The Great Recession adversely affected federal budget outcomes through revenue declines and spending increases from FY2008 through FY2013. Overview

Each fiscal year Congress and the President engage in a number of practices that influence short- and long-run revenue and expenditure trends. The Congressional Budget Office (CBO) computes current-law baseline projections using assumptions set out in budget enforcement legislation. On the revenue side of the budget, the 2017 tax revision ( P.L. On the spending side, baseline discretionary spending levels are largely constrained by the caps and automatic spending reductions enacted as part of the Budget Control Act of 2011 (BCA; P.L. 112-25 ) and further modified on several occasions, most recently with the Bipartisan Budget Act of 2018 (BBA 2018; P.L. 115-123 ). CBO's current baseline projections, released in April 2018, show rising budget deficits over the next several years. Mandatory spending increases are largely due to the rising cost of Social Security and Medicare programs, and declines in federal revenues. Discretionary spending is controlled by the annual appropriations acts. Changes made in the 2017 tax revision include the following:
temporary modifications (scheduled to expire at the end of tax year 2025) to individual income tax brackets, with a reduction in the top rate from 39.6% to 37%, an increase in the income threshold for the top bracket, and a temporary increase in the individual alternative minimum tax (AMT) exemption; a permanent modification in corporate income tax rates from a graduated rate structure with a top rate of 35% to a flat rate of 21%, and a permanent repeal of the corporate AMT; numerous modifications, mostly temporary, to the tax expenditures available to individual and corporate income tax filers, which include changes made to the standard deduction, the mortgage interest deduction, and the deduction for state and local taxes paid; a temporary (scheduled to expire at the end of tax year 2025) increase in the federal estate and gift tax exclusion; and a permanent shift in the taxation of foreign income from a modified version of a worldwide basis (where all income from U.S. firms earned in other countries is subject to U.S. taxation) to a modified version of a territorial profits basis (where profits are taxed on the basis of the country where they are earned). Before enactment of BBA 2018, the deficit reduction measures established by the BCA were amended by the American Taxpayer Relief Act of 2012 (ATRA; P.L. 112-240 ), the Bipartisan Budget Act of 2013 (BBA 2013; P.L. 113-67 ), and the Bipartisan Budget Act of 2015 (BBA 2015; P.L. 114-74 ). Budget for FY2019

The Trump Administration submitted its FY2019 budget to Congress on February 12, 2018. Deficit Projections in the President's FY2019 Budget

The Trump Administration provided two deficit projections in its FY2019 budget. In FY2019, the Administration projects that the deficit will reach $984 billion (4.7% of GDP). FY2019 Congressional Budget Activity

Following passage of full-year FY2018 appropriations, Congress has turned its attention to the FY2019 budget. The budget committees in the House and Senate each may develop budget legislation as they receive information and testimony from a number of sources, including the Administration, the CBO, and congressional committees with jurisdiction over spending and revenues. Issues related to deficit reduction and the long-term budget outlook may continue to arise in policy discussions. Congress may also choose to modify the statutory debt limit. CBO, GAO, and the Trump Administration agree that the current mix of federal fiscal policies is unsustainable in the long term.
The federal budget is a central component of the congressional "power of the purse." Each fiscal year, Congress and the President engage in a number of activities that influence short- and long-run revenue and expenditure trends. This report offers context for the current budget debate and tracks legislative events related to the federal budget.
After a decline in budget deficits over the past several years, the deficit is projected to increase significantly in FY2019. Enactment of the 2017 tax revision (P.L. 115-97) and the Bipartisan Budget Act of 2018 (BBA 2018; P.L. 115-123) are projected to decrease revenues and increase outlays relative to past years, thus increasing deficits. The Budget Control Act of 2011 (BCA; P.L. 112-25) implemented several measures intended to reduce deficits from FY2012 through FY2021, and deficits declined from FY2012 through FY2015. In its April 2018 forecast, the Congressional Budget Office (CBO) baseline projects that the FY2019 deficit will equal $981 billion (4.6% of GDP), its highest value since the economy was recovering from the Great Recession in FY2012.
The 2017 tax revision and BCA will continue to affect budget outcomes in FY2019 and beyond. Congress may debate amending the BCA as it has in the past through the American Taxpayer Relief Act of 2012 (ATRA; P.L. 112-240), Bipartisan Budget Act of 2013 (BBA 2013; P.L. 113-67), Bipartisan Budget Act of 2015 (BBA 2015; P.L. 114-74), and BBA 2018. The annual appropriations process, the statutory debt limit, and further tax modifications may also draw congressional attention in FY2019. Additionally, Congress may choose to debate structural changes to the federal budget, including reforms to mandatory and discretionary spending programs proposed by the House Committee on Ways and Means and the Trump Administration.
The Trump Administration released its FY2019 budget on February 12, 2018. Proposed policy changes in the budget include increases in discretionary defense spending and relatively large decreases in mandatory spending other than Social Security and Medicare and in nondefense discretionary programs.
Following passage of full-year FY2018 appropriations, Congress has turned its attention to the FY2019 budget. The Budget Committees in the House and Senate each develop budget legislation as they receive information and testimony from a number of sources, including the Administration, the Congressional Budget Office, and congressional committees with jurisdiction over spending and revenues.
Trends resulting from current federal fiscal policies are generally thought by economists to be unsustainable in the long term. Projections suggest that achieving a sustainable long-term trajectory for the federal budget would require deficit reduction. Reductions in deficits could be accomplished through revenue increases, spending reductions, or some combination of the two.