- Over the past 15 years, the federal budget has swung from deficit to surplus and back to deficit again.
- In the late 1990s, Congress obeyed self-imposed budget constraints and a buoyant economy generated rapidly rising revenues, resulting in budget surpluses. A brief recession, tax cuts, two wars, and the expiration of budget rules after 2000 led to falling revenues and rising spending and pushed the budget back into a deficit.
- More recently, federal revenues have rebounded, reducing but not eliminating the deficit. Congress reimposed budgetary constraints on itself in 2007 but failed to obey them, although their mere existence may nonetheless have restrained spending.
- The President's FY2009 Budget proposes to spend $3.1 trillion, supported by revenues totaling $2.7 trillion. That would leave a deficit of $407 billion, roughly a third larger than what is currently predicted for FY2008. Over the subsequent three years, the administration projects that spending will rise just 3.7 percent, less than a fifth of the 21 percent growth of revenues, and that the FY2012 budget will show a $48 billion surplus. The recent softening of the economy has led to a decline in revenues in FY2008, particularly from the corporate income tax. If that trend continues, the projected FY2012 surplus would likely not occur.
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