November 14, 2001

Where Has All the Surplus Gone?
Fact Sheet

If you cannot access the files through the links, right-click on the underlined text, click "Save Link As," download to your directory, and open the document in Adobe Acrobat Reader.

On November 1, the Center on Budget and Policy Priorities released an analysis of the causes of the shrinkage of the budget surplus in recent months. The analysis is based on new budget estimates that the Senate and House Budget Committees issued in October.

The Center's analysis finds that since the spring, the projected budget surplus has declined by $3 trillion over ten years, with half of this decline being due to last June's tax cut. Another quarter of the decline has been caused by the downturn in the economy and other changes in budget estimates. The final quarter comes from three sources: 1) increases in existing programs, including added defense funding the President requested in June; 2) legislation enacted in response to the terrorist attacks of September 11; and 3) an assumption that Congress will shortly enact $100 billion in economic stimulus legislation. After 2002, the degree to which the decline in the surplus is due to the tax cut becomes larger with each passing year. By 2010, nearly 70 percent of the decline in the projected surplus will be due to the tax cut. The report's findings include:

Figure 1