Number: RS21939
Title: The Magnitude of Changes That Would Be Required to Balance the FY2009 Budget
Authors: Marc Labonte, Government and Finance Division 
Abstract: The budget deficit in FY2009 is projected to be between $198 billion and $407 billion. Mathematically, the budget could be balanced by reducing total spending by 7%-14%, or mandatory spending by 11%-24%, or discretionary spending by 17%-32%, or non-military discretionary spending by 36%-72%, or by raising income tax rates by 14%-31%, or some combination of these options. The budget is unlikely to return to balance "on its own," as some have suggested, because higher growth rates should be incorporated in the projections; research suggests that the revenue estimates of tax cuts are unlikely to be significantly overstated; and the decline in the deficit found in the CBO baseline or President's budget rests on assumptions that differ substantially from what is typically thought of as current policy.
Pages: 6
Date: February 29, 2008