Mid-Session Review

By Government Printing Office

Book Id: WPLBN0000153777
Format Type: PDF eBook:
File Size: 0.4 MB
Reproduction Date: 2005

Title:	Mid-Session Review
Author:	Government Printing Office
Volume:
Language:	English
Subject:	Government publications, Legislation., Economic & political studies
Collections:	Government Library Collection, Government Printing Office
Historic Publication Date:
Publisher:	Government Printing Office


Citation APA MLA Chicago Printing Office, B. G. (n.d.). Mid-Session Review. Retrieved from http://gutenberg.cc/

Description
Government Reference Publication

Excerpt
Excerpt: When this report was published last year, the nation was in the midst of a recession that, predictably, was already having detrimental effects on the government’s finances. What no one could predict was that just 20 days later, a lethal attack on America would exacerbate the recession and trigger extraordinary military, homeland defense, and repair expenditures that would at least temporarily make an enormous difference in the fiscal outlook. By the February 2002 submission of the Budget for fiscal year 2003, the budgetary effects of the recession and the war on terror were well understood. It was also becoming apparent that the flood of revenue that produced record surpluses in the late 1990s was driven both by underlying economic growth, the traditionally decisive factor, and, in ways not yet fully grasped, by the extraordinary boom in the stock market. The markedly greater dependence of revenues on stock market developments was not yet understood by experts either inside or outside the government. The economic recovery appears to be underway, the one-time costs of recovery are being paid, and the expense of war-fighting abroad and new protective resources at home have been incorporated in budget plans. Taking all these changes into account, the federal government is now projected to spend $165 billion more than it receives in revenues in 2002, up from the $106 billion projected nearly six months ago. Table 1 below comparing February and July estimates shows a return to the pre-recession pattern of surpluses in 2005, and growing surpluses thereafter. Future improvements, however, depend to a significant extent on two key factors: 1) restraint of the recent rapid growth in federal spending; and 2) a resumption of growth in tax payments produced by a stronger economy and a stronger stock market. Moving Forward Amid the Backdrop of War President Bush placed two purposes above all others in his 2003 Budget: Winning the war on terror and restoring the economy to health. On both fronts, initial progress has been encouraging. Military action in Afghanistan has depleted the ranks and greatly weakened the operational capabilities of the terrorists. On the economic front, the nation’s gross domestic product (GDP) grew at an impressive 6.1 percent annual rate in the first quarter of 2002, making the recession both shorter and shallower than most and the early recovery far stronger than assumed in February’s budget. For the future, we can be certain only of the intentions of our adversaries and our own resolve to defeat them. We know neither the length of the conflict nor the budgetary expense of victory. Nor can we be certain the economy will not be weakened by further shocks. To preserve the flexibility to respond to future events while maintaining a fiscal framework that will return the budget to surplus, it is imperative that spending, 2 MID-SESSION REVIEW 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 6 7 8 9 10 11 12 Chart 1. Income Tax Take Still High Despite Tax Relief (Individual Income Taxes as a Percent of GDP) Percent of GDP SOURCES OF CHANGE IN INDIVIDUAL INCOME TAXES (In billions of dollars) 2001 2002 2003 Individual Income Taxes: February 2001 Baseline Estimate 1, 073 1, 103 1, 149 Changes: Tax relief -41 -65 -80 Economic and other changes -38 -165 -105 Current Estimate 994 873 964 Tax Relief Recession Tax relief enacted in 2001 reduced individual income taxes as a share of GDP from an all-time high, but five-year forecasts keep them among the highest levels in U.S. history. especially on programs not related to the primary objectives of the 2003 Budget, be tightly restrained. Emergencies and Response Increase Outlays In late March 2002, President Bush requested that Congress provide an additional $27.1 billion, primarily for our efforts in the war against terror. More than half of this amount would fund the war

Table of Contents
TABLE OF CONTENTS Transmittal Letter List of Tables ...................................................................................................................... iii List of Charts ..................................................................................................................... iv Summary ............................................................................................................................ 1 Economic Assumptions ...................................................................................................... 11 Receipts ............................................................................................................................... 17 Spending ............................................................................................................................. 19 Progress Implementing the President’s Management Agenda ...................................... 23 Summary Tables ................................................................................................................ 41 GENERAL NOTES 1. All years referred to are fiscal years unless otherwise noted. 2. All totals in the text and tables display both on-budget and offbudget spending and receipts unless otherwise noted. 3. Details in the tables and text may not add to totals due to rounding. 4. Web address: http://www.whitehouse.gov/omb/budget