# Presentation: 683347

## Mid-Session Budget Status

- Jim Nussle
- Chairman
- House Budget Committee

## OMB Estimates Show Economy Delays Return to Surplus

- Fiscal year 2002 deficit of $165 billion.
- Return to surpluses in fiscal year 2005.
- Almost all of the change in the surplus estimates this year is the result of slower-than-expected revenue collections.
- Return to surpluses contingent on sticking to the policies in the House budget resolution.

- Prepared by the House Budget Committee.

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## OMB Budget EstimatesJuly 2002 Update

|  | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2003-07 |  2003-12 |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Receipts | 1,867 | 2,029 | 2,169 | 2,351 | 2,451 | 2,567 | 11,567 | 26,476 |
| Outlays | 2,032 | 2,138 | 2,217 | 2,298 | 2,390 | 2,483 | 11,526 | 25,649 |
| Surplus | -165 | -109 | -48 | 53 | 60 | 84 | 41 | 827 |

**(By fiscal year in billions of dollars)**

- Prepared by the House Budget Committee.  Figures based on OMB Midsession Policy.

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## Largest Cause of Deficits in

**Largest Cause of Deficits in**
**2002 and 2003 is the Economy**

- Source: House Committee on the Budget.  Figures based on OMB Midsession Policy.

**62%**

**44%**

**2002**

**2003**

**Spending, Incl.**
**Stimulus Package**

**Tax Cut**

**Weak Economy**

**War Costs**

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## Restraining Spending Key to Budget Surpluses

**Restraining Spending Key to Budget Surpluses**
*Taxes as Share of Economy Still High*

- Prepared by the House Budget Committee.  Figures based on OMB Midsession Policy.

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## Continuing Recent Spending Growth

**Continuing Recent Spending Growth**

- Prepared by the House Budget Committee.

- Fiscal Year

- $2.0 Trillion Surplus Reduction

- President’s Budget Path

- Continued 1998-2003 Discretionary Growth of 7.4%

**Surplus**

**Deficits**

- Billions of Dollars

- 2003 is assumed to be level of President’s request.

**Leads to Perpetual Deficits**

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## Democrat Spending Proposals

**Democrat Spending Proposals**

- Prepared by the House Budget Committee.

- Fiscal Year

- President’s Budget Path

- Continued Discretionary Growth of 7.4% a year

**Surplus**

**Deficits**

- Billions of Dollars

- Democrat Calls for Higher Spending

**Would Make Matters Worse**

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## 10-Year Surplus “Estimates”

**Drop Sharply**
***From +$5.6 Trillion Last January to +$1.7 Trillion This July***

**Tax Cut**

**Economy**

**Spending**

**Remaining**
**Surplus**

- Source: House Committee on the Budget.  Figures based on OMB Midsession Baseline.

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## Where Has the Surplus Gone?A Review of the Past 18 Months

|  | 2002 | 2002-11 |
| --- | --- | --- |
| Jan. 2001 Surplus Estimate | 283 | 5,637 |
|   Tax Relief | -41 | -1,491 |
|   Economic Slowdown |  |  |
|      Revenues | -267 | -1,442 |
|      Outlays | -10 | -227 |
|   All Other (Incl. Stimulus) | -115 | -760 |
| July 2002 Surplus Estimate | -150 | 1,717 |

**(By fiscal year in billions of dollars)**

- Prepared by the House Budget Committee.  Figures based on OMB Midsession Baseline.

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## Factors Beyond Our Control Responsible for Surpluses Becoming Deficits 

**Factors Beyond Our Control Responsible for Surpluses Becoming Deficits**** **

- Prepared by the House Budget Committee.  Figures based on OMB Midsession Baseline.

- Billions of dollars

- Unanticipated Changes Total $1 Trillion

- February 2001 Baseline Surplus

- February 2001 less Legislation

- July 2002 Baseline Surplus

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## Importance of Spending Restraint

- The House Budget Resolution assumes that total appropriations will not exceed $759 billion for fiscal year 2003.
- Increased base levels of government spending will make balanced budgets unachievable in the near-term.
- Deficit spending will reverse the progress we have made in paying off the debt.

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## A Record of Accomplishment: $453 Billion in Debt Paid Off Prior to War and Recession

**A Record of Accomplishment: $453 Billion in Debt Paid Off Prior to War and Recession**

**(Cumulative Reduction in Billions of Dollars)**

- 	End of fiscal year reduction in Debt Held by the Public.
- Prepared by the House Budget Committee.  Source: ’98-’01 Actual.

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## Continuing Recent Spending Growth Adds $2 Trillion in Public Debt

**Continuing Recent Spending Growth Adds $2 Trillion in Public Debt**

- Prepared by the House Budget Committee.

- Fiscal Year

- President’s Budget Path

- Continued 1998-2003 Discretionary Growth of 7.4%

- Trillions of Dollars

- 2003 is assumed to be level of President’s request.

- Additional $2 Trillion Public Debt

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