Table Of Content

STUDY The Budget and Economic Outlook: Fiscal Years 2005 to 2014 sy 2008 DISTRIBUTION STATEMENT A Approved for Public Retease Distabutinn Untimited 20040225 132 The Budget and Economic Outlook: Fiscal Years 2005 to 2014 JANUARY 2004 Preface T. ola dscribes che sae of edger and she exsaomy, Wino a sts of repos hae the Congiessonal Brdget ice (CBC? awe rah yearn response race egutement faction 2020 of che Congrainal Budget Acc uf 1574 for CRO to shit the Clnmiees on che Bul pevou epontabuut Disc policy and o> prvi haseine ‘projections ofthe fd! budge: [a accordance wth CBO' manda» provide ipa stays, che epnet makes no recommendations he basclie spending prictions wise popeted by dhe st oF CRO’ Radyo Anas isi- un under the super: of Rober: Surahine, Peer Fotos Jenet Ar, "eom Sale, Ki ‘Cawley, Pl Calan, ofcy Hell nel Jo Anu Vins. Whe weveave einaes were pre anal be the sal f the Ta Anais Divison under the spernion of Thuwss Woedrald, ‘Mark Boot, and Dav! Weines, with asisance from the Jone Conaite on Taxation. (A decile lis oF contributes tthe spending and revenue projections appcas i Appendix G1 “The ecmvanic uilooke was ppated hy the Marroseonomtc Analysis Dison under the Aliecion of Robert Denis Joba K Petison and Rater Argel excel the won mnie forecast and projections, David Braet Ufle Demimga, Trey Foertsh. Douges Hamilton, Jorn Hang, Kia Kavlewok, Marl Lacky Angelo Marca, Shinichi Nishiyama, Benji age, Kank Russe, Reber Shakton, fn Stutck, and Chiropher Willsee esate tured co tbe analysis Te kia Mathis, and Amita Palzval providot sch aie C804 Panel of Bonomic Advitars mamta ge wetson of he eenoni Feat ndering this report. Mess of he pene ae Andere B, Abel, Alen Blader Michal. Boskia, Bary P Rormrch, Dun Cxippeo, Rober G, Deeick, Willan ©. Dudley, Martin Felis, Robt J Gondon, Rrbert. Ha, Allen H. Rf, Willan D. Nordhaus, June Z ‘ONE Rudolph G, Peaner, jms Potula, Rober Rear, Ree Rin, zed Jud Slered, Joho Fer Dail Shel, and Chas Varaesanended the panels uneing st ets Ahn CTY oud advisers prided consid te sauce, hey are not responsible forthe contents of i er [eles Hollen wate the amar, Beary Blom, Sr ural Hen Heys zoe Chapter 1 wich anne Zona Tora Beale, Seny Davis and Ese Schacen, Mac Lasky sem held aur for Chapter 2, Ger Tinare and Chung Howley Seder wrote CChapees 3h asta: om -or Bradley andl Ere Shae, Mark Waath and Thomas Wodwrl wns Chapter 4 Frank Rove and Luk Demsogla wnore Appende A. Fen Higa weve Azpeadie B, Mart Schmit omit Appendix C, Fra use and Bary lon ‘wee Appeac D. Tani ker prepared Appendix F. Ano Faull compiled Append Jeanie Smith praduced the gloisary. Catistine Bogus, Joyne Tings Us Matad John Sheen, ard Christan Speorelned che _port, Manin Cory, Linds Lewis Iai, el Deine Wills assed ints premarin. ‘Mucen Commuting designed the ewer and, wid assistance fom Alt Kea, prepared che ‘poe for publication, Jenny Shuts und Bian Phimmer printed re ii pies Ampere elie, wth lp fan Mara ajuk Porto, pre the clecwonic versions for CROs Vise omg) Dyethy y. asglat Heder Eakin Diseceor Iaauary 2004 Sammy «3 “The ludget Outlook 7 A Rees of 2003-4 “The Concept Behind CROS Baeine Projections Budge Pjztons Under Aterative Seenacos 5 “The Lamg-Tetm Qudoo fer the Bridget 3 ‘Change o he Badger Outonk Since Aogost 2003-9 ‘The Oudook for Ferd Deb 18 ‘aust Fundvand the Badger 2 “The Fonneie Outlook 25 ‘Genie ofthe Foren 23 Producivier Gonth 26 “The orp Gap ancl dhe Composition of Demand Growch 28 aemploysat ofan, and Laer Races 35 The Outlokefor GDP Reyond 2005 39 Taxable Income 42 ‘Change inthe Hesoomic Parecst Since Anguse 2903. 44 ‘The ZI0A Bencard Revnion 29 the Nail neon ‘ad Bradt Acsourae 44 “The Speuing itank 47 Dirstinnary Speudiog 49 Fuvilaae and Other Mandatory Spending 55 Neclawcer 6 ‘The Revenue Onook 72 Revenues by Source 72 Revisions t9 CRO’: Auge Revenue Pajections 73 Reveave Pujcton in Dewalt 77 “The Hie of Expsiug Tax Provisions. 89 1 eRUBsE a epseRNCOFManK ree Sas THK. A B Cc ‘the Uncertaity of Bagel Projections 9 “The Acsuacy af CBO's Pt Badge Proje 97 Aenaive Eeonomie vl Badget Senate 102 ow Changes in Eronomic Assantlons ‘an Ae Badge Projections 103 Lames Read Growth 103) TEgherTaerest Rares 104 Highs fallrlon 704 Federal Facing fre Womelan Security 107° ‘What Holand Seow? 107 oman Secaiy snl the Feder Budget 108 “The Ogpatnenr of Hermcland Secuiey 108 Homeland Seay Actives in Oder Fava Agencies 209 Treads in Homekd Secwry Fonding, 108 Fonsing for 2004 127 “The Treluent of Federal Recipes and Expentiures Ya the Natl hcene and Print Accousts £13 ‘Conceptual Dillecaces Pecween RC IPAE Peder Seco and Federal Badge 123, Difeences in Acconncing fot Major Tronecrinas 124 Novly Revised Tratune of Feder! Vransuctioae nthe NIPAy 19 Presentation ofthe Feder Guvernsznt’s Revs and ‘iepsadnies in the NIPAC 120 ‘o's Eouomie Projeions for 2004 Thenagh 2014 123 ‘Motori Budget Data 127 ‘Gorieibutorsto the Revenue ‘and Spending Projeclons. 143 Glossary 167 il TaexLece wo Temmar oun HL EIS TOES Tiles sa. (Cs Bacline ndget Ooslook 5a, ‘Changes in CBO") Raulne Projestinns nf the Deicie or Sump Soe August 2008 sa (18% sowomicPrfecians fr Calendar Yeas 2004 Threngh 2014 Ma Projected Deficits and Suchen in CU's Beene 2 CHO Buetine Budget Priectioos 13, ‘he Budgeruy Bice of Policy Alternativ ‘Nor Tachi in BD's Baslne 14, Change in GHO's Leelne Pjectons ofthe Defic or Supls Size Aoguse 2008 1. (CRO seine Projections of Federal Debt 16, CRO" Racine tojeions of rust Fund Surge: 2 (C80 Hzonomic Projection for Caen Yeas 2008 Though 2014 22. Comparison of te (p's and CROs Forests for Calendar Your: 2004 and 2905 23. Key Aseumptions in O's Pasiction wf Poeon:al Ouepor 2, (CRO: Curent aad Powious Keonomie Projxtms Thr Galendor Year 2903 Through 2013 #1 CRO’ Pryjesios of Spending Under Frsatine 32. Accroge Ann Races of Gr in Quays nder CO's Brine as Defeose and Nandefense Divsionay Outlays 3A CBO % Basline Projedons of Dicratonaer Spending, Ter Momelund Secuty 35. CRO Pojecnns of Picredonary Spending ‘Under Alrmnsiee Pac 36. (CBOs Racine Projections of Mandarory Spending Including Offettng Receipes a7, Sourcss af Grow ia Mandaeary Spending eS (CO's Paene Projections of Ofering Reeeips copes 38. 3:10 ba, EA, 22. ‘Cane for Mandauny Progeuns Thac CROs Baseline ‘Aanics WU Condnue Beyord Thr Curt (CROs Maine Trojans of Federal Towese Quays [Changes in CHC’s Pojestons of Revemurs ‘Since Auguze 2003 (CRO Pejesons of Revenue (CBOs Projections af Tndividua! Income Tex Peseips snd the NIPA Tac Base Acad and Projected Capital Grins Welcations and Tases (CO's Projections of Soc, Insiranoe"Ta Receipes ad, ‘ke Soca Innance Ts For (CROs Projsions of Sac Ineusince Tae Rests by Source (CO's Projections of Corprate Income" ax Reco ‘snd Tax Bases (CRO Prjeation of tnt Tax Recep, by Ctegney 0% Laue of Ocher Sones of Meee fest of Extending Tox Prodi Uae WAN Beir Pefine 2014 crage Dixence Beoneea C8O's Bl! Projections 1nd Aeuel Ouecomer Since 1981 “Adjusted for SubseoeneLeglation Estimated Flea of Scleced Deonaraic Chang fon CC Baclne budget rojecsons ‘otal ede Retoreces or Husnelead Seouy Fading fut Huansland Sruney hy Agency Relaionsiip of the Bye Ua Bede Secror "e Mesure by she National Income and Proset Assman C904 Yeury Yeas Forest and Projedons Far Calender Your: 2004 Tatcugh 2014 CROs Your Year Fores and Pjestions or Vaal Yous 20H Theagh 2014 “ 6 15 "HEU FINO TINO AL YES ONE Bl Pa, Bs Mo, FA, BS, #r. Ba Bs, Fat, Rovennes, Qntlys Surplus, Delile, and Debt Heli bythe Puli, (962 ne 2008 Bilinns nf dos) Resenurs, Oodsys, Supluss, efi, and Debs Ted ‘the Public, 1962 2003 {Aca percentage of GDP Resenues by Maja Soure, EAS?» 2903, Un bibioas of dol Revenues by Major Sense 1962 ra 2908 ea perennige of GDP; (Outs fir Maju Spending Caregen. 1962 10 2005 ‘As dion oF dears) ‘Ouilag For Major Spending Categories, 1963 x0 2008 (Gav puscenage of CDP) Discrerionary Qutb, 1962 x0 2008 {a billigns of dla) Disirevinmary Outlars 1962 t9 2108 (haa patcenrge oF GDP! Gols for Hinidements and Orter Mandatory Spe ‘962 16 403 (I illons of dela) ‘Ourlays far Encdemses and Other Mandatory Spring, 1962 «9 2003 (Asa percentage af GDPI Surplasee, Dts. Dea, and Related Sere, 1942 202003 Strulandind-budess Suepinert Deficit and Related Sees, 1862 0 3003 (I blions of della Staxdandiet-BudgseSuaples or Defic oul Related Seis, 1962 w 2003 fAsa parcensge of GOP} “Total Reserues and Gneay Share of GDP, 1962 02044 ‘he otal Defic Surplus ava Share of GDP, 1967 w 204 abe Held by the Publics 1940 90 204 vef CDP, abe Subjecs Tit, eter 2002 vo Deter 004 Shel Susy Yaage Fond Surpls (Plungers v0 “i 2 2