Contents

Summary

1

The Budget Outlook

A Review of 2007

The Concept Behind CBO’s Baseline Projections

CBO’s Baseline Projections for 2008 to 2018

Changes in CBO’s Baseline Since August 2007

Uncertainty and Budget Projections

Federal Debt Held by the Public

The Long-Term Budget Outlook

2

The Economic Outlook

The Threat to the Economy From the Turmoil in the Financial Markets

The Prospect of Slow Economic Growth in the Near Term

The Persistent Risk of Higher Inflation

The Outlook Through 2018

Projections of Income

Changes in the Outlook Since August 2007

How CBO’s Forecast Compares With Others

3

The Spending Outlook

Mandatory Spending

Discretionary Spending

Net Interest

4

The Revenue Outlook

Sources of Revenues

CBO’s Current Revenue Projections in Detail

The Effects of Expiring Tax Provisions

A

Changes in CBO’s Baseline Since August 2007

B

Trust Funds and Measures of Debt

C

How Changes in Economic Assumptions Can Affect Budget Projections

D

The Treatment of Federal Receipts and Expenditures in the National Income and Product Accounts

E

CBO’s Economic Projections for 2008 to 2018

F

Historical Budget Data

G

Contributors to the Revenue and Spending Projections

Glossary