Number: RS21786
Title: The Federal Budget Deficit: A Discussion of Recent Trends
Authors: Gregg Esenwein, Marc Labonte, and Philip Winters, Government and Finance Division 
Abstract: The federal budget deficit in FY2004 was 3.6% of gross domestic product (GDP). When the influence of economic conditions and temporary factors is excluded from the measurement of budget balances, the FY2004 deficit was 2.6% of GDP. By either measure, the deficit is above the historical average for the last 50 years. The FY2004 deficit represents a dramatic turnaround from the FY2000 surplus of 2.4% of GDP. Most of this turnaround can be traced to a fall in receipts, from a 50-year high of 20.9% of GDP in FY2000 to a 45-year low of 16.3% of GDP in FY2004. In percentage terms, tax cuts accounted for approximately 45% of the decline in the federal budget balance between FY2000 and FY2004. The downturn in the economy and temporary factors were responsible for about 38% of the deterioration in federal finances, while increases in federal outlays as a percentage of GDP were responsible for another 17%.
Pages: 6
Date: March 2, 2005