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Mr. Chairman, I am pleased to be here this morning to provide an updated analysis of the President's budgetary proposals for fiscal year 2000. Three recent developments have altered the picture that I presented when I appeared before your committee in March to discuss the President's budget.
CBO assesses the impact of the President's policies by comparing them with
our budget baseline, which assumes that current laws and policies continue
unchanged. The baseline assumes that discretionary spending adheres to
the statutory caps through 2002 and grows at the rate of inflation thereafter.
Under CBO's July baseline, the total federal surplus will grow from $120
billion in 1999 to $413 billion in 2009. Cumulative on-budget surpluses
total nearly $1 trillion between 2000 and 2009, and Social Security's off-budget
surpluses total almost $2 trillion. If those surpluses are realized, past
borrowing from the public will be substantially repaid, and debt held by
the public will fall from $3.7 trillion at the end of 1998 to $0.9 trillion,
or 6 percent of gross domestic product (GDP), at the end of 2009 (see Figure
1).
FIGURE 1. DEBT HELD BY THE PUBLIC, FISCAL YEARS 2000-2009 |
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SOURCE: Congressional Budget Office. |
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The President proposes to leave the off-budget surpluses untouched; he would spend most of the projected on-budget surpluses on discretionary programs, Universal Savings Accounts (USA accounts), and a prescription drug benefit under Medicare. By CBO's reckoning, the President's budgetary policies would result in small on-budget deficits in some years and cumulative on-budget surpluses of about $50 billion over the 2000-2009 period. Debt held by the public would decline to $1.8 trillion, or 13 percent of GDP, by the end of the period.
The Congressional budget resolution reflects a different set of fiscal
priorities. Like the President's proposal, it would preserve the off-budget
surpluses, but it would allow for a tax cut of at least $778 billion over
the 2000-2009 period while holding discretionary spending below baseline
levels after 2004. Under CBO's updated economic and other estimating assumptions,
the budget resolution would lead to on-budget surpluses of $277 billion
over the next 10 years. Debt held by the public would drop to $1.6 trillion,
or 12 percent of GDP, by 2009.
THE MID-SESSION REVIEW OF THE BUDGET
Like the Administration's February budget submission, the Mid-Session Review divides the President's proposals into two parts:
The Administration has made few changes in its basic budgetary policies. On the outlay side, it has incorporated the effects of the Emergency Supplemental Appropriations Act of 1999, the release of previously enacted contingent emergency appropriations, and a recently transmitted request for additional funding for the 2000 census. On the revenue side, it has added proposals to modify the safe-harbor thresholds in the individual income tax and the carryover rules for the foreign tax credit.
The changes in the framework for Social Security and Medicare reform are more substantial:
Comparison of CBO and Administration Baseline Projections
At this point, CBO and the Administration have similar economic assumptions and baseline budget projections. Through 2005, CBO's economic forecast and technical estimating assumptions lead to slightly higher projected surpluses than the Administration's; thereafter, the Administration projects somewhat larger surpluses. Over the entire 1999-2009 period, the two projections of baseline surpluses are within $20 billion of each other.
In their short-term economic forecasts, both CBO and the Administration
anticipate real growth (adjusted for inflation) of about 4 percent this
year and 2½ percent in 2000, with the consumer price index increasing
2.2 percent in 1999 and about 2½ percent in 2000 (see Table 1).
CBO, however, assumes that interest rates will edge up over the next six
months from 4.6 percent currently for three-month Treasury bills and 5.6
percent for 10-year Treasury notes to 5.0 percent and 5.9 percent, respectively.
In contrast, the Administration's projections assume that interest rates
will average slightly below current levels over the next few years. CBO
also assumes slightly stronger growth in 2001.
TABLE 1. COMPARISON OF CBO AND ADMINISTRATION ECONOMIC PROJECTIONS, CALENDAR YEARS 1999-2009 |
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Actual 1998 |
Forecast
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Projected
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1999 | 2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | |||||
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Nominal GDP (Billions of dollars) | |||||||||||||||
CBO | 8,511 | 8,964 | 9,351 | 9,751 | 10,159 | 10,583 | 11,027 | 11,508 | 12,017 | 12,554 | 13,113 | 13,695 | |||
Administration | 8,511 | 8,953 | 9,333 | 9,724 | 10,154 | 10,639 | 11,145 | 11,680 | 12,243 | 12,824 | 13,434 | 14,068 | |||
Nominal GDP (Percentage change) | |||||||||||||||
CBO | 4.9 | 5.3 | 4.3 | 4.3 | 4.2 | 4.2 | 4.2 | 4.4 | 4.4 | 4.5 | 4.5 | 4.4 | |||
Administration | 4.9 | 5.2 | 4.2 | 4.2 | 4.4 | 4.8 | 4.8 | 4.8 | 4.8 | 4.7 | 4.8 | 4.7 | |||
Real GDP (Percentage change) | |||||||||||||||
CBO | 3.9 | 4.0 | 2.4 | 2.4 | 2.3 | 2.3 | 2.3 | 2.5 | 2.5 | 2.5 | 2.5 | 2.5 | |||
Administration | 3.9 | 3.9 | 2.4 | 2.1 | 2.2 | 2.5 | 2.5 | 2.6 | 2.6 | 2.5 | 2.5 | 2.4 | |||
GDP Price Index (Percentage change) | |||||||||||||||
CBO | 1.0 | 1.3 | 1.8 | 1.8 | 1.8 | 1.8 | 1.8 | 1.9 | 1.9 | 1.9 | 1.9 | 1.9 | |||
Administration | 1.0 | 1.3 | 1.8 | 2.1 | 2.2 | 2.2 | 2.2 | 2.2 | 2.2 | 2.2 | 2.2 | 2.2 | |||
Consumer Price Indexa (Percentage change) | |||||||||||||||
CBO | 1.6 | 2.2 | 2.5 | 2.5 | 2.5 | 2.5 | 2.5 | 2.5 | 2.5 | 2.5 | 2.5 | 2.5 | |||
Administration | 1.6 | 2.2 | 2.4 | 2.4 | 2.5 | 2.5 | 2.5 | 2.5 | 2.5 | 2.5 | 2.5 | 2.5 | |||
Unemployment Rate (Percent) | |||||||||||||||
CBO | 4.5 | 4.2 | 4.3 | 4.6 | 4.9 | 5.1 | 5.3 | 5.4 | 5.5 | 5.5 | 5.5 | 5.5 | |||
Administration | 4.5 | 4.3 | 4.5 | 4.9 | 5.2 | 5.2 | 5.2 | 5.2 | 5.2 | 5.2 | 5.2 | 5.2 | |||
Three-Month Treasury Bill Rate (Percent) | |||||||||||||||
CBO | 4.8 | 4.6 | 5.0 | 4.6 | 4.5 | 4.5 | 4.5 | 4.5 | 4.5 | 4.5 | 4.5 | 4.5 | |||
Administration | 4.8 | 4.5 | 4.5 | 4.5 | 4.5 | 4.6 | 4.6 | 4.6 | 4.6 | 4.6 | 4.6 | 4.6 | |||
Ten-Year Treasury Note Rate (Percent) | |||||||||||||||
CBO | 5.3 | 5.6 | 5.9 | 5.5 | 5.4 | 5.4 | 5.4 | 5.4 | 5.4 | 5.4 | 5.4 | 5.4 | |||
Administration | 5.3 | 5.4 | 5.5 | 5.5 | 5.6 | 5.6 | 5.6 | 5.6 | 5.6 | 5.6 | 5.6 | 5.6 | |||
Tax Bases (Percentage of GDP) | |||||||||||||||
Corporate profitsb | |||||||||||||||
CBO | 8.4 | 8.1 | 7.3 | 7.4 | 7.5 | 7.4 | 7.4 | 7.3 | 7.3 | 7.3 | 7.2 | 7.2 | |||
Administration | 8.4 | 8.4 | 7.7 | 7.6 | 7.5 | 7.5 | 7.4 | 7.4 | 7.4 | 7.3 | 7.3 | 7.2 | |||
Wages and salaries | |||||||||||||||
CBO | 48.8 | 49.2 | 49.5 | 49.3 | 49.2 | 49.2 | 49.2 | 49.3 | 49.3 | 49.3 | 49.3 | 49.3 | |||
Administration | 48.8 | 49.0 | 49.1 | 49.0 | 48.9 | 48.9 | 48.9 | 48.9 | 48.9 | 48.9 | 48.9 | 48.9 | |||
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SOURCES: Congressional Budget Office; Office of Management and Budget; Department of Commerce, Bureau of Economic Analysis; Federal Reserve Board; Department of Labor, Bureau of Labor Statistics. | |||||||||||||||
NOTE: Percentage change is year over year. | |||||||||||||||
a. The consumer price index for all urban consumers. | |||||||||||||||
b. Corporate profits are book profits. | |||||||||||||||
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Compared with the Administration's, CBO's economic forecast implies slightly higher revenues and surpluses in the near term. Nominal GDP is slightly higher in the CBO forecast through 2002, as on average are the GDP shares of categories of income that are taxed at relatively high effective rates--wage and salary income and book profits. After 2002, however, the Administration's assumption of faster growth in the GDP price index results in a level of nominal GDP that is higher than CBO's. Although that difference is partially offset by smaller GDP shares of taxable income, the Administration projects higher baseline revenues in 2005 and thereafter.
CBO Estimate of the Mid-Session Review
CBO estimates that the proposals in the Mid-Session Review would reduce
projected surpluses by $21 billion in 2000 and $937 billion through 2009
compared with the CBO baseline (see Table 2). Under the President's basic
policies, as proposed in February, the Administration would increase discretionary
spending above the levels allowed by the current statutory caps on such
spending and would pay for part of that increase by raising revenues. The
basic budget shows little net change in noninterest mandatory spending.
Over the 2000-2009 period, the Administration's basic policies would reduce
projected surpluses by a total of $111 billion. That figure is larger than
our March estimate of $91 billion, even though the Administration's basic
policies have not changed very much, because CBO has reduced its baseline
projections of discretionary spending after 2002 to reflect lower projected
inflation. Otherwise, CBO's previous analysis of the President's basic
policies still applies.(1)
TABLE 2. CBO ESTIMATE OF THE MID-SESSION REVIEW OF THE BUDGET FOR FISCAL YEAR 2000 (By fiscal year, in billions of dollars) |
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1999 | 2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2000- 2009 |
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Baseline Surplus or Deficit (-) | ||||||||||||||||
On-Budget | -4 | 14 | 38 | 82 | 75 | 85 | 92 | 129 | 146 | 157 | 178 | 996 | ||||
Off-Budget | 125 | 147 | 155 | 164 | 172 | 181 | 195 | 205 | 217 | 228 | 235 | 1,901 | ||||
Total | 120 | 161 | 193 | 246 | 247 | 266 | 286 | 334 | 364 | 385 | 413 | 2,896 | ||||
Effect of the Mid-Session Review's Policies | ||||||||||||||||
Policies Pending Social Security and Medicare Reform | ||||||||||||||||
Revenues | a | 13 | 11 | 9 | 10 | 10 | 10 | 7 | 7 | 9 | 10 | 95 | ||||
Outlays | ||||||||||||||||
Discretionary | a | 35 | 17 | 21 | 24 | 22 | 15 | 7 | 6 | 13 | 14 | 173 | ||||
Mandatory | a | -2 | -1 | 1 | 1 | -1 | -1 | -1 | -1 | -1 | -1 | -5 | ||||
Net interest | a | 1 | 2 | 2 | 3 | 4 | 5 | 5 | 5 | 6 | 6 | 39 | ||||
Subtotalb | a | 34 | 18 | 23 | 28 | 25 | 19 | 12 | 10 | 18 | 19 | 207 | ||||
Totalc | a | -21 | -7 | -15 | -18 | -16 | -9 | -5 | -3 | -9 | -9 | -111 | ||||
Framework for Social Security and Medicare Reform | ||||||||||||||||
Medicare reformb | 0 | a | 2 | 8 | 10 | 13 | 14 | 15 | 15 | 16 | 17 | 111 | ||||
Universal Savings Accountsd | 0 | 0 | 1 | 1 | 4 | 21 | 32 | 42 | 45 | 49 | 52 | 245 | ||||
Additional discretionary spendingb | 0 | 0 | 21 | 46 | 36 | 34 | 38 | 41 | 39 | 38 | 35 | 328 | ||||
Net interestb | 0 | a | 1 | 3 | 5 | 9 | 13 | 18 | 24 | 31 | 38 | 142 | ||||
Totalc | 0 | a | -24 | -57 | -56 | -77 | -96 | -116 | -124 | -134 | -142 | -826 | ||||
All Proposed Policiesc | a | -21 | -32 | -72 | -73 | -92 | -105 | -120 | -127 | -143 | -151 | -937 | ||||
Surplus or Deficit (-) Under the Mid-Session Review's Policies as Estimated by CBO | ||||||||||||||||
On-Budget | -5 | -7 | 6 | 10 | 1 | -8 | -14 | 8 | 19 | 13 | 26 | 54 | ||||
Off-Budget | 125 | 147 | 155 | 164 | 173 | 182 | 195 | 206 | 218 | 229 | 236 | 1,904 | ||||
Total | 120 | 140 | 161 | 174 | 174 | 174 | 181 | 214 | 237 | 242 | 262 | 1,959 | ||||
Memorandum: | ||||||||||||||||
Debt Held by the Public | ||||||||||||||||
Baseline | 3,618 | 3,473 | 3,297 | 3,066 | 2,835 | 2,584 | 2,312 | 1,992 | 1,640 | 1,267 | 865 | n.a. | ||||
Mid-Session Review as estimated by CBO | 3,619 | 3,495 | 3,350 | 3,191 | 3,034 | 2,875 | 2,708 | 2,508 | 2,283 | 2,053 | 1,802 | n.a. | ||||
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SOURCE: Congressional Budget Office. | ||||||||||||||||
NOTE: n.a. = not applicable. | ||||||||||||||||
a. Less than $500 million. | ||||||||||||||||
b. Effect on outlays. | ||||||||||||||||
c. Effect on the surplus. | ||||||||||||||||
d. CBO has not determined how these amounts should be divided between a reduction in receipts and an increase in outlays. | ||||||||||||||||
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The proposals in the President's framework for Social Security and Medicare reform would reduce the surplus over the next 10 years by $826 billion as follows:
CBO's estimate of the cost of the proposed Medicare reforms is more than twice that of the Administration. In estimating the cost of the proposed prescription drug benefit, CBO has incorporated new, higher projections of drug spending from the Health Care Financing Administration, included spending for drugs used by the institutionalized population, and taken account of the proposal's effect on participation in the Medicaid program. As a result, our estimate of the cost of the drug benefit is about 40 percent (or about $50 billion) higher than the Administration's over 10 years. CBO's estimate of the proposed savings in fee-for-service Medicare is 25 percent (or $16 billion) lower than the Administration's. Although the President's proposal would create new, competitive options for paying providers in traditional Medicare, the new techniques would not be mandatory, and beneficiaries would have little financial incentive to use them. CBO's estimates of the proposed adjustments to provider payments and beneficiary cost sharing are similar to those of the Administration. We have not yet completed our estimate of the proposal for a competitive defined benefit in Medicare.
Since the President's budget was released in February, the Administration has provided further details of its proposed USA accounts. According to the Department of the Treasury, the automatic grants would be phased in over four years, with the maximum automatic grant increasing from $250 in 2003 to $400 in 2006 and thereafter. Matching grants would not begin until 2005. The maximum annual amount that could be deposited in a USA account from all sources would be $1,000 in 2005 through 2007 and $1,500 in 2008 and thereafter. The Joint Committee on Taxation and CBO estimate that over the 2000-2009 period, USA accounts would cost $245 billion, which includes federal administrative expenses. (The Administration's estimate is similar.) Without legislative language, CBO cannot finally determine how that amount should be divided between a reduction in receipts and an increase in outlays. Based on the available information, however, the proposal is likely to increase outlays without reducing receipts.
As part of his framework for Social Security and Medicare reform, the
President has proposed increasing both defense and nondefense discretionary
spending above the levels in his basic policies. In the Mid-Session Review,
the President now divides those increases into three parts: $127 billion
over 10 years for military readiness, another $127 billion for domestic
programs, and $74 billion for a new trust fund for children and education.
In the absence of any details, CBO's estimate adopts those outlay figures.
THE CONGRESSIONAL BUDGET RESOLUTION
In mid-April, the Congress adopted the Concurrent Resolution on the Budget for Fiscal Year 2000 (H. Con. Res. 68). CBO has reestimated the resolution, like the Mid-Session Review, using our latest economic and technical estimating assumptions. As a result, the projected surpluses under the policies of the budget resolution are larger than those envisioned in April.
Compared with CBO's July baseline, implementing the policies of the
budget resolution would reduce the surplus by a total of $719 billion over
the 2000-2009 period (see Table 3). As adopted, the budget resolution provides
for a tax cut of $778 billion over 10 years. Although the resolution allows
the chairmen of the budget committees to adjust the amount of the tax cut
to reflect CBO's updated estimate of the on-budget surplus for fiscal year
2000, our analysis uses the unadjusted numbers.
TABLE 3. CBO ESTIMATE OF THE CONGRESSIONAL BUDGET RESOLUTION FOR FISCAL YEAR 2000 (By fiscal year, in billions of dollars) |
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1999 | 2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2000- 2009 |
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Baseline Surplus or Deficit (-) | |||||||||||||||
On-Budget | -4 | 14 | 38 | 82 | 75 | 85 | 92 | 129 | 146 | 157 | 178 | 996 | |||
Off-Budget | 125 | 147 | 155 | 164 | 172 | 181 | 195 | 205 | 217 | 228 | 235 | 1,901 | |||
Total | 120 | 161 | 193 | 246 | 247 | 266 | 286 | 334 | 364 | 385 | 413 | 2,896 | |||
Effect of the Budget Resolution's Policies | |||||||||||||||
Revenues | 0 | 0 | -8 | -54 | -32 | -49 | -63 | -109 | -136 | -151 | -177 | -778 | |||
Outlays | |||||||||||||||
Discretionarya | 0 | 0 | 0 | 0 | 10 | 6 | -6 | -24 | -42 | -55 | -70 | -180 | |||
Mandatory | 0 | b | 1 | 1 | 1 | 1 | 1 | b | b | -1 | -1 | 4 | |||
Net interest | 0 | b | b | 2 | 4 | 7 | 10 | 15 | 20 | 26 | 32 | 117 | |||
Subtotalc | 0 | b | 1 | 3 | 16 | 14 | 5 | -9 | -22 | -29 | -38 | -59 | |||
Totald | 0 | b | -9 | -57 | -48 | -63 | -68 | -100 | -114 | -121 | -139 | -719 | |||
Surplus or Deficit (-) Under the Budget Resolution's Policies as Estimated by CBO | |||||||||||||||
On-Budget | -4 | 14 | 29 | 26 | 27 | 21 | 24 | 29 | 32 | 36 | 39 | 277 | |||
Off-Budget | 125 | 147 | 155 | 164 | 172 | 181 | 195 | 205 | 217 | 228 | 235 | 1,901 | |||
Total | 120 | 161 | 184 | 190 | 199 | 203 | 219 | 234 | 250 | 263 | 275 | 2,178 | |||
Memorandum: | |||||||||||||||
Debt Held by the Public | |||||||||||||||
Baseline | 3,618 | 3,473 | 3,297 | 3,066 | 2,835 | 2,584 | 2,312 | 1,992 | 1,640 | 1,267 | 865 | n.a. | |||
Budget resolution as estimated by CBO | 3,618 | 3,473 | 3,305 | 3,132 | 2,949 | 2,761 | 2,557 | 2,336 | 2,099 | 1,847 | 1,584 | n.a. | |||
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SOURCE: Congressional Budget Office. | |||||||||||||||
NOTE: n.a. = not applicable. | |||||||||||||||
a. The effect of the 1999 supplemental appropriations bill (P.L. 106-31), which was enacted after the resolution was passed, has been added to the resolution totals. Also, the projections include spending from contingent emergencies. | |||||||||||||||
b. Less than $500 million. | |||||||||||||||
c. Effect on outlays. | |||||||||||||||
d. Effect on the surplus. | |||||||||||||||
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The budget resolution, like CBO's baseline, assumes that discretionary spending is held to the levels of the statutory caps on such spending through 2002. After 2002, the baseline assumes that discretionary spending grows at the same rate as inflation. In the budget resolution, discretionary spending is higher than the baseline in 2003 and 2004 and lower than the baseline in 2005 to 2009. Over the entire 10-year period, discretionary spending under the budget resolution falls $180 billion below baseline levels.
Mandatory spending under the resolution differs little from current
law. Over the next 10 years, the budget resolution allows for an additional
$4 billion in noninterest mandatory spending, primarily for crop insurance.
It also establishes reserve funds for retirement security, Medicare, and
agricultural programs, but those reserves are not reflected in our estimates
because we cannot predict the extent to which they will be used. To the
extent that they are used, the projected surpluses would be smaller.
CONCLUSION
Although CBO's baseline projections indicate that on-budget surpluses could total $1 trillion over the next 10 years, decisionmakers should view that estimate with considerable caution for several reasons.
First, 10-year budget projections are highly uncertain. In the space of only six months, CBO's estimate of the cumulative surplus has increased by nearly $300 billion. Further changes of that or a greater magnitude are likely--in either direction--as a result of economic fluctuations, administrative and judicial actions, and other developments. For example, in recent weeks the Administration has announced plans to lower origination fees for direct student loans and allow states to waive the limitation on the vehicle allowance for some working families receiving food stamps. The changes in those two programs alone will raise annual spending by $100 million to $200 million above the levels projected by CBO just a few weeks ago. Moreover, although we believe that our economic assumptions are reasonable and take account of the possibility of recession sometime during the forecasting period, economic forecasting remains an art that no one has truly mastered.
Second, some commentators believe that it will be difficult to meet the caps on discretionary spending that were established two years ago. Since 1990, discretionary spending has grown by an average of about 1½ percent a year, and domestic discretionary spending has increased by about 5 percent a year. To adhere to the caps, discretionary appropriations in 2002 must be held 10 percent below the level needed to maintain the same purchasing power provided by the 1999 appropriations, excluding emergencies. The evaluations required by the Government Performance and Results Act may assist the Congress in identifying ineffective, inefficient programs that might be cut in order to achieve such reductions. Agencies are required to submit those evaluations to the Congress by March 31, 2000.
Making other assumptions about discretionary spending could substantially
alter the budget outlook (see Table 4). If the Congress provided just $15.8
billion in additional discretionary emergency funding each year (the amount
contained in the Omnibus Consolidated and Emergency Supplemental Appropriations
Act for 1999), the cumulative on-budget surpluses would drop by $170 billion.
If discretionary spending grew 3 percent a year in nominal terms, the projected
on-budget surpluses would all but disappear.
TABLE 4. ALTERNATIVE BASELINES (By fiscal year, in billions of dollars) |
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2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2000- 2009 |
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Alternative Levels of Discretionary Spending | ||||||||||||
Capped Baseline | 580 | 575 | 569 | 583 | 598 | 613 | 628 | 644 | 660 | 677 | 6,127 | |
Capped Baseline Plus $15.8 Billion a Year in Emergency Spending | 586 | 584 | 582 | 598 | 613 | 628 | 644 | 660 | 676 | 692 | 6,262 | |
Inflated Baseline | ||||||||||||
With emergencies not projected | 605 | 614 | 630 | 645 | 660 | 680 | 694 | 710 | 732 | 752 | 6,722 | |
With emergencies projected | 612 | 626 | 645 | 661 | 677 | 697 | 712 | 728 | 751 | 771 | 6,881 | |
Resulting Baseline Surplus or Deficit (-) | ||||||||||||
Capped Baseline | 14 | 38 | 82 | 75 | 85 | 92 | 129 | 146 | 157 | 178 | 996 | |
Capped Baseline Plus $15.8 Billion a Year in Emergency Spending | 9 | 27 | 69 | 59 | 67 | 72 | 109 | 125 | 135 | 154 | 825 | |
Inflated Baseline | ||||||||||||
With emergencies not projected | -12 | -4 | 16 | 5 | 10 | 9 | 43 | 56 | 56 | 68 | 247 | |
With emergencies projected | -19 | -17 | 1 | -13 | -10 | -13 | 19 | 31 | 29 | 39 | 46 | |
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SOURCE: Congressional Budget Office. | ||||||||||||
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Third and finally, the budgetary pressures stemming from an aging population
loom just beyond the 2009 horizon. Budget surpluses allow the government
to reduce the amount of debt held by the public and thereby increase national
saving. Increased saving will promote economic growth, which will make
future obligations easier to meet.
1. Congressional
Budget Office, An Analysis of the President's Budgetary Proposals for
Fiscal Year 2000 (April 1999).
PROPOSED USES OF PROJECTED SURPLUSES THROUGH 2009 (In billions of dollars) |
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Mid-Session Review |
Budget Resolution |
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Tax Cuts | -95 | 778 | ||||
Outlays | ||||||
Discretionary | 501 | -180 | ||||
Mandatory | 351 | 4 | ||||
Net interest | 180 | 117 | ||||
Pay Down Debt | 1,959 | 2,178 | ||||
Total Projected Surpluses | 2,896 | 2,896 | ||||
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TEN-YEAR ESTIMATES OF THE PRESIDENT'S MEDICARE PROPOSALS (In billions of dollars) |
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Administration | CBO | |||||
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Benefit Payments | ||||||
Prescription drug benefita | 119 | 168 | ||||
Changes to fee-for-service Medicare | -64 | -48 | ||||
Competitive defined benefit | -9 | -9 | ||||
Subtotal | 46 | 111 | ||||
Transfers from the General Fund | 328 | 328 | ||||
Total | 373 | 439 | ||||
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a. Includes effect on Medicaid. | ||||||
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TOTAL SURPLUSES (In billions of dollars) |
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2000 | 2009 | 2000- 2009 |
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CBO Baseline | 161 | 413 | 2,896 |
CBO Estimate of Mid-Session Review | 140 | 262 | 1,959 |
CBO Estimate of Budget Resolution | 161 | 275 | 2,178 |
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ON-BUDGET SURPLUSES (In billions of dollars) |
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2000 | 2009 | 2000- 2009 |
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CBO Baseline | 14 | 178 | 996 |
CBO Estimate of Mid-Session Review | -7 | 26 | 54 |
CBO Estimate of Budget Resolution | 14 | 39 | 277 |
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DEBT HELD BY THE PUBLIC (In billions of dollars) |
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2000 | 2004 | 2009 | |
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CBO Baseline | 3,473 | 2,584 | 865 |
CBO Estimate of Mid-Session Review | 3,495 | 2,875 | 1,802 |
CBO Estimate of Budget Resolution | 3,473 | 2,761 | 1,584 |
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DEBT HELD BY THE PUBLIC, FISCAL YEARS 2000-2009 |
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PRESIDENT'S PROPOSED USES OF PROJECTED SURPLUSES THROUGH 2009 (In billions of dollars) |
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Administration | CBO | ||||
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Tax Cuts | -87 | -95 | |||
Outlays | |||||
Discretionary | 470 | 501 | |||
Mandatory | 233 | 351 | |||
Net interest | 129 | 180 | |||
Pay Down Debt | 2,171 | 1,959 | |||
Total Projected Surpluses | 2,916 | 2,896 | |||
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