September 8, 2005
Honorable John M. Spratt Jr.
Ranking Member
Committee on the Budget
U.S. House of Representatives
Washington, DC 20515
Dear Congressman:
As requested in your letter of August 17, 2005, the Congressional Budget Office has estimated the effect on its most recent baseline projections of the policy alternatives that you specified. The enclosed table shows CBO's estimate of revenues, outlays, the total budget deficit, and debt held by the public incorporating the following adjustments to its August 2005 baseline:
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Assume enactment of the revenue policies proposed in the President's budget for fiscal year 2006;
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Assume that the exemption amount for the alternative minimum tax (AMT) is extended at the level in effect for 2005 and, together with the AMT tax brackets, is indexed for inflation after 2005;
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Assume enactment of the mandatory spending proposals included in the President's budget, including the President's plan to create personal accounts in the Social Security program. CBO does not have enough information about that proposal to do its own estimate, so it used the figures prepared by the Office of Management and Budget and shown in the Mid-Session Review
of the President's budget issued on July 13 (outlays totaling $662 billion over the 2006-2015 period);
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For discretionary programs funded through the regular appropriation process, adopt the levels of budget authority proposed in the President's budget for 2006 through 2010 and the extrapolation of that budget authority through 2015 as presented in CBO's Analysis of the President's Budgetary Proposalsfor Fiscal Year 2006 (March 2005); and
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Assume that spending associated with activities in Iraq and Afghanistan and the war on terrorism--which has been funded through supplemental appropriations--slows gradually instead of continuing over the next 10 years at the level funded for 2005, as assumed in the baseline; use the scenario specified in Table 1-6 of The Budget and Economic Outlook: An Update (August 2005).
The estimates in this letter include most legislation enacted through August, but do not include any funding in response to Hurricane Katrina. Funding already provided or proposed will add tens of billions of dollars to deficits over the next few years.
If you would like further details on the information provided in this letter, we would be pleased to provide them. The staff contact is Jeff Holland.
Sincerely,
Douglas Holtz-Eakin
Director
Enclosure
cc: |
Honorable Jim Nussle Chairman |
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Honorable Judd Gregg
Chairman Senate Committee on the Budget |
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Honorable Kent Conrad
Ranking Member |
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Budgetary Projections Incorporating
the Assumptions Specified by Congressman Spratt in his Letter of August
17, 2005
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2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
2015 |
Total, 2006- 2010 |
Total, 2006- 2015 |
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In Billions of Dollars |
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Revenuesa |
2,142 |
2,266 |
2,358 |
2,470 |
2,590 |
2,723 |
2,829 |
2,967 |
3,112 |
3,263 |
3,424 |
12,407 |
28,003 |
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Outlays |
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Discretionary spendingb |
962 |
988 |
989 |
996 |
996 |
995 |
1,012 |
1,027 |
1,055 |
1,079 |
1,106 |
4,965 |
10,243 |
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Mandatory spendinga,c |
1,329 |
1,393 |
1,470 |
1,550 |
1,666 |
1,791 |
1,940 |
2,044 |
2,193 |
2,339 |
2,500 |
7,870 |
18,885 |
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Net interest |
182 |
208 |
238 |
272 |
298 |
322 |
346 |
372 |
397 |
427 |
458 |
1,337 |
3,336 |
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Total |
2,473 |
2,589 |
2,697 |
2,818 |
2,960 |
3,107 |
3,297 |
3,442 |
3,644 |
3,845 |
4,064 |
14,172 |
32,464 |
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Deficit |
-331 |
-323 |
-339 |
-348 |
-370 |
-384 |
-468 |
-475 |
-532 |
-582 |
-640 |
-1,765 |
-4,462 |
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Debt Held by the Public |
4,621 |
4,952 |
5,305 |
5,667 |
6,049 |
6,445 |
6,923 |
7,406 |
7,944 |
8,530 |
9,172 |
n.a. |
n.a. |
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As a Percentage of GDP |
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Revenuesa |
17.5 |
17.5 |
17.3 |
17.2 |
17.1 |
17.2 |
17.1 |
17.1 |
17.2 |
17.3 |
17.4 |
17.2 |
17.2 |
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Outlays |
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Discretionary spendingb |
7.8 |
7.6 |
7.2 |
6.9 |
6.6 |
6.3 |
6.1 |
5.9 |
5.8 |
5.7 |
5.6 |
6.9 |
6.3 |
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Mandatory spendinga,c |
10.8 |
10.7 |
10.8 |
10.8 |
11.0 |
11.3 |
11.7 |
11.8 |
12.1 |
12.4 |
12.7 |
10.9 |
11.6 |
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Net interest |
1.5 |
1.6 |
1.7 |
1.9 |
2.0 |
2.0 |
2.1 |
2.1 |
2.2 |
2.3 |
2.3 |
1.9 |
2.1 |
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Total |
20.2 |
20.0 |
19.8 |
19.6 |
19.6 |
19.6 |
19.9 |
19.9 |
20.1 |
20.3 |
20.6 |
19.7 |
20.0 |
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Deficit |
-2.7 |
-2.5 |
-2.5 |
-2.4 |
-2.4 |
-2.4 |
-2.8 |
-2.7 |
-2.9 |
-3.1 |
-3.2 |
-2.5 |
-2.7 |
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Debt Held by the Public |
37.7 |
38.2 |
38.8 |
39.4 |
40.0 |
40.7 |
41.8 |
42.7 |
43.9 |
45.1 |
46.5 |
n.a. |
n.a. |
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Memorandum: |
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Deficit in CBO's Baseline |
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In billions of dollars |
-331 |
-314 |
-324 |
-335 |
-321 |
-317 |
-218 |
-78 |
-80 |
-66 |
-57 |
-1,612 |
-2,110 |
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As a percentage of GDP |
-2.7 |
-2.4 |
-2.4 |
-2.3 |
-2.1 |
-2.0 |
-1.3 |
-0.4 |
-0.4 |
-0.3 |
-0.3 |
-2.2 |
-1.3 |
Debt Held by the Public in CBO's Baseline |
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In billions of dollars |
4,621 |
4,943 |
5,281 |
5,630 |
5,964 |
6,292 |
6,520 |
6,605 |
6,691 |
6,762 |
6,820 |
n.a. |
n.a. |
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As a percentage of GDP |
37.7 |
38.1 |
38.7 |
39.2 |
39.5 |
39.7 |
39.3 |
38.1 |
37.0 |
35.8 |
34.6 |
n.a. |
n.a. |
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