The federal government incurred a budget deficit of $434 billion in the first four months of fiscal year 2010, CBO estimates in its latest Monthly Budget Review, almost $40 billion more than the shortfall recorded in the same period last year. Although spending is lower than it was at this time last year, the deficit is still higher because revenues have fallen by 11 percent.
CBO Blog
Today CBO released a letter to Senator Robert Casey, Jr., in response to questions he asked about policies that could be adopted to increase employment. Specifically, Senator Casey was interested in a policy option to reduce employers payroll taxes for firms that increase their payroll, and how different design elements of this type of policy might affect its impact on employment.
I testified about CBO’s Budget and Economic Outlook to the House Budget Committee yesterday morning and to the Senate Budget Committee this morning. In both testimonies I highlighted several points from the Outlook:
Today CBO released a letter to Congressman Paul Ryan, Ranking Member of the House Budget Committee, analyzing the Roadmap for Americas Future Act of 2010. This legislation, which Congressman Ryan introduced today, would make comprehensive changes to the Social Security program; to federal involvement in health care, including Medicare, Medicaid, and the tax treatment of health insurance; to other federal spending; and to other features of the tax system.
CBO projects that if current laws and policies remained unchanged, the federal budget would show a deficit of $1.3 trillion for fiscal year 2010. At 9.2 percent of gross domestic product (GDP), that deficit would be slightly smaller than the shortfall of 9.9 percent of GDP ($1.4 trillion) posted in 2009. Last year’s deficit was the largest as a share of GDP since the end of World War II, and the deficit expected for 2010 would be the second largest.
What amount of budgetary resources might be needed in the long term to carry out the Administration’s plans for defense that were proposed during 2009? CBO addresses that question in a study prepared at the request of the Chairman and the Ranking Member of the Senate Budget Committee.
Yesterday CBO senior analyst Eric Labs testified before the House Armed Services Committees Subcommittee on Seapower and Expeditionary Forces to discuss the challenges that the Navy is facing in its plans for building its future fleet.
The number of people who will be subject to the alternative minimum tax (AMT) will increase dramatically in 2010 under current law. About 4.5 million taxpayers were affected by the AMT in 2009. That number has been kept relatively small by annual modifications to the AMT rules, but the most recent modifications expired at the end of calendar year 2009.
The number of jobs in the United States has declined almost every month since December 2007. Although nearly all professional forecasters believe that the economy has begun to recover from the recent recession, many also predict that the pace of the recovery will be slow and that unemployment will remain high for several years. Concerns that the economic recovery will be protracted have prompted the consideration of further fiscal policy actions beyond those actions taken over the last year.
After the U.S. government assumed control of Fannie Mae and Freddie Mactwo federally chartered institutions that provide credit guarantees for almost half of the outstanding mortgages in the United StatesCBO concluded that the institutions had effectively become government entities whose operations should be included in the federal budget. In contrast, the Administration, which ultimately determines what is included in the budget, considers Fannie Mae and Freddie Mac to be nongovernmental entities for federal budgeting purposes.