The Congress of the United States O Congressional Budget Office

CBO

The Cyclically Adjusted 

and Standardized

Budget Measures

February 2007

A

PAPER
Notes

Numbers in the text and tables of this report may not add up to totals because of rounding.

Unless otherwise indicated, all of the years referred to are federal fiscal years.

Spreadsheets showing historical values for the variables of the cyclically adjusted and standardized budgets are available at www.cbo.gov. 
Preface

This report offers alternative measures of the budget that incorporate adjustments for 

cyclical and other factors. It is one of a series of reports that the Congressional Budget Office 

(CBO) issues each year to fulfill the requirement of section 202(e) of the Congressional Budget Act of 1974 that CBO submit to the Committees on the Budget periodic reports about 

fiscal policy and provide baseline projections of the federal budget. The report is based 

on information presented in The Budget and Economic Outlook: Fiscal Years 2008 to 2017, 

published in January of this year.

Frank Russek wrote the report, with assistance from Adam Weber, under the supervision 

of John Peterson and Robert Dennis. Christine Bogusz edited the report, and Maureen 

Costantino prepared it for publication. Lenny Skutnik printed the initial copies, and Simone 

Thomas prepared the electronic version for CBO’s Web site (www.cbo.gov).

Peter R. Orszag

Director

February 2007 

Contents

Summary 1

Why Adjust Measures of the Total Budget Deficit or Surplus? 2

The Cyclically Adjusted Deficit or Surplus 3

The Standardized-Budget Deficit or Surplus 4

Appendix: Details of CBO’s Projections of the

Standardized-Budget Deficit 7

Tables

1. Measures of the Federal Budget Deficit, 2003 to 2008 2

A-1. Details of the Standardized-Budget Deficit in Billions of

Dollars, 2003 to 2008 8

A-2. Details of the Standardized-Budget Deficit as a Percentage of

Potential Gross Domestic Product, 2003 to 2008 9

A-3. Details of the “Other Adjustments” to the Standardized

Budget, 2003 to 2008 10

A-4. Standardized-Budget Deficit or Surplus and Related Series in 

Billions of Dollars, 1962 to 2008 11

A-5. Standardized-Budget Deficit or Surplus and Related 

Series as a Percentage of Potential Gross Domestic 

Product, 1962 to 2008 13

Figure

1. Standardized, Cyclically Adjusted, and Total Budget

Deficits or Surpluses 4

The Cyclically Adjusted and 

Standardized Budget Measures

Summary

In January 2007, the Congressional Budget Office 

(CBO) released updated baseline projections of federal 

revenues, outlays, and budget balances for the next 10 

years.1 Those projections are governed by statutory rules 

that require CBO to assume the continuation of current 

laws and policies affecting taxes and mandatory programs 

and to extrapolate the growth of discretionary spending 

by using projected rates of inflation. According to CBO’s 

current projections, if the policies reflected in its January 

2007 report continued, the total budget deficit would 

decrease from $248 billion in 2006 to $172 billion in 

2007 and $98 billion in 2008. Measured relative to the 

size of the economy—that is, as a percentage of gross 

domestic product, or GDP—the total budget deficit 

would be 1.9 percent in 2006, 1.3 percent in 2007, and 

0.7 percent in 2008.

The size of the budget deficit is influenced by temporary 

factors, such as the effects of the business cycle or onetime shifts in the timing of federal tax receipts and spending, and the longer-lasting impact of such factors as tax 

and spending legislation, changes in the trend growth rate 

of the economy, and movements in the distribution and 

proportion of income subject to taxation. To help separate out those factors, this report presents estimates of 

two adjusted budget measures: the cyclically adjusted 

deficit or surplus (which attempts to filter out the effects 

of the business cycle) and the standardized-budget deficit 

or surplus (which removes other factors in addition to 

business cycle effects).

In CBO’s estimation, the cyclically adjusted budget deficit—the total baseline budget deficit minus the effects of 

the business cycle—will decline from 1.8 percent of 

potential GDP in 2006 to 1.1 percent in 2007 and 0.5 

percent in 2008.2 The standardized-budget deficit this 

year is forecast to decline by somewhat less, from 1.8 percent of potential GDP in 2006 to 1.4 percent in 2007, 

but then to decline further to 0.7 percent in 2008 (see 

Table 1). CBO’s projections of the cyclically adjusted and 

standardized budgets extend only through 2008 because 

the economic outlook on which they are based does not 

attempt to predict cyclical movements beyond that point. 

Consequently, projections of the cyclically adjusted budget deficit or surplus beyond 2008 would be very similar 

to CBO’s baseline projections of the total budget deficit 

or surplus. 

Economic output will be somewhat further from its 

potential level in 2007 and 2008 than in 2006, CBO 

projects. Business cycle effects will thus add somewhat 

more to the federal budget deficit in those years. In 2006, 

those estimated cyclical effects accounted for only 3 percent of the total budget deficit, down from 14 percent in 

2004 and 9 percent in 2005. (By comparison, in 2002 

and 2003, they accounted for much larger proportions 

of the total deficit—43 percent and 25 percent, respectively—because of the greater amount of slack in the 

economy in the aftermath of the 2001 recession.) According to CBO’s baseline projections for the economy and 

the budget, cyclical effects will add roughly 13 percent 

and 30 percent to the total budget deficit in 2007 and 

2008, respectively. The additional adjustments that 

underlie the standardized-budget deficit (for shifts in the 

timing of tax receipts and outlays and for other factors)

1. See Congressional Budget Office, The Budget and Economic Outlook: Fiscal Years 2008 to 2017 (January 2007), Summary Table 1.

2. Potential GDP is the level of output that corresponds to a high 

level of resource—labor and capital—use. See the later discussion 

on its use in measuring the cyclically adjusted deficit or surplus.
2 THE CYCLICALLY ADJUSTED AND STANDARDIZED BUDGET MEASURES

Table 1.

Measures of the Federal Budget Deficit, 2003 to 2008

Sources: Congressional Budget Office; Office of Management and Budget.

Notes: Deficits are shown as negative numbers.

* = between -0.05 percent and zero.

a. “Other adjustments” include those made to account for unusually large discrepancies between tax payments and liabilities, swings in collections of taxes on capital gains, changes in the inflation component of the government’s net interest payments, temporary legislative 

changes in the timing of revenues and outlays, receipts from the government’s sale of assets and from auctions of licenses for the use of 

the electromagnetic spectrum, federal outlays for deposit insurance, and contributions from allied nations for Operation Desert Storm 

(which were received in 1991 and 1992).

are also projected to be larger in 2007 and 2008, compared with 2006. CBO estimates that those adjustments, 

which represent 1 percent of the total deficit for 2006, 

will rise to 25 percent in 2007 and 40 percent in 2008, 

raising the standardized deficit in those years.

Why Adjust Measures of the Total

Budget Deficit or Surplus?

Despite some limitations, both conceptual and empirical, 

budget measures that filter out cyclical and other temporary factors are useful in a number of ways. For example, 

some analysts use those measures to discern underlying 

trends in government saving (that is, deficits or surpluses). Others use them to determine in a rough way 

whether the influence of the budget on the growth of real 

(inflation-adjusted) aggregate demand in the short run is 

positive or negative. More generally, those measures provide estimates of the extent to which changes in the budget are caused by movements of the business cycle and 

thus are likely to prove temporary. 

Drops in revenues and increases in outlays occur automatically during a cyclical downturn and then reverse 

themselves during a cyclical upturn. The cyclically 

adjusted deficit or surplus is calculated to show the 

underlying outcome of the federal budget balance when 

those automatic movements are removed. (The cyclical 

contribution—the difference between the total budget 

deficit or surplus and the cyclically adjusted deficit or 

surplus—is sometimes used as a measure of the so-called 

automatic stabilizers, which mitigate the decline of real 

income in recessions and dampen its growth in booms.)3

2003 2004 2005 2006 2007 2008

Total Budget Deficit -378 -413 -318 -248 -172 -98

Minus: Cyclical Contribution -95 -56 -30 -8 -23 -30 ___ ___ ___ ___ ___ ___

Equals: Cyclically Adjusted Deficit -282 -357 -288 -240 -149 -68 

Plus: Other Adjustmentsa 6 71 51 -2 -42 -39 ___ ___ ___ ___ ___ ___

Equals: Standardized-Budget Deficit -276 -286 -237 -242 -192 -108

Total Budget Deficit -3.4 -3.5 -2.6 -1.9 -1.3 -0.7

Minus: Cyclical Contribution -0.9 -0.5 -0.2 -0.1 -0.2 -0.2 ___ ___ ___ ___ ___ ___

Equals: Cyclically Adjusted Deficit -2.5 -3.1 -2.3 -1.8 -1.1 -0.5 

Plus: Other Adjustmentsa 0.1 0.6 0.4 * -0.3 -0.3

___ ___ ___ ___ ___ ___

Equals: Standardized-Budget Deficit -2.5 -2.4 -1.9 -1.8 -1.4 -0.7

Actual Projected

In Billions of Dollars

As a Percentage of Potential Gross Domestic Product

3. Those stabilizers are the automatic decline or increase in tax liabilities and the increase or decrease in transfers to individuals (such 

as unemployment insurance benefits) that occur during economic 

downturns or upturns.
THE CYCLICALLY ADJUSTED AND STANDARDIZED BUDGET MEASURES 3

Policy actions such as tax or spending legislation create 

changes in the total budget deficit or surplus that are 

distinct from the automatic cyclical movements. Those 

legislative changes result in movements in the cyclically 

adjusted deficit or surplus in the same way that they 

affect the unadjusted total budget deficit or surplus. 

Under the rules governing CBO’s baseline, however, 

possible future legislation has no effect on either budget 

measure.

Other factors that affect taxes and spending but that are 

not directly connected with changes in policy may also 

alter cyclically adjusted measures of revenues or spending. 

For example, increases or decreases in receipts from capital gains taxes, which may be caused by movements in the 

stock market, raise or lower cyclically adjusted revenues 

just as they raise or lower total budget revenues. Changes 

in capital gains tax receipts are not treated as cyclical factors and therefore are not removed from the cyclically 

adjusted budget measure because those receipts are not 

closely tied to the business cycle. Similarly, the measure 

does not remove the effects of certain explicit budgetary 

decisions that produce temporary changes—sometimes 

of only a few days’ duration—in the timing of tax receipts 

or government spending. Such actions may be viewed 

more as accounting decisions than as changes in policy. 

CBO calculates a different measure, the standardizedbudget deficit or surplus, that attempts to remove those 

factors as well as the effects of the business cycle. For 

example, that measure removes capital gains tax revenues 

and the effects of budgetary decisions that only temporarily change the timing of revenues or outlays. As a 

result, the standardized-budget deficit or surplus is the 

more speculative of the two measures presented here. 

The Cyclically Adjusted Deficit or 

Surplus 

Calculations of cyclically adjusted budget measures 

attempt to remove the effects of the business cycle on revenues and outlays (that is, the cyclical part of the budget). 

For example, calculations of cyclically adjusted revenues 

exclude estimates of the revenue losses or gains that automatically occur during a recession or boom. Likewise, calculations of cyclically adjusted outlays exclude estimates 

of the increases or reductions in spending that attend a 

rise or fall in unemployment. The difference between 

those two measures is the cyclically adjusted deficit or 

surplus.

CBO’s estimates of the cyclical component of revenues 

and outlays depend on the gap between actual GDP and 

potential GDP.4

 Thus, different estimates of potential 

GDP will produce different estimates of the size of the 

cyclically adjusted deficit or surplus.5

CBO estimates that under the laws in place as of January 

2007, the cyclically adjusted deficit will decrease from 1.8 

percent of potential GDP in 2006 to 1.1 percent in 2007 

and 0.5 percent in 2008 (see Figure 1). As a percentage of 

potential GDP, the cyclically adjusted deficits projected 

for 2007 and 2008 would be the smallest since 2002, 

when it amounted to 0.8 percent.

The effect of the business cycle on the budget deficit or 

surplus is measured by the cyclical contribution—the difference between the total budget deficit or surplus and 

the cyclically adjusted deficit or surplus. In 2000, the 

cyclical contribution amounted to a surplus of 1.0 percent of potential GDP, which indicated that the economy 

was temporarily augmenting the total budget surplus by a 

significant amount. By 2002, the cyclical contribution 

had turned negative, reaching 0.6 percent of potential 

GDP—which meant that the economy, in operating 

below its potential, was adding to the total budget deficit. 

A string of negative but diminishing contributions persisted up to 2006, falling from 0.9 percent to 0.1 percent 

of potential GDP between 2003 and 2006. Cyclical contributions will remain negative in 2007 and 2008, CBO 

projects, but they will be slightly larger than in 2006, 

increasing the deficit in each year by roughly 0.2 percent 

of potential GDP.

In its annual report on the budget and the economy, 

CBO presents estimates (or “rules of thumb”) that specify 

how the budget would respond if certain economic 

assumptions were changed.6 The estimates of the cyclical 

contribution presented here differ from those that would 

4. For CBO’s method of estimating potential GDP, see Congressional Budget Office, CBO’s Method for Estimating Potential Output: An Update (August 2001). See the Web site (www.cbo.gov) 

for CBO’s current estimate of potential output.

5. For a discussion of the relationship between the cyclically adjusted 

budget and potential GDP, see Congressional Budget Office, The 

Budget Adjusted for Effects of the Business Cycle (July 1999). See also 

Congressional Budget Office, A Summary of Alternative Methods 

for Estimating Potential GDP (March 2004).

6. See Congressional Budget Office, The Budget and Economic Outlook: Fiscal Years 2008 to 2017 (January 2007), Appendix B.
4 THE CYCLICALLY ADJUSTED AND STANDARDIZED BUDGET MEASURES

Figure 1.

Standardized, Cyclically Adjusted, and 

Total Budget Deficits or Surpluses

(Percentage of potential gross domestic product)

Sources: Congressional Budget Office; Office of Management and 

Budget.

Notes: The shaded vertical bars indicate periods of recession. A 

recession extends from the peak of a business cycle to its 

trough. 

The dashed vertical line separates actual from projected 

data. 

be obtained by using the rules of thumb. The rule-ofthumb estimates attempt to capture the budgetary effects 

of sustained changes in the rate of growth of GDP and 

other economic variables, whereas the estimates presented 

in this report are meant to filter out temporary cyclical 

fluctuations.

Economic research suggests that fundamental changes in 

the economy occurred in the early 1980s that may have 

resulted in fewer and milder cyclical movements in the 

economy.7 For instance, in the first 37 years after World 

War II, there were 8 recessions; whereas in the 25 years 

since 1982, there have been just 2 recessions—each of 

them milder than average.

A more stable economy since the early 1980s has tended 

to reduce budget swings that stem from business cycles. 

For example, the cyclical component went from reducing 

the budget deficit by 1.1 percent of potential GDP in 

1973 to raising the deficit by 1.4 percent of potential 

GDP in 1975. The back-to-back recessions of 1980 and 

1981–1982 widened the budget deficit even more. By 

contrast, the swings in the cyclical contributions to the 

deficit in the 1990–1991 and 2001 recessions were much 

smaller. 

The Standardized-Budget Deficit or 

Surplus

CBO routinely calculates another adjusted budget measure, the standardized-budget deficit or surplus. That 

measure excludes the effects of cyclical fluctuations and 

of factors that are short-lived and unlikely to significantly 

affect real income in the short term.8 Those factors 

include unusually large discrepancies between tax payments and liabilities, swings in collections of capital gains 

taxes, changes in the inflation component of the government’s net interest payments, temporary legislative 

changes in the timing of revenues and outlays, receipts 

from the government’s sale of assets and auctions of 

licenses for use of the electromagnetic spectrum, and 

federal outlays for deposit insurance. 

A substantial discrepancy between tax payments and liabilities emerged most recently in 2003, when estimated 

and withheld tax payments were reduced for only about 

half of the year, even though the Jobs and Growth Tax 

Relief Reconciliation Act lowered tax liabilities for all 

of the year. The discrepancy, which CBO estimates at 

$20 billion, meant that taxpayers generally expected to 

receive larger refunds (or to make smaller final settlements) in the spring of 2004 and might have adjusted 

their 2003 spending plans as a result. Accordingly, in calculating the standardized budget, CBO treated those 

overpayments in 2003 (and similar discrepancies between 

tax payments and liabilities that occurred in the past) as if 

they affected only the timing of tax payments and not 

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005

4

2

0

-2

-4

-6

-8

Total 

Cyclically

Adjusted

Standardized 

7. Greater macroeconomic stability appears to stem from a variety of 

interrelated causes—changes in the conduct of monetary policy; 

structural changes in the economy (such as increased competition, 

the use of information technology, financial market innovations, 

and reduced economic regulation); and, perhaps, a reduction in 

shocks to the world economy. For a discussion of these arguments, 

see Congressional Budget Office, The Economic Effects of Recent 

Increases in Energy Prices, Chapter 3 (July 2006); and Economic 

Volatility, statement of Peter R. Orszag, Director, before the 

Committee on Ways and Means, House of Representatives 

(January 31, 2007).

8. See Congressional Budget Office, The Standardized Budget: 

Revised Historical Estimates (June 2000).
THE CYCLICALLY ADJUSTED AND STANDARDIZED BUDGET MEASURES 5

perceived after-tax income. That adjustment removed 

the overpayments from standardized revenue totals for 

2003 and reduced refunds (thus increasing standardized 

revenues) in 2004 by the same amount.

CBO removes capital gains tax receipts from the standardized budget for two reasons. First, removing those 

tax receipts avoids the misleading effects that may arise, 

for example, when a cut in the tax rate on capital gains 

temporarily encourages investors to realize taxable gains 

by enough to increase revenues. If capital gains taxes 

were included, that rise in revenues would cause the 

standardized-budget measure to indicate—incorrectly—

that a lowered tax rate could increase the tax burden and 

thus reduce the growth of real income in the short term. 

Second, although capital gains tax receipts move up and 

down over the business cycle, they are not tied closely 

enough to the business cycle to be fully captured by the 

cyclical adjustments to revenues. 

CBO also removes changes in the inflation component of 

net interest from its calculation of the standardized budget. That component reflects the effect of inflation on the 

value of outstanding federal debt and does not add to or 

subtract from real income.

Legislation sometimes temporarily shifts the timing of 

receipts or outlays (usually from the end of one fiscal year 

to the beginning of the next). CBO excludes those small 

timing shifts from the standardized budget because they 

are unlikely to significantly alter people’s perception of 

their real income. In addition, CBO excludes receipts 

from the government’s sale of assets and from auctions of 

licenses to use the electromagnetic spectrum. Those 

transactions are voluntary exchanges of existing assets 

that have little or no effect on private net worth or on the 

growth of real income. CBO also removes outlays for 

deposit insurance because their effects on real income 

occurred in earlier years (when various thrift institutions 

failed).

CBO projects that in 2007, under current laws and policies, the ratio of the standardized-budget deficit to potential GDP will fall by 0.5 percentage points, compared 

with a decline in the ratio for the cyclically adjusted deficit of 0.7 percentage points. The difference between the 

movements in the two measures reflects the adjustments 

to the standardized-budget deficit for factors other than 

the business cycle. In 2008, the ratio of the standardizedbudget deficit to potential GDP and the ratio of the 

cyclically adjusted deficit to potential GDP will both fall 

by 0.6 percentage points, CBO projects. 

Appendix: 

Details of CBO’s Projections of the 

Standardized-Budget Deficit

The standardized-budget deficit amounted to 1.8 percent of potential gross domestic product, or potential 

GDP, in 2006, which is almost the same as in 2005, and 

roughly 1⁄2 percentage point smaller than in 2003 and 

2004 (see Tables A-1 and A-2). An increase in the ratio of 

standardized revenues to potential GDP, from 17.0 percent to 17.7 percent, was offset by a rise in standardized 

outlays, from 18.9 percent to 19.5 percent. The rise in 

standardized revenues was about the same as the rise in 

cyclically adjusted revenues, but the rise in standardized 

outlays was somewhat larger than the increase in cyclically adjusted outlays. 

The larger rise in standardized outlays compared with

cyclically adjusted outlays was mainly due to two factors. 

First, some standardized outlays were shifted from 2005 

into 2006 to reverse an acceleration of actual payments 

from 2006 into 2005 for Supplemental Security Income, 

veterans’ benefits, and Medicare payments for managed 

care. The other major factor was a decline in the inflation 

component of interest payments between 2005 and 

2006. 

Under the assumptions incorporated in the Congressional Budget Office’s (CBO’s) baseline projections for 

January 2007, which reflect past but not future legislation, the ratio of the standardized-budget deficit to 

potential GDP is forecast to decrease in 2007 by 0.5 percentage points and by 0.6 percentage points in 2008. For 

2007, CBO projects that the decline in the standardized 

deficit will be about equally attributable to a rise in standardized revenues and a fall in standardized outlays. The 

decline in standardized outlays, in turn, largely reflects a 

decrease in cyclically adjusted outlays that is partly offset 

by a further decline in the inflation component of interest 

payments. The combined effects of timing and other 

adjustments to mandatory spending are relatively small. 

The larger decline in the standardized deficit in 2008 is 

mostly due to stronger growth in standardized revenues.

The decrease in the standardized-budget deficit of 

1.1 percentage points of potential GDP that CBO anticipates from 2006 to 2008 is slightly smaller than the 

1.4-percentage-point projected decline in the cyclically 

adjusted deficit. That difference reflects the various 

adjustments that are specific to the standardized budget 

(see Table A-3). Those adjustments are very small in 

2006 but are roughly 0.3 percent of potential GDP in 

both 2007 and 2008. That change is basically due to a 

smaller adjustment for the inflation component of interest payments. 

Historical estimates of the standardized-budget measures 

and related series are presented in Tables A-4 and A-5. 
8 THE CYCLICALLY ADJUSTED AND STANDARDIZED BUDGET MEASURES

Table A-1.

Details of the Standardized-Budget Deficit in Billions of Dollars, 2003 to 2008

Sources: Congressional Budget Office; Office of Management and Budget.

Notes: The cyclical contribution to revenues is negative when actual gross domestic product (GDP) is less than potential GDP. The cyclical 

contribution to mandatory spending is positive when the unemployment rate is higher than the natural rate of unemployment. The 

cyclical contribution to the budget deficit equals the cyclical contribution to revenues minus the cyclical contribution to mandatory 

spending. (No cyclical adjustment is estimated for discretionary spending or interest payments.)

Deficits are shown as negative numbers.

* = between -$500 million and zero.

a. “Other adjustments” to the total deficit comprise “other adjustments” to revenues minus the sum of “other adjustments” to mandatory 

spending, the “timing adjustment” to discretionary spending, and the “inflation adjustment” to interest payments.

2003 2004 2005 2006 2007 2008

Budget 1,783 1,880 2,154 2,407 2,542 2,720

Minus: Cyclical contribution -79 -47 -32 -13 -27 -29

Equals: Cyclically adjusted 1,862 1,928 2,186 2,420 2,569 2,749

Plus: Other adjustments -65 -42 -88 -106 -106 -105

Equals: Standardized 1,797 1,886 2,098 2,314 2,463 2,644

Budget 1,182 1,237 1,321 1,411 1,455 1,533

Minus: Cyclical contribution 16 9 -2 -6 -4 1

Equals: Cyclically adjusted 1,165 1,229 1,322 1,417 1,460 1,533

Plus: Other adjustments 6 7 -2 16 24 23

Equals: Standardized 1,172 1,236 1,320 1,433 1,484 1,556

Budget 825 895 968 1,016 1,024 1,034

Plus: Timing adjustment 0 0 -4 * 4 0

Equals: Standardized 825 895 964 1,016 1,028 1,034

Budget 153 160 184 227 235 250

Plus: Inflation adjustment -77 -120 -133 -120 -92 -89

Equals: Standardized 76 41 51 107 143 161

Budget -378 -413 -318 -248 -172 -98

Minus: Cyclical contribution -95 -56 -30 -8 -23 -30

Equals: Cyclically adjusted -282 -357 -288 -240 -149 -68

Plus: Other adjustmentsa 6 71 51 -2 -42 -39

Equals: Standardized -276 -286 -237 -242 -192 -108

Actual Projected

Revenues

Mandatory Spending Less Offsetting Receipts

Discretionary Spending

Interest Payments

Total Deficit
APPENDIX DETAILS OF CBO’S PROJECTIONS OF THE STANDARDIZED-BUDGET DEFICIT 9

Table A-2.

Details of the Standardized-Budget Deficit as a Percentage of Potential 

Gross Domestic Product, 2003 to 2008

Sources: Congressional Budget Office; Office of Management and Budget.

Notes: The cyclical contribution to revenues is negative when actual gross domestic product (GDP) is less than potential GDP. The cyclical 

contribution to mandatory spending is positive when the unemployment rate is higher than the natural rate of unemployment. The 

cyclical contribution to the budget deficit equals the cyclical contribution to revenues minus the cyclical contribution to mandatory 

spending. (No cyclical adjustment is estimated for discretionary spending or interest payments.)

Deficits are shown as negative numbers.

* = between -0.05 percent and 0.05 percent. 

a. “Other adjustments” to the total deficit comprise “other adjustments” to revenues minus the sum of “other adjustments” to mandatory 

spending, the “timing adjustment” to discretionary spending, and the “inflation adjustment” to interest payments.

2003 2004 2005 2006 2007 2008

Budget 16.1 16.1 17.4 18.4 18.5 18.9

Minus: Cyclical contribution -0.7 -0.4 -0.3 -0.1 -0.2 -0.2

Equals: Cyclically adjusted 16.8 16.5 17.7 18.5 18.7 19.1

Plus: Other adjustments -0.6 -0.4 -0.7 -0.8 -0.8 -0.7

Equals: Standardized 16.2 16.1 17.0 17.7 17.9 18.4

Budget 10.7 10.6 10.7 10.8 10.6 10.7

Minus: Cyclical contribution 0.1 0.1 * * * *

Equals: Cyclically adjusted 10.5 10.5 10.7 10.8 10.6 10.6

Plus: Other adjustments 0.1 0.1 * 0.1 0.2 0.2

Equals: Standardized 10.6 10.6 10.7 10.9 10.8 10.8

Budget 7.4 7.7 7.8 7.8 7.5 7.2

Plus: Timing adjustment 0 0 * * * 0

Equals: Standardized 7.4 7.7 7.8 7.8 7.5 7.2

Budget 1.4 1.4 1.5 1.7 1.7 1.7

Plus: Inflation adjustment -0.7 -1.0 -1.1 -0.9 -0.7 -0.6

Equals: Standardized 0.7 0.3 0.4 0.8 1.0 1.1

Budget -3.4 -3.5 -2.6 -1.9 -1.3 -0.7

Minus: Cyclical contribution -0.9 -0.5 -0.2 -0.1 -0.2 -0.2

Equals: Cyclically adjusted -2.5 -3.1 -2.3 -1.8 -1.1 -0.5

Plus: Other adjustmentsa 0.1 0.6 0.4 * -0.3 -0.3

Equals: Standardized -2.5 -2.4 -1.9 -1.8 -1.4 -0.7

Actual Projected

Revenues

Mandatory Spending Less Offsetting Receipts

Discretionary Spending

Interest Payments

Total Deficit
10 THE CYCLICALLY ADJUSTED AND STANDARDIZED BUDGET MEASURES

Table A-3.

Details of the “Other Adjustments” to the Standardized Budget, 2003 to 2008

Sources: Congressional Budget Office; Office of Management and Budget.

Notes: The adjustments to spending in this table have the opposite sign from the corresponding adjustments in Tables A-1 and A-2 because 

the adjustments in this table sum to show the total effect on the deficit.

* = between -$500 million and $500 million; ** = between -0.05 percent and 0.05 percent.

2003 2004 2005 2006 2007 2008

-50 -61 -84 -103 -109 -105

6 -1 -5 -3 3 0

-20 20 0 0 0 0

-1 -2 -1 -1 -2 -3

-5 -5 -6 -7 -7 -9

0 0 * * -14 -10

0 0 9 -8 -1 -1

0 0 4 * -4 0

77 120 133 120 92 89

__ ___ ___ ___ ___ ___

Total 6 71 51 -2 -42 -39

-0.5 -0.5 -0.7 -0.8 -0.8 -0.7

**   **  ** 0

-0.2 0.2 0 0 0 0

  **  **  

**  ** ** -0.1 -0.1 -0.1

0 0   -0.1 -0.1

0 0 0.1 -0.1 **  **

0 0   **  0

0.7 1.0 1.1 0.9 0.7 0.6

___ ___ ___ ___ ___ ___

Total 0.1 0.6 0.4 ** -0.3 -0.3

Inflation adjustment

Timing adjustment

Discretionary Spending

Timing adjustment

Interest Payments

Mandatory Spending Less Offsetting Receipts

Deposit insurance

Asset sales

Spectrum auctions

Revenues

Capital gains

Timing adjustment

Other

Timing adjustment

Interest Payments

Inflation adjustment

As a Percentage of Potential Gross Domestic Product

Asset sales

Spectrum auctions

Timing adjustment

Discretionary Spending

Timing adjustment

Other

Mandatory Spending Less Offsetting Receipts

Deposit insurance

In Billions of Dollars

Revenues

Capital gains

Actual Projected
APPENDIX DETAILS OF CBO’S PROJECTIONS OF THE STANDARDIZED-BUDGET DEFICIT 11

Table A-4.

Standardized-Budget Deficit or Surplus and Related Series in Billions of Dollars, 

1962 to 2008

Continued

– = +=

1962 -7 -2 -5 1 -4 99 104

1963 -5 -2 -3 * -4 106 110

1964 -6 2 -8 1 -6 109 115

1965 -1 5 -6 1 -5 110 115

1966 -4 13 -17 2 -15 115 130

1967 -9 12 -21 -1 -22 131 153

1968 -25 11 -36 5 -31 140 171

1969 3 14 -11 8 -3 170 173

1970 -3 5 -8 10 2 186 184

1971 -23 -4 -19 9 -10 187 197

1972 -23 * -23 2 -21 199 220

1973 -15 14 -29 8 -21 213 234

1974 -6 10 -16 18 3 251 249

1975 -53 -23 -31 34 3 301 298

1976 -74 -25 -48 14 -35 310 344

1977 -54 -14 -40 19 -21 358 378

1978 -59 1 -60 28 -32 390 422

1979 -41 9 -50 36 -13 446 459

1980 -74 -21 -52 43 -10 523 533

1981 -79 -24 -55 39 -17 606 623

1982 -128 -62 -66 23 -43 655 698

1983 -208 -89 -119 7 -112 653 765

1984 -185 -30 -155 12 -143 673 816

1985 -212 -16 -196 17 -179 723 902

1986 -221 -11 -210 -1 -212 747 959

1987 -150 -12 -137 -19 -156 815 971

1988 -155 8 -163 36 -128 868 996

1989 -153 21 -173 56 -117 937 1,054

StandardizedBudget Cyclically Adjusted

Cyclical Deficit (-) Other

Budget

Deficit (-) Standardized Budget

or Surplus Contribution or Surplus Adjustmentsa or Surplus Revenues Outlays

Deficit (-)
12 THE CYCLICALLY ADJUSTED AND STANDARDIZED BUDGET MEASURES

Table A-4.

Continued

Sources: Congressional Budget Office; Office of Management and Budget.

Note: * = between -$500 million and $500 million. 

a. “Other adjustments” include those made to account for unusually large discrepancies between tax payments and liabilities, swings in collections of taxes on capital gains, changes in the inflation component of the government’s net interest payments, temporary legislative 

changes in the timing of revenues and outlays, receipts from the government’s sale of assets and from auctions of licenses for the use of 

the electromagnetic spectrum, federal outlays for deposit insurance, and contributions from allied nations for Operation Desert Storm 

(which were received in 1991 and 1992).

b. Projected. 

– = +=

1990 -221 10 -231 109 -122 992 1,113

1991 -269 -48 -221 71 -150 1,068 1,219

1992 -290 -62 -228 40 -188 1,124 1,312

1993 -255 -51 -204 11 -193 1,165 1,358

1994 -203 -28 -175 30 -145 1,245 1,390

1995 -164 -17 -147 * -146 1,330 1,477

1996 -107 -19 -88 -8 -96 1,417 1,513

1997 -22 16 -38 -42 -80 1,494 1,574

1998 69 42 28 -66 -38 1,594 1,632

1999 126 68 58 -58 -1 1,661 1,662

2000 236 94 142 -37 105 1,820 1,715

2001 128 17 111 -6 105 1,900 1,795

2002 -158 -68 -90 -36 -126 1,824 1,950

2003 -378 -95 -282 6 -276 1,797 2,073

2004 -413 -56 -357 71 -286 1,886 2,172

2005 -318 -30 -288 51 -237 2,098 2,335

2006 -248 -8 -240 -2 -242 2,314 2,556

2007b -172 -23 -149 -42 -192 2,463 2,655

2008b -98 -30 -68 -39 -108 2,644 2,751

StandardizedDeficit (-) Cyclical Deficit (-) Other Deficit (-)

Budget Cyclically Adjusted Budget

Standardized Budget

or Surplus Contribution or Surplus Adjustmentsa or Surplus Revenues Outlays
APPENDIX DETAILS OF CBO’S PROJECTIONS OF THE STANDARDIZED-BUDGET DEFICIT 13

Table A-5.

Standardized-Budget Deficit or Surplus and Related Series as a Percentage of 

Potential Gross Domestic Product, 1962 to 2008

Continued

– = +=

1962 -1.2 -0.4 -0.8 0.1 -0.7 17.3 18.0

1963 -0.8 -0.3 -0.5 -0.1 -0.6 17.5 18.1

1964 -0.9 0.3 -1.2 0.2 -1.0 17.1 18.0

1965 -0.2 0.7 -0.9 0.2 -0.7 16.3 17.0

1966 -0.5 1.8 -2.4 0.3 -2.0 16.0 18.0

1967 -1.1 1.6 -2.7 -0.2 -2.8 16.9 19.7

1968 -3.0 1.3 -4.3 0.6 -3.7 16.6 20.3

1969 0.4 1.5 -1.2 0.9 -0.3 18.6 18.9

1970 -0.3 0.5 -0.8 1.0 0.2 18.5 18.3

1971 -2.1 -0.3 -1.8 0.9 -0.9 17.1 18.1

1972 -2.0 * -2.0 0.2 -1.8 16.9 18.6

1973 -1.2 1.1 -2.2 0.6 -1.6 16.8 18.4

1974 -0.4 0.7 -1.1 1.3 0.2 17.7 17.6

1975 -3.3 -1.4 -1.9 2.1 0.2 18.6 18.4

1976 -4.1 -1.4 -2.7 0.8 -1.9 17.3 19.2

1977 -2.7 -0.7 -2.0 1.0 -1.0 17.8 18.9

1978 -2.7 0.1 -2.7 1.3 -1.4 17.6 19.0

1979 -1.6 0.4 -2.0 1.5 -0.5 18.0 18.5

1980 -2.7 -0.8 -1.9 1.5 -0.3 18.8 19.2

1981 -2.5 -0.8 -1.8 1.2 -0.5 19.4 20.0

1982 -3.7 -1.8 -1.9 0.7 -1.3 19.2 20.4

1983 -5.7 -2.4 -3.2 0.2 -3.0 17.8 20.8

1984 -4.7 -0.8 -4.0 0.3 -3.6 17.1 20.8

1985 -5.1 -0.4 -4.7 0.4 -4.3 17.3 21.5

1986 -5.0 -0.3 -4.7 * -4.8 16.9 21.6

1987 -3.2 -0.3 -2.9 -0.4 -3.3 17.4 20.7

1988 -3.1 0.2 -3.3 0.7 -2.6 17.4 19.9

1989 -2.9 0.4 -3.2 1.0 -2.2 17.5 19.7

Deficit (-) Cyclical Deficit (-) Other

Budget Cyclically Adjusted

StandardizedDeficit (-)

Budget

or Surplus Contribution or Surplus Adjustments or Surplus a

Standardized Budget

Revenues Outlays
14 THE CYCLICALLY ADJUSTED AND STANDARDIZED BUDGET MEASURES

Table A-5.

Continued

Sources: Congressional Budget Office; Office of Management and Budget.

Note: * = between -0.05 percent and 0.05 percent.

a. “Other adjustments” include those made to account for unusually large discrepancies between tax payments and liabilities, swings in collections of taxes on capital gains, changes in the inflation component of the government’s net interest payments, temporary legislative 

changes in the timing of revenues and outlays, receipts from the government’s sale of assets and from auctions of licenses for the use of 

the electromagnetic spectrum, federal outlays for deposit insurance, and contributions from allied nations for Operation Desert Storm 

(which were received in 1991 and 1992).

b. Projected.

– = +=

1990 -3.9 0.2 -4.0 1.9 -2.1 17.4 19.5

1991 -4.4 -0.8 -3.6 1.2 -2.5 17.6 20.0

1992 -4.5 -1.0 -3.6 0.6 -2.9 17.6 20.5

1993 -3.8 -0.8 -3.0 0.2 -2.9 17.4 20.3

1994 -2.9 -0.4 -2.5 0.4 -2.1 17.7 19.8

1995 -2.2 -0.2 -2.0 * -2.0 18.0 20.0

1996 -1.4 -0.2 -1.1 -0.1 -1.2 18.3 19.5

1997 -0.3 0.2 -0.5 -0.5 -1.0 18.4 19.3

1998 0.8 0.5 0.3 -0.8 -0.4 18.7 19.2

1999 1.4 0.8 0.6 -0.7 * 18.6 18.6

2000 2.5 1.0 1.5 -0.4 1.1 19.3 18.1

2001 1.3 0.2 1.1 -0.1 1.0 18.9 17.9

2002 -1.5 -0.6 -0.8 -0.3 -1.2 17.3 18.5

2003 -3.4 -0.9 -2.5 0.1 -2.5 16.2 18.7

2004 -3.5 -0.5 -3.1 0.6 -2.4 16.1 18.6

2005 -2.6 -0.2 -2.3 0.4 -1.9 17.0 18.9

2006 -1.9 -0.1 -1.8 * -1.8 17.7 19.5

2007b -1.3 -0.2 -1.1 -0.3 -1.4 17.9 19.3

2008b -0.7 -0.2 -0.5 -0.3 -0.7 18.4 19.1 3

Budget Cyclically Adjusted Budget

Standardized Budget

or Surplus Contribution or Surplus Adjustmentsa or Surplus

Deficit (-) Cyclical Deficit (-) Other

Revenues Outlays

StandardizedDeficit (-)