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This analysis of the President's budget for fiscal year 1984 was prepared at the request of the Senate Committee on Appropriations. The report describes the problem of large and growing budget deficits faced by the federal government under existing tax laws and current spending policies. It discusses how the Administration's proposals would reduce these projected deficits over the next five years.

This report includes the Congressional Budget Office's preliminary reestimates of the budgetary impact of the Administration's proposals using CBO's economic assumptions and technical estimating methods. The report analyzes in some detail the major tax changes proposed by the Administration as well as the major spending increases proposed for defense programs and reductions in domestic programs. Finally, the report also discusses the economic outlook and the assumptions used for the President's budget.

This report was prepared by the staff of the Budget Analysis, Fiscal Analysis, and Tax Analysis Divisions under the supervision of James L. Blum, William J. Beeman, and James M. Verdier, respectively. Principal contributors are listed in an appendix.

Robert L. Faherty supervised the editing and production of the report, assisted by Nancy H. Brooks. Major portions were edited by Patricia H. Johnston, Francis S. Pierce, and Johanna Zacharias. Thelma L, Jones coordinated production of the report. The final manuscript was prepared for publication by Barbara Bakari, David Bashore, Debra Blagburn, Linda Brockman, Gwen Coleman, Mechita O. Crawford, Dorleen Dove, Suzie Fominaya, Shirley Hornbuckle, Dorothy J. Kornegay, and Nancy Wentzel.
 

Alice M. Rivlin
Director
February 1983
 
 

CHAPTER I. SUMMARY AND INTRODUCTION

• The Budget Under Current Policies
• The Administration's Budget Program
• CBO Budget Estimates

CHAPTER II. THE ADMINISTRATION'S ECONOMIC ASSUMPTIONS AND FISCAL POLICY

• The Economic Outlook Under the Administration's Program
• Issues in the Economic Outlook
• Structural Deficits in the Longer Run

CHAPTER III. THE ADMINISTRATION'S REVENUE PROPOSALS AND ESTIMATES

• The President's Revenue Proposals
• Baseline Revenue Estimates
• Reduced Sensitivity of Revenues to Economic Growth
• Tax Expenditures

CHAPTER IV. THE ADMINISTRATION'S DEFENSE BUDGET

• Defense Budget Growth in Perspective
• Real Growth in Defense Spending in the 1984 Appropriation Request
• Changes from the 1983-1987 Defense Plan for Fiscal Year 1984
• Changes from Current Policy
• Potential Reductions

CHAPTER V. THE ADMINISTRATION'S DOMESTIC BUDGET

• Entitlements and Other Mandatory Spending
• Nondefense Discretionary Spending
• Net Interest
• Offsetting Receipts
• CBO Outlay Reestimates

APPENDIX. MAJOR CONTRIBUTORS TO THE PREPARATION OF THIS REPORT
 

FIGURES
I-1.	FEDERAL BUDGET DEFICIT UNDER CURRENT POLICIES
I-2.	ADMINISTRATION'S BUDGET PROGRAM
I-3.	OUTLAY CATEGORIES AS PERCENTAGES OF GNP
II-1.	STANDARD-EMPLOYMENT DEFICIT AS A PERCENTAGE OF STANDARDIZED GNP
II-2.	FEDERAL DEBT HELD BY THE PUBLIC AS A PERCENTAGE OF GNP
III-1.	FEDERAL REVENUES AS A PERCENTAGE OF GNP UNDER THE ADMINISTRATION PROGRAM AND CURRENT POLICIES
IV-1.	DEFENSE DEPARTMENT BUDGET, FISCAL YEARS 1984 AND 1988 (BUDGET AUTHORITY)
IV-2.	BUDGET AUTHORITY FOR NATIONAL DEFENSE (IN CONSTANT 1984 DOLLARS)
IV-3.	REAL GROWTH IN NATIONAL DEFENSE (BUDGET AUTHORITY)
IV-4.	NATIONAL DEFENSE OUTLAYS AS A PERCENTAGE OF GNP
IV-5.	COMPARISON OF ADMINISTRATION DEFENSE PROGRAM AND CURRENT POLICIES (BUDGET AUTHORITY)
IV-6.	COMPOSITION OF NATIONAL DEFENSE OUTLAYS

 

The Administration's budget proposal for fiscal year 1984 contains a number of tax increases and spending reductions designed to reverse the trend of growing federal deficits. At the same time, the Administration proposes to increase defense spending more rapidly than assumed in the First Concurrent Resolution on the Budget for Fiscal Year 1983. The Congressional Budget Office (CBO) estimates that the net effect of these changes would be to reduce projected deficits by $332 billion over the next five years. Nevertheless, the deficit in 1988 would still remain at a high level--$159 billion, or 3.3 percent of the gross national product (GNP). Of this amount, about $100 billion would persist even if the economy were to resume operating at a high-employment level.

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