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1 Curtis S. Dubay & Scott A. Hodge, CBO Forecast Shows Rising Spending Continues to Drive Federal Deficits 1 (2006)

handle is hein.taxfoundation/ffegxz0001 and id is 1 raw text is: TAX(%~m
January 27, 2006
CBO Forecast Shows Rising Spending Continues to Drive Federal Deficits
by Curtis S. Dubay and Scott A. Hodge
Critics of the 2001 and 2003 tax legislation continue to blame those tax cuts for the
deficits plaguing the federal government. Meanwhile, critics of government spending
blame the deficit on a profligate Congress and a President who has signed spending bills
into law that many of his supporters urged him to veto. The anti-spending crowd got new
ammunition recently from the Congressional Budget Office (CBO).
Released January 26, the CBO's new federal budget projections show that the tax cuts
have not prevented tax revenue from growing rapidly. In fact, total tax revenues are
projected to be $2.3 trillion in 2006, which is $321 billion more than in 2001, the last
year of budget surpluses.
One might expect such a revenue surge to eliminate any possibility of a federal deficit,
but spending has grown at an astonishingly rapid pace, 42 percent in the last five years.
As Table 1 below shows, spending has increased $786 billion, which means that for
every additional dollar rolling into federal coffers between 2001 and 2006, $2.45 went
out in new spending.
Since 2001, the budget has gone from a surplus of $128 billion to a deficit estimated at
$337 billion for 2006-a swing of $465 billion, and the White House actually predicts
the deficit will be even higher.
Table 1. Rising Spending Continues to Drive Federal Budget Deficits
Difference  Difference
2001 2006 (e)  ($)      (%)
Revenues        1991  2312       321        16
Outlays         1863  2649       786        42
Deficit(-)/Surplus  128  -337    465 --
Source: Congressional Budget Office

© 2006 Tax Foundation - www.taxfoundation.org

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