Federal Budget: Current and Upcoming Issues

摘要

The federal budget implements Congress's 'power of the purse.' It expresses Congress's priorities as spending is allocated among competing aims. The Obama Administration's FY2010 budget submission described several important changes, including increased funding for certain domestic priorities, major programmatic reforms, and proposed spending cuts in some programs. Over the past decade, federal spending has accounted for approximately a fifth of the economy (as measured by GDP) and federal revenues have ranged between just under a sixth to just over a fifth of GDP. In FY2008, the U.S. Government collected $2.5 trillion in revenue and spent almost $3.0 trillion. Outlays as a proportion of GDP rose from 18.4% in FY2000 to 21.0% of GDP in FY2008. Federal revenues as a proportion of GDP reached a post-WWII peak of 20.9% in FY2000 and then fell to 16.3% of GDP in FY2004 before rising slightly to 17.7% of GDP in FY2008. The current economic climate continues to pose major challenges to policy makers. Federal spending tied to means-tested social programs rose due to rising unemployment, while federal revenues are projected to fall as individuals' incomes have dropped and corporate profits have sunk. Federal deficits, according to OMB and CBO projections, will likely be high relative to historic norms over the next few years, as spending rises and revenues fall relative to previously anticipated levels. FY2009 outlays rose to $3,522 billion (24.9% of GDP) and revenues fell to $2,105 billion (14.7% of GDP), yielding a total federal deficit of $1,417 billion (10% of GDP). The federal government has undertaken significant financial interventions in an attempt to alleviate economic recession. The final costs of federal responses to this turmoil will depend on how quickly the economy recovers, how well firms with federal credit guarantees weather future financial shocks, and the magnitude of government losses or gains on its asset purchases.