Budget and Economic Outlook: Fiscal Years 2010-2021

Budget and Economic Outlook: Fiscal Years 2010-2021

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The United States faces daunting economic and budgetary challenges. The economy has struggled to recover from the recent recession, which was triggered by a large decline in house prices and a financial crisisa€”events unlike anything this country has seen since the Great Depression. During the recovery, the pace of growth in the nation's output has been anemic compared with that during most other recoveries since World War II, and the unemployment rate has remained quite high. For the federal government, the sharply lower revenues and elevated spending deriving from the financial turmoil and severe drop in economic activitya€”combined with the costs of various policies implemented in response to those conditions and an imbalance between revenues and spending that predated the recessiona€”have caused budget deficits to surge in the past two years. The deficits of $1.4 trillion in 2009 and $1.3 trillion in 2010 are, when measured as a share of gross domestic product (GDP), the largest since 1945a€”representing 10.0 percent and 8.9 percent of the nation's output, respectively. For 2011, the Congressional Budget Office (CBO) projects that if current laws remain unchanged, the federal budget will show a deficit of close to $1.5 trillion, or 9.8 percent of GDP. The deficits in CBO's baseline projections drop markedly over the next few years as a share of output and average 3.1 percent of GDP from 2014 to 2021. Those projections, however, are based on the assumption that tax and spending policies unfold as specified in current law. Consequently, they understate the budget deficits that would occur if many policies currently in place were continued, rather than allowed to expire as scheduled under current law.I ederal revenues will total about $2.2 trillion in fiscal year 201 1, the Congressional Budget Office (CBO) estimates, ... In only two years since 1 946 have federal revenues reached or exceeded 19.9 percent of GDP; during the past 40 years, revenues have averaged 18 percent of GDP. Of the 5 percentage- point increase in revenues relative to GDP projected for 201 1 to 2014, about three-quarters stemsanbsp;...

Title:Budget and Economic Outlook: Fiscal Years 2010-2021
Author:Congressional Budget Office
Publisher:Government Printing Office - 2011-02


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