The Federal Budget: Current and Upcoming Issues
LIBRARY OF CONGRESS WASHINGTON DC CONGRESSIONAL RESEARCH SERVICE
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The federal budget is central to Congresss ability to assert its power of the purse. Federal budget decisions express Congresss priorities among competing aims and reinforce Congresss influence on federal policies. The budget also affects, and is affected by, the national economy as a whole. The federal budget over the next few fiscal years will likely face significant challenges to both revenues and outlays as a result of recent turmoil in the economy and financial markets. Making budgetary decisions for the Federal Government is an enormously complex process, entailing the efforts of tens of thousands of staff persons in the executive and legislative branches, totaling millions of work hours each year. The budget process allows the President and Congress to negotiate and refine spending plans for the nations fiscal priorities. The current budget situation is challenging. The federal government faces very large budget deficits, rising costs of entitlement programs, and significant spending on overseas military operations. The enactment of financial intervention and fiscal stimulus legislation designed to alleviate a credit crunch and to bolster the economy will push up the deficit, shifting fiscal burdens into the future. While GDP grew at an estimated annual rate of 2.8 in the third quarter of 2009, perhaps marking an end to the longest post-World War II recession, most forecasters expect unemployment to remain at high levels for the medium term. The Congressional Budget Office CBO projects that the unemployment rate will crest at nearly 10.5 in early 2010, well above some earlier predictions. High unemployment rates would add to government spending through automatic stabilizer programs, such as unemployment insurance and income support programs. The economic downturn has not only pushed federal spending up and revenues down, but also threatens to slow economic growth for the next few years.
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