The Economic and Budget Outlook: An Update
Abstract
The Congressional Budget Office (CBO) projects that, under current taxing and spending policies, the federal budget deficit will approach $200 billion in 1990 and will average almost $160 billion over the next five fiscal years. These projections, however, do not include sufficient resources to resolve the hundreds of insolvent savings and loan associations whose deposits are federally insured. New legislation will be required to provide for these additional spending needs, which if included would push the projected budget deficit to more than $230 billion in 1991 and 1992. At the request of the Congressional budget negotiators, CBO has based its economic projections on the premise that a substantial multiyear package of deficit reduction measures will be adopted later this year. Under this assumption, CBO expects that the U.S. economy will grow by 2.0 percent in 1990 and by about 2.6 percent a year in 1991 through 1995. The three-month Treasury bill rate is projected to fall from its current level of 7.8 percent to an average of 6.9 percent in 1991 and 5.4 percent in 1995. If significant deficit reduction measures of the sort assumed by CBO are not enacted, interest rates are likely to be higher and growth rates are likely to be lower than CBO has projected. CBO's baseline budget projections follow the rules laid down in the Balanced Budget Act. For revenues and entitlement spending, the baseline generally assumes that laws now on the statute books will continue. For defense and nondefense discretionary spending, the projections for 1991 through 1995 are based on the 1990 appropriations, including supplemental appropriations and rescissions, increased only to keep pace with inflation. The baseline projections provide a benchmark for analyzing alternative deficit reduction proposals.
Document Details
- Document Type
- Technical Report
- Publication Date
- Jul 01, 1990
- Accession Number
- ADA531059
Entities
People
- Douglas R. Hamilton
- Kathy A. Ruffing
Organizations
- Congressional Budget Office