The Administration foresees a steady improvement of the federal government's fiscal position, including a surplus of $29 billion in FY2013, the last year projected, although the FY2013 on-budget deficit, which excludes Social Security surpluses, is projected at $201 billion. Administration projections omit all costs of wars in Afghanistan and Iraq beyond FY2008 aside from a $70 billion supplemental request. Federal deficits are projected to rise rapidly after FY2020. Major Administration proposals include extensions of the expiring tax cuts, limited increases in domestic discretionary spending, and halting the expanding reach of the alternative minimum tax (AMT) for calendar 2008, but not for later years. Medicare and Medicaid are expected to grow more slowly than in recent years. 70 and H.Con.Res. The House passed its budget resolution on March 13 by a 212 to 207 vote, and the Senate passed its version in the early hours of March 14 by a 51 to 44 vote. The budget conference report, H.Rept. 70 conference report on a 48-45 vote, and the House passed it the next day on a 214-210 vote. This analysis included the effects of the Economic Stimulus Act of 2008 ( P.L. 110-185 ), which was projected to raise the FY2008 budget deficit by $152 billion and the FY2009 deficit by $16 billion. Administration Projections and Proposals

President Bush's FY2009 budget proposed a permanent extension of most of the 2001 EGTRRA and 2003 JGTRRA tax cuts, as well as extending other expiring tax provisions. Assuming that AMT fixes lapse boosts estimated tax revenues. Congressional Budget Action

On March 7, 2008, the House and Senate Budget Committees reported budget resolutions ( S.Con.Res. 312 ). 110-659 ) was filed on May 20, and on the next day, the House approved H.Res. On June 4, 2008, the Senate passed the S.Con.Res. According to September 2008 CBO projections, federal outlays (aside from the costs of wars in Iraq and Afghanistan) would grow by an additional $295 billion over the FY2009-FY2013 period were discretionary spending to grow at the same rate as the economy. The Administration estimated spending on the national defense function will total $603.7 billion in FY2008 and proposes spending $670.7 billion in FY2009. CBO Revenue Projections

The March 2008 CBO preliminary analysis of the President's FY2009 policy proposals projected slightly lower revenues in FY2008 than the President's budget, in part because the CBO estimate reflected recent fiscal stimulus legislation. Long-term CBO and OMB projections both show substantial increases in budget deficits in the years after FY2020. Administration Deficit Projections

The President's February budget estimated the FY2008 deficit at $410 billion (1.6% of GDP) and a small surplus of $29 billion in FY2013. March 2008 Baseline Projections

In March 2008, CBO released revised current-law baseline projections, which incorporated costs of the Economic Stimulus Act and superceded projections issued in January. The CBO also projected that the President's budget would generate a FY2009 deficit of $342 billion, well above the revised baseline projection of a $207 billion FY2009 deficit. The projected deficit for FY2008 rose to $407 billion and $438 billion for FY2009. The Social Security, Medicare, and Medicaid programs present different challenges to the long-term fiscal position of the federal government.
On February 4, 2008, President Bush sent his fiscal year (FY) 2009 budget to Congress. The President's budget predicted a deficit of $407 billion for FY2008 and $410 billion for FY2009, up from $162 billion in FY2007. The Congressional Budget Office (CBO) estimated the FY2008 deficit would total $396 billion if the President's proposals were enacted, about $39 billion more than the current-law baseline. CBO projected that the President's proposals would generate a FY2009 deficit of $342 billion. Tax rebates and business investment incentives enacted in the Economic Stimulus Act of 2008 (P.L. 110-185), which passed in January, will push up the FY2008 deficit by an estimated $152 billion. CBO estimated the on-budget deficit, which excludes Social Security surpluses, for the President's budget proposals would reach $592 billion in FY2008 and $525 billion in FY2009. Budget and economic estimates issued later in 2008 have been less optimistic.
In February, the Administration foresaw a steady improvement in federal finances, including a surplus of $29 billion in FY2013, the last year projected. The FY2013 on-budget deficit was projected at $201 billion. These projections omitted costs of wars in Afghanistan and Iraq beyond FY2008 aside from a $70 billion supplemental request. Federal deficits are projected to rise rapidly after FY2020. Major Administration proposals include extending expiring tax cuts, limiting domestic discretionary spending, and halting the expanding reach of the alternative minimum tax (AMT) for calendar 2008, but not for later years. Medicare and Medicaid were expected to grow more slowly than in recent years.
The FY2009 budget also discusses long-term fiscal problems. According to longer-term projections from the Administration, CBO, and the Government Accountability Office (GAO), the impending retirement of the baby boom generation and rising health care costs will substantially expand spending on Medicare, Social Security, and Medicaid over the coming decades. The long-term growth of outlays, if left unchanged or if not offset by new revenues, could overwhelm the government's ability to finance its obligations.
September 2008 CBO baseline projections, which incorporate costs of the Economic Stimulus Act and legislation affecting housing policy, veterans' benefits, and unemployment benefits, show a $407 billion deficit in FY2008, a $147 billion deficit in FY2013, and a $135 billion deficit in FY2018. CBO baseline projections assume that key tax cuts enacted in 2001 and 2003 (as well as some others) expire as scheduled, real discretionary spending is fixed, and the AMT is unchanged.
On March 7, 2008, the House and Senate Budget Committees introduced budget resolutions (S.Con.Res. 70 and H.Con.Res. 312). The House passed its budget resolution on March 13 by a 212 to 207 vote. The Senate passed its version the next day. The budget conference report, H.Rept. 110-659, was filed on May 20. The Senate passed the S.Con.Res. 70 conference report on June 4, 2008, and the House passed it the next day. This report will be updated as legislative conditions warrant.