The Economic and Budget Outlook: Fiscal Years 1990-1994. A Report to the Senate and House Committees on the Budget - Part 1
Abstract
The American economy is making almost full use of both its labor force and its capital stock. The latest unemployment rate is 5.3 percent, the lowest level in 14 years, and factories are operating at high levels of capacity. Because these high operating rates threaten to increase inflation, monetary restraint is likely to slow the economy's growth from recent high rates to a more sustainable trend. As a result, further reductions in the federal budget deficit will probably be modest if spending reductions or tax increases do not take place. The budget deficit for 1989 is now estimated by the Congressional Budget Office (CBO) to be $155 billion, about what it was in 1988. Under current budgetary policies, the deficit is projected to decline slowly thereafter--to $141 billion in 1990, $140 billion in 1991, and $122 billion in 1994. These figures exceed by increasing amounts the deficit targets specified in the Balanced Budget Reaffirmation Act of 1987 (Public Law 100-119). CBO's baseline budget projections portray what would happen if current budgetary policies were continued without change. They are not a forecast of future budget outcomes, since the future will include many policy changes. The methodology for the baseline projections follows closely the specifications contained in the Reaffirmation 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 1990 through 1994 are based on the 1989 appropriations, increased only to keep pace with inflation. As a result, the baseline makes no explicit allowance for activities not included in the 1989 appropriations, such as conducting the decennial Census of Population, building the manned space station or the superconducting super collider, renewing long-term subsidized housing contracts that are about to expire, buying more B-2 bombers, or modernizing nuclear weapons plants.
Document Details
- Document Type
- Technical Report
- Publication Date
- Jan 01, 1989
- Accession Number
- ADA531061
Entities
People
- John F. Peterson
- John R. Sturrock
- John Sabelhaus
- Kathleen M. O'connell
- Kathy A. Ruffing
- Mary B. Maginnis
- Paul Cullinan
- Paul N. Van De Water
- Paul T. Christy
- Victoria Farrell
Organizations
- Congressional Budget Office