Budget Committee Report on the Declining Surplus
January 11, 2002
A House Budget Committee staff analysis of the federal budget situation finds that 80 percent of the reduction in the surplus next year is due to the combined effects of recession and September 11, and they comprise more than half of the 10-year decline in the projected surplus.
The Congressional Budget Office (CBO) projected in January, 2001 a $359 billion surplus for fiscal 2003. Instead, the federal budget surplus is declining due to a variety of factors:
- Economic and technical changes and projected changes made to the CBO baseline account for a $243 billion reduction in the January surplus estimate.
- An additional $99 billion reduction is assigned to the effects of the Bush tax cut.
- Over 10 years, the Bush tax cut will subtract $1.66 billion from the projected $5.6 trillion ten-year surplus.
The $1.66 trillion is "about equal to the impact of the economic slowdown, and significantly less than the combined effects of the economy and antiterrorist spending," according to the analysis.
Source: "Nussle Says Economy And War Are Responsible For Dwindling Surpluses," White House Bulletin, January 10, 2002; "Most of Surplus Went to Terrorism, Economy," Budget Monitor, January 9, 2002, House Committee on the Budget.
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