CBO Budget Projections Show Growing Economy: Spending Still Out of Control
January 26, 2006
The CBO released The Budget and Economic Outlook: Fiscal Years 2007 to 2016 today. Total tax revenue was $2.15 trillion in 2005. This is about $130 billion more than the tax revenue collected in 2000, the previous record high.
This good news is tempered, however, by continued projections of deficits through 2011. The deficit is projected to reach a high of $337 billion this year.
Many will point to the 2001 and 2003 tax cuts as the culprit for continued deficits, but further analysis shows that rampant spending is driving the persistent budgetary shortfall. Even with revenue pouring into government coffers, deficits remain.
In 2000, CBO projected that total government outlays would be $2.1 trillion in 2006. Today, CBO estimates that outlays will be $2.6 trillion, a $500 billion increase. If spending remained at levels projected in 2000, the government would be looking at an almost $200 billion surplus this year.
In fact, if spending had simply remained at levels projected in 2000, the addition to the national debt from 2001 to 2005, or the accumulated deficits, would have been approximately $238 billion, instead of the $1.3 trillion actually added to the national debt in that time. This is a 5-fold increase.
Tax receipts continue to surge on the back of a growing economy, but the growth in spending will continue to create deficits unless reigned in.