1 (March 23, 2005)

handle is hein.crs/crsaikz0001 and id is 1 raw text is: Order Code RS21756
March 23, 2005
CRS Report for Congress
Received through the CRS Web
The Option of Freezing
Non-defense Discretionary Spending
to Reduce the Budget Deficit
Gregg Esenwein
Specialist in Public Finance
Government and Finance Division
Philip D. Winters
Analyst in Government Finance
Government and Finance Division
Congressional concern over the size of the federal budget deficit has prompted calls
for a reduction in federal expenditures. One proposal would freeze non-defense
discretionary funding at its FY2005 level. Since non-defense discretionary outlays
constitute slightly under 20% of overall federal outlays, limiting their growth would
produce a modest reduction in the federal budget deficit. Congressional Budget Office
(CBO) estimates indicate that freezing non-defense discretionary funding at its FY2005
level would produce a cumulative savings of approximately $147 billion including
reduced interest payments over the FY2006 to FY2010 time period. These savings
would reduce the cumulative baseline budget deficit by approximately 12% over the
period. This report will not be updated.
The Congressional Budget Office's (CBO's) FY2006 budget report shows a large
estimated baseline deficit, $295 billion in FY2006, followed by declining deficits in
subsequent years. Legislative language directs how CBO is to produce its baseline
estimates, such that they estimate the future paths of federal revenues and spending
under current laws and policies.1 Hence these baseline projections of budget deficits do
not include future policy changes, no matter how likely they are to be adopted by
Congress. Examples of such policy changes might include continued funding for the

Congressional Research Service *+ The Library of Congress

1 CBO, Budget and Economic Outlook. Fiscal Years 2006-2015, p. xiii.

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