Budget and Economic Outlook: Fiscal Years 2010-2021

Front Cover
Congressional Budget Office
Government Printing Office, 2011 - Business & Economics - 188 pages

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 crisis—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 activity—combined with the costs of various policies implemented in response to those conditions and an imbalance between revenues and spending that predated the recession—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 1945—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.

 

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Contents

The Budget Outlook
1
Budget Trends 20092011
3
CBOs Baseline Projections for 2012 to 2021
14
Changes in CBOs Baseline Since August 2010
16
Federal Debt Held by the Public
18
Uncertainty in Budget Projections
20
Alternative Policy Assumptions
21
The LongTerm Budget Outlook
25
Discretionary Spending
73
Net Interest
81
The Revenue Outlook
85
Sources of Revenues
90
Individual Income Taxes
91
Social Insurance Taxes
94
Corporate Income Taxes
98
Other Sources of Revenues
100

The Economic Outlook
27
The Recovery Through 2010
28
The Outlook Through 2016
36
The Outlook for 2017 Through 2021
45
Comparison with CBOs August 2010 Forecast
47
Comparison with Other Forecasts
50
The Spending Outlook
53
Mandatory Spending
57
Changes in CBOs Baseline Since August 2010
105
How Changes in Economic Projections Can Affect Budget Projections
115
Trust Funds and Measures of Federal Debt
121
CBOs Economic Projections for 2010 to 2021
127
Historical Budget Data
131
Contributors to the Economic Revenue and Spending Projections
147
Glossary
151
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