Deficit Announcement Masks Bigger Story
Long-Term Outlook Remains Bleak
End Notes
[1] See Office of Management and Budget, Mid-Session Review of the Budget for Fiscal Year 2007, July 11, 2006, and Congressional Budget Office, An Analysis of the President’s Budgetary Proposals for Fiscal Year 2007, March 2006. CBO’s March baseline projection of the 2006 deficit under then-current policies was $336 billion. Legislation enacted since then (primarily additional funds for the war in Iraq and an extension of alternative minimum tax relief) has added an estimated $30 billion to the deficit. Thus, CBO’s March projection implied a deficit of $366 billion under the policies that have actually taken effect.
[2] Quoted in David Wessel, “Deficit Progress Will Be Tough to Sustain,” Wall Street Journal, October 7, 2006, page A2.
[3] Our adjustments to CBO’s current-policy baseline projections (including an adjustment to reflect the assumption that emergency appropriations enacted in 2006 will not be repeated in each year through 2016) are based on estimates provided by CBO in Table 1-8 of the Budget and Economic Outlook: An Update.
[4] See Isaac Shapiro, Richard Kogan, and Aviva Aron-Dine, “How Good is the Current Economic Recovery?,” Center on Budget and Policy Priorities, revised October 6, 2006.