The Budget and Economic Outlook: Fiscal Years 2007 to 2016
CONGRESSIONAL BUDGET OFFICE (U S CONGRESS) WASHINGTON DC
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The Congressional Budget Office CBO projects that under current laws and policies, the federal budget will report a deficit of 337 billion in 2006 see Summary Table 1. That estimate is somewhat higher than the 318 billion shortfall recorded in 2005 but about the same in comparison to the size of the nations economy. At 2.6 percent of gross domestic product GDP, this year s deficit would be slightly larger than the 2.3 percent average recorded since 1965. Because of the statutory rules that govern baseline projections, CBO s current estimates omit a significant amount of spending that is likely to occur later this year. In particular, additional funding will probably be necessary in 2006 to pay for military activities in Iraq and Afghanistan and for flood insurance claims. If that funding is provided, CBO expects that outlays will grow by another 20 billion to 25 billion this year, resulting in a deficit in the vicinity of 360 billion, or about 2.8 percent of GDP. CBO s baseline includes spending from the 50 billion that the Congress has appropriated this year for military activities in Iraq and Afghanistan, but more resources are likely to be necessary within a few months. The baseline also includes the effect of legislation dealing with disaster relief, flood insurance, and other programs that were funded in the aftermath of Hurricane Katrina and other storms. Such legislation will add an estimated 47 billion in outlays during 2006 hurricane-related tax relief will reduce revenues by an estimated 7 billion this year. But paying all claims expected under the federal flood insurance program could require a few billion dollars of additional funding for that program. Furthermore, the pending spending reconciliation act, if signed into law, would reduce the deficit by about 5 billion in 2006.
- Economics and Cost Analysis
- Military Forces and Organizations