CRS Provides Overview of Federal Budget Debate

The federal budget is central to Congress's ability to exercise its "power of the purse." Each fiscal year Congress and the President undertake a variety of steps intended to set levels of spending and revenue and to make policy decisions. The purpose of this report is to provide an overview and background on the current budget debate. This report will track legislative events related to the federal budget and will be updated as budgetary legislation moves through Congress.

In recent years, policies enacted to restrain spending, along with a stronger economy, have led to reductions in the budget deficit. On August 2, 2011, the President signed into law the Budget Control Act of 2011 (P.L. 112-25). The BCA contained a variety of measures intended to reduce the deficit by at least $2.1 trillion over the FY2012-FY2021 period, along with a mechanism to increase the debt limit. Two subsequent pieces of legislation have modified the BCA since it was enacted -- the American Taxpayer Relief Act of 2012 (ATRA; P.L. 112-240) and the Bipartisan Budget Act of 2013 (BBA; P.L. 113-67). Both pieces of legislation allow for more discretionary spending than was provided under the BCA for FY2013, FY2014, and FY2015. Various deficit reduction measures were included to offset the costs of the changes to spending levels in both ATRA and the BBA. The BCA will continue to affect spending levels in FY2016 and beyond and Congress may debate enacting further changes.

The Obama Administration released its budget for FY2016 on February 2, 2015. If the policies contained within the budget proposal are fully implemented, spending (outlays) would total an estimated $3,999 billion (21.3% of GDP) and revenues an estimated $3,525 billion (18.7% of GDP), resulting in a budget deficit of $474 billion (2.5% of GDP) in FY2016. Over the 10-year window, the proposed budget would reduce the deficit from an estimated 3.2% of GDP in FY2015 to 2.5% of GDP in FY2025, averaging 2.5% of GDP over the next decade.

The President's budget proposes increasing the caps on discretionary spending, originally put in place as part of the BCA. For FY2016, the budget proposes to increase discretionary spending by $74 billion relative to current law, divided between the defense ($37.9 billion) and nondefense ($37.5 billion) categories. The budget also proposes to eliminate the sequester on mandatory programs through FY2024. Deficit reduction is proposed through various changes to the tax code, immigration reform, and other mandatory health programs.

Congressional consideration of the FY2016 budget has already begun. The budget committees in the House and Senate each work to develop a budget resolution as they receive information and testimony from various sources, such as the Administration, CBO, and congressional committees with jurisdiction over spending and revenues. House Budget Committee Chairman Tom Price (R-GA) and Senate Budget Committee Chairman Mike Enzi (R-WY) have stated that they are committed to completing budget resolutions by mid-March and have them ready for consideration and passage by the House and Senate before the end of March.

Though the federal budget deficit has fallen in recent years, CBO, GAO, and the Administration agree that current federal fiscal policies are unsustainable in the long term. Projections indicate that putting the federal budget on a sustainable long-term path will require an agreement on additional deficit reduction. Such an agreement could include increases in revenues, changes to large spending programs, or some combination of the two.

                                Contents

In August 2011, budget negotiations resulted in the enactment of the Budget Control Act of 2011 (BCA; P.L. 112-25), which contained provisions to reduce the budget deficit by about $2 trillion over the next decade. Since that time, various legislative changes to the law have lessened the impact on certain types of federal spending.² However, the long-term costs of federal health care programs and the effects of the baby boom generation's retirement continue to put pressure on the federal budget. Operating these programs in their current form may pass on substantial economic burdens to future generations. Congress and the President may consider proposals for additional deficit reduction if fiscal issues remain a key item on the legislative agenda.

This report will provide an overview of federal budget issues, focusing on recent fiscal policy changes. It will also discuss the major policy proposals contained in the President's FY2016 budget and the House and Senate budget resolutions. Finally, it also addresses major short- and long-term fiscal challenges. This report will track legislative events related to the federal budget and will be updated as budgetary legislation moves through Congress.

Overview

Each fiscal year Congress and the President undertake a variety of steps intended to set levels of spending and revenue and to make policy decisions. This section provides a brief summary of the budget cycle along with an explanation of how budget baselines are constructed. Budget baselines are used to measure how legislative changes affect the budget outlook and are integral to evaluating these policy choices.

Budget Cycle³

A single year's budget cycle takes roughly three calendar years from initial formation by the Office of Management and Budget (OMB) until final audit.⁴ The executive agencies begin the budget process by compiling detailed budget requests in the calendar year before the President's budget submission. Many agencies start working on their budgets during the spring and summer -- about a year and a half before the fiscal year begins. OMB oversees the development of these agency requests. The President submits a budget to Congress, which is based on work by OMB and federal agencies, typically around the first Monday in February or about eight months before the fiscal year begins.⁵

Congress typically begins formal consideration of the budget resolution once the President submits the budget request. The budget resolution sets out a plan, agreed to by the House and Senate, which establishes the framework for subsequent budgetary legislation. Because the budget resolution is a concurrent resolution, it is not sent to the President for approval.⁶

Congress does not always complete action on a budget resolution. In years when Congress is late in adopting, or does not adopt, a budget resolution, the House and Senate independently may adopt "deeming resolution" provisions for the purpose of enforcing certain budget levels.⁷ The last time the House and Senate agreed to a budget resolution was for FY2010. The FY2010 budget resolution was agreed to on April 29, 2009.⁸

House and Senate Appropriations Committees and their subcommittees typically begin reporting discretionary spending bills after the budget resolution is agreed upon. Appropriations Committees review agency funding requests and propose levels of budget authority (BA). Appropriations acts passed by Congress set the amount of BA available for specific programs and activities. Authorizing committees, which control mandatory spending, and committees with jurisdiction over revenues also play important roles in budget decision making.⁹

During the fiscal year, which begins on October 1, Congress and OMB oversee the execution of the budget. Once the fiscal year ends on the following September 30, the Treasury Department and the Government Accountability Office (GAO) begin year-end audits.

Budget Baseline Projections

Budget baseline projections are used to measure how future legislation would affect the budget picture. They are not meant to be predictions of the future budget outlook. Due to the nature of projections, slight changes in assumptions can lead to large effects in out-year totals. Therefore, it is important to understand what projections include and the assumptions on which they are based. Baseline projections are included in both the President's budget and the congressional budget resolution.

The Congressional Budget Office (CBO) computes current law baseline projections using assumptions set out in budget enforcement legislation.¹⁰ Since Congress and the President have resolved certain questions related to expiring tax policy and have enacted specific policies set to control discretionary spending over the next decade, there are fewer policy uncertainties affecting the baseline levels under current law. More specifically, the American Taxpayer Relief Act of 2012 (ATRA; P.L. 112-240; see additional discussion below) permanently set into law many individual tax rates and tax policy provisions. On the spending side, baseline discretionary spending levels are largely constrained by the caps and automatic spending reductions enacted as part of the Budget Control Act of 2011 (BCA; P.L. 112-25) and further modified by the Bipartisan Budget Act (BBA; P.L. 113-67; see additional discussion below).¹¹ In addition to these elements of current law, macroeconomic assumptions, specifically of gross domestic product (GDP) growth, inflation, and interest rates, will also affect the baseline estimates and projections.

The CBO baseline also incorporates policy provisions in current law even though they have historically been revised prior to the policy change actually taking effect. Specifically, the CBO baseline assumes that sharp reductions in Medicare's payment rates for physician services will take effect as scheduled in April 2015 and that certain expired and expiring tax provisions will not be extended.¹² This leads to baseline projections of lower spending and higher revenue levels relative to what some consider likely based on previous policy actions.

The projections in the baseline also contain additional uncertainty, particularly as it relates to future federal borrowing and healthcare costs. Minor changes in the economic or technical assumptions that are used to project the baseline also could result in significant changes in the out-year deficit levels.¹³

Current baseline projections show stable budget deficits over the next several years.¹⁴ These figures represent marked declines in the budget deficit relative to the past few fiscal years. This is primarily due to continued improvements in the economy, restraints on discretionary spending, and certain assumptions used in constructing the baseline (i.e., certain tax provisions will expire as scheduled under current law). These budget deficit levels are projected to result in slight reductions in the level of debt held by the public as a percentage of GDP through FY2018. In other words, these budget deficits would be fiscally sustainable.¹⁵ However, after FY2018, deficit levels are projected to rise again, reaching 3.9% of GDP by FY2022 and 4.0% of GDP by FY2025. Under the baseline assumptions, budget deficits are projected to average 3.3% of GDP over the FY2016 to FY2025 period. (See Table 1 below.)

           Table 1. Selected CBO Baseline Budget Projections

Spending and Revenue Trends

Over the last four decades, on average, federal spending accounted for approximately 20% of the economy (as measured by gross domestic product), while federal revenues averaged roughly 17% of GDP. Since FY2002, spending exceeded revenue in each fiscal year resulting in budget deficits. Between FY2009 and FY2012, spending and revenue deviated significantly from historical averages primarily as a result of the economic downturn and policies enacted in response to financial turmoil. In FY2014, the U.S. government spent $3.5 trillion and collected $3.0 trillion in revenue resulting in a budget deficit of 2.8% of GDP, the smallest imbalance since 2007. The trends in revenues and outlays between FY1970 and FY2014 are shown in Figure 1.

 

Figure 1. Total Outlays and Revenues, FY1970-FY2014

 

 

(as a percentage of GDP)

 

 

 

Federal Spending

Federal outlays are often divided into the broad categories of discretionary and mandatory spending, and net interest.¹⁶ Discretionary spending is controlled by annual congressional appropriations acts. Mandatory spending encompasses spending on entitlement programs and spending controlled by laws other than annual appropriation acts.¹⁷ Entitlement programs such as Social Security, Medicare, and Medicaid make up the bulk of mandatory spending. Congress sets eligibility requirements and benefits for entitlement programs, rather than appropriating a fixed sum each year. Therefore, if the eligibility requirements are met for a specific mandatory program, outlays are made automatically. Net interest comprises the government's interest payments on the debt held by the public, offset by small amounts of interest income the government receives from certain loans and investments.¹⁸

Federal Spending Relative to the Size of the Economy (GDP)

In FY2000, total outlays equaled 17.6% of GDP (the lowest level since FY1966). In FY2009, outlays peaked at 24.4% of GDP. Outlays have fallen steadily since then. In FY2014, total outlays were 20.3% of GDP or equal to the historical average over the last four decades. Under the CBO baseline, total outlays are projected to begin rising again after FY2014 and will reach 22.3% of GDP in FY2025. Figure 2 shows the level of federal spending as a percentage of GDP, broken into the discretionary, mandatory, and net interest categories, between FY2000 through FY2025, as projected in the CBO baseline.

 

Figure 2. Outlays by Type, FY2000-FY2025

 

 

(as a percentage of GDP)

 

 

 

Notes: Data for FY2015 are estimates and data for FY2016-FY2025 are projections under the current law baseline.

In FY2000, discretionary spending totaled 6.1% of GDP. Discretionary spending increased in most years between FY2000 and FY2010 largely as a result of increases in security spending¹⁹ and, more recently, the funding provided in the American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5). Discretionary spending peaked in FY2010 at 9.1% of GDP. In FY2014, discretionary spending totaled 6.8% of GDP. By FY2018, according to CBO's baseline projections, discretionary spending will fall to 5.8% of GDP, its lowest level ever. Discretionary spending in FY2025 is projected to total 5.1% of GDP. The projected decline in discretionary spending in the baseline over the next decade is largely due to the reductions under current law contained in the Budget Control Act.²⁰

Mandatory spending totaled 12.2% of GDP in FY2014, up from 9.4% of GDP in FY2000, as shown in Figure 2. Mandatory spending peaked in FY2009 at 14.5% of GDP. Mandatory spending levels during the FY2009-FY2012 period were elevated mainly because of increases in outlays for income security programs as a result of the recession. The continuing economic recovery has resulted in lower mandatory spending on certain programs. However, mandatory spending is projected to resume its upward trend towards the end of the decade due to increases in certain entitlement programs. As a result, under current law, CBO projects that mandatory spending will total 14.2% of GDP in FY2025, nearly the FY2009 level.

Size of Federal Spending Components Relative to Each Other

In addition to their size relative to the economy, the components of federal spending can also be examined relative to each other. In FY2014, mandatory spending amounted to 59.8% of total outlays, discretionary spending reached 33.6% of total outlays, and net interest comprised the remaining 6.5% of total outlays. The largest mandatory programs, Social Security, Medicare, and the federal share of Medicaid, constituted 49.8% of all federal spending in FY2014. By FY2025, mandatory and net interest spending are projected to increase, thereby reducing discretionary spending's share of total outlays. Mandatory spending is projected to rise to 63.6% of total outlays while discretionary spending's share is projected to fall to 22.9% in that year. Net interest spending is projected to rise to 13.5% of total outlays in FY2025.

Because discretionary spending currently represents roughly one-third of total federal outlays, some budget experts contend that to achieve significant reductions in federal spending, reductions in mandatory spending are needed. Other budget and social policy experts contend that cuts in mandatory spending would cause substantial disruption to many households, because mandatory spending comprises important parts of the social safety net.²¹ Even though the budget deficit has recently been declining, future projections of increasing deficits and resulting high debt levels still warrant further action to restore fiscal health over the long term.²²

Federal Revenue

In FY2014, federal revenue collection totaled 17.5% of GDP, slightly higher than the historical average over the last four decades. Between FY2009 and FY2013, revenue collection was depressed as the result of the economic downturn and certain tax relief provisions. In FY2009 and FY2010, revenue collection totaled 14.6% of GDP.

Policies enacted during the 112^th Congress enhanced certainty with respect to the revenue outlook. The American Taxpayer Relief Act of 2012 (ATRA; P.L. 112-240) permanently extended reduced tax rates for most income groups, while raising tax rates for upper-income households beginning in calendar year 2013.²³ Under the CBO baseline, revenues are projected to total 18.3% of GDP in FY2025.

Individual income taxes have long been the largest source of federal revenues, followed by social insurance (payroll) and corporate income taxes.²⁴ In FY2014, individual income tax revenues totaled 8.1% of GDP. Social insurance tax revenue accounted for 5.9% of GDP, and corporate income tax revenues equaled 1.9% of GDP in FY2014. All other taxes accounted for 1.6% of GDP in FY2014. Figure 3 shows revenue collections between FY2000 and FY2025, as projected in the CBO baseline.

 

Figure 3. Revenue by Type, FY2000-FY2025

 

 

(as a percentage of GDP)

 

 

 

Notes: Data for FY2015 are estimates and data for FY2016-FY2025 are projections under the current law baseline.

Deficits, Debt, and Interest

The annual differences between revenue (i.e., taxes and fees) that the government collects and outlays (i.e., spending) result in the budget deficit (or surplus). Annual budget deficits or surpluses determine, over time, the level of publicly held federal debt and affect the level of interest payments to finance the debt.

Budget Deficits

Between FY2009 and FY2012, annual budget deficits as a percentage of GDP were sharply higher than deficits in any period since FY1945.²⁵ The unified budget deficit in FY2014 was $483 billion, or 2.8% of GDP -- the lowest level since FY2007. The unified deficit, according to some budget experts, gives an incomplete view of the government's fiscal condition because it includes off-budget surpluses.²⁶ Excluding off-budget items (Social Security benefits paid net of Social Security payroll taxes collected and the U.S. Postal Service's net balance), the on-budget FY2014 federal deficit was $513 billion.

Budget Deficit for FY2015

The February 2015 CBO baseline estimated the FY2015 budget deficit at $468 billion or 2.6% of GDP. The decline in the estimated budget deficit for FY2015 is mainly the result of increased revenues due to higher individual income tax collections. Outlays for FY2015 are estimated to be equal as a percentage of GDP to FY2014 levels (though slightly higher in dollar terms).

Federal Debt and Debt Limit

Gross federal debt is composed of debt held by the public and intragovernmental debt.²⁷ Intragovernmental debt is the amount owed by the federal government to other federal agencies, to be paid by the Department of the Treasury. This amount largely consists of money contained in trust funds, such as the Social Security trust fund, that has been invested in federal securities as required by law. Debt held by the public is the total amount the federal government has borrowed from the public and remains outstanding. This measure is generally considered to be the most relevant in macroeconomic terms because it is the debt sold in credit markets.

Changes in debt held by the public generally track the movements of the annual unified deficits and surpluses.²⁸ Whether or not the movements of gross federal debt will follow those of debt held by the public depends on how intragovernmental debt changes.

Historically, Congress has set a ceiling on federal debt through a legislatively established limit. The debt limit also imposes a form of fiscal accountability that compels Congress, in the form of a vote authorizing a debt limit increase, and the President, by signing the legislation, to take visible action to allow further federal borrowing when nearing the statutory limit. Since February 2013, however, three consecutive pieces of legislation have suspended the debt limit accompanied by specific dates upon which the suspension expires. The debt limit is currently suspended as a result of the Temporary Debt Limit Extension Act (P.L. 113-83) through March 15, 2015.²⁹

It should be noted that the debt limit by itself has no effect on the borrowing needs of the government.³⁰ The debt limit, however, can hinder the Treasury's ability to manage the federal government's finances when the amount of federal debt approaches this ceiling or when the suspension expires. In those instances, the Treasury has had to take unusual and extraordinary measures to meet federal obligations, leading to inconvenience and uncertainty in Treasury operations at times.³¹ At the end of FY2014 (September 30, 2014), federal debt subject to limit was approximately $17,824 billion, of which $12,785 billion was held by the public.³²

Net Interest

In FY2014, the United States spent $229 billion or 1.3% of GDP on net interest payments on the debt. What the government pays in interest depends on market interest rates as well as on the size and composition of the federal debt. Currently, low interest rates have held net interest payments as a percentage of GDP below the historical average despite increases in borrowing to finance the debt.³³ Some economists, however, have expressed concern that federal interest costs could rise once the economy fully recovers, resulting in future strain on the budget. Interest rates are projected to gradually rise in the CBO baseline resulting in net interest payments of $827 billion or 3.0% of GDP in FY2025. If interest costs rise to this level, they will be higher than the historical average.

Recent Budget Policy Legislation and Events³⁴

During the 112^th and 113^th Congresses, several legislative actions and events affected the fiscal outlook. In August 2011, negotiations over increasing the debt limit resulted in the enactment of the Budget Control Act of 2011 (BCA). Subsequently, two pieces of legislation have revised this law. First, the American Taxpayer Relief Act of 2012 (ATRA) was enacted in January 2013 to deal with numerous expiring tax provisions, the BCA's across-the-board spending cuts (i.e., sequester), and other short-term considerations that were scheduled to take effect at the very end of 2012 or in early 2013. This combination of policies was referred to by some as the "fiscal cliff." During October 2013, certain activities of the federal government ceased operation (i.e., shutdown) due to a lapse in appropriations.³⁵ Several months after the shutdown, the second piece of legislation modifying the BCA, the Bipartisan Budget Act of 2013 (BBA), was enacted (December 2014). It contained new discretionary spending levels for FY2014 and FY2015 replacing the old levels as prescribed by the BCA. These actions are discussed in more detail below.

Budget Control Act of 2011³⁶

The Budget Control Act of 2011 (BCA; P.L. 112-25) was enacted on August 2, 2011. The BCA contained a variety of measures intended to reduce the deficit by at least $2.1 trillion over the FY2012-FY2021 period, along with a mechanism to increase the debt limit. The deficit reduction provisions included $917 billion in savings from statutory caps on discretionary spending and the establishment of a Joint Select Committee on Deficit Reduction (Joint Committee) to identify further budgetary savings of at least $1.2 trillion over 10 years. Because the Joint Committee was unable to reach an agreement, an automatic spending reduction process was triggered to begin in FY2013. This automatic process was intended to reduce spending levels further in the absence of other legislation to implement these changes.

American Taxpayer Relief Act of 2012³⁷

As the BCA's additional spending reductions were set to take effect in early 2013, the American Taxpayer Relief Act of 2012 (ATRA; P.L. 112-240) was signed into law by President Obama on January 2, 2013. ATRA included a number of spending provisions. First, ATRA postponed the start of the FY2013 BCA automatic spending reductions until March 1, 2013. ATRA also reduced the FY2013 BCA spending reductions implemented via the automatic process by $24 billion (i.e., two months' worth of reductions), to roughly $85 billion equally divided between defense and non-defense. These provisions were offset by other changes in spending or revenue. Other spending changes unrelated to the BCA included an extension of certain unemployment benefits, prevention of reductions in Medicare physician payment rates, and a one-year extension of the 2008 farm bill.³⁸

In addition, ATRA made a variety of changes to tax policy, including the permanent extension of the 2001 and 2003 tax cuts on both ordinary income and capital gains and dividends for taxpayers with taxable income below $400,000 ($450,000 for married taxpayers filing jointly). For taxpayers with taxable income above these thresholds, the marginal tax rate on ordinary income rose from 35% to 39.6% on the portion of their income above these thresholds, and the top tax rate on long term capital gains and dividends rose from 15% to 20%. ATRA also reinstated the personal exemption phase-out (PEP) and limitation on itemized deductions (Pease) for taxpayers with adjusted gross income (AGI) above $250,000 ($300,000 for married couples filing jointly), allowing these limitations to expire for those with AGI below these thresholds. ATRA also extended the tax changes to a variety of tax credits, provided marriage tax penalty relief, and modified certain education-related tax incentives. ATRA also included a permanent "patch" for the alternative minimum tax and provided permanent estate and gift tax rules. Expiring provisions commonly known as "tax extenders" were extended through the end of 2013. The 113 ^th Congress acted in December 2014 to extend most (but not all) provisions that had expired at the end of 2013 by enacting the Tax Increase Prevention Act of 2014 (P.L. 113-295).³⁹

Appropriations and Government Shutdown

On October 1, 2013, the federal government experienced a funding gap and partial shutdown after appropriations to fund many departments and agencies were not enacted by the beginning of FY2014.⁴⁰ The funding gap and associated shutdown ended on October 17, 2013, with the enactment of the Continuing Appropriations Act, 2014 (P.L. 113-46). The act provided interim appropriations through January 15, 2014. As part of the negotiations related to the passage of the Continuing Appropriations Act, the House and Senate agreed to go to conference on the FY2014 budget resolution. On December 9, 2013, Senator Patty Murray and Representative Paul Ryan released an agreement on discretionary spending caps for the remainder of the current fiscal year (FY2014) and the next fiscal year (FY2015), which was later enacted into law as the Bipartisan Budget Act of 2013.

The Bipartisan Budget Act of 2013

The Bipartisan Budget Act of 2013 (BBA; P.L. 113-67) replaced a portion of the BCA's automatic spending process reductions for FY2014 ($45 billion) and FY2015 ($18 billion). These changes allow for more discretionary spending than was provided under the BCA for FY2014 and FY2015. Various deficit reduction measures were included to offset the cost of the increased discretionary spending.

Budget for FY2016

The Obama Administration released its FY2016 budget on February 2, 2015. The President's budget lays out for Congress the Administration's views on national priorities and policy initiatives. Congress has also begun its consideration of the FY2016 budget.

Obama Administration's FY2016 Budget

In his budget for FY2016, President Obama presented his policy agenda. If the policies are fully implemented, spending would total an estimated $3,999 billion (21.3% of GDP) and revenues an estimated $3,525 billion (18.7% of GDP), resulting in a budget deficit of $474 billion (2.5% of GDP). Over the 10-year window, the proposed budget would reduce the deficit from an estimated 3.2% of GDP in FY2015 to 2.5% of GDP in FY2024, averaging 2.5% of GDP over the next decade.

The President's budget proposes a variety of tax and spending measures intended to pay for a number of initiatives. Specifically, the President's budget proposes to increase the caps on discretionary spending, originally put in place as part of the Budget Control Act (BCA). In August 2011, the BCA placed limits on spending via discretionary spending caps and included provisions for additional spending cuts to be implemented via an automatic process. Since the BCA's enactment, Congress and the President have acted to modify the BCA several times, primarily through increases in discretionary spending (for more information see the section titled "Recent Budget Policy Legislation and Events"). For FY2016, the budget proposes to increase discretionary spending by about $74 billion relative to current law, divided between the defense ($38 billion) and nondefense ($37 billion) categories. Figure 4, below, compares the discretionary spending levels in current law to those in the President's budget proposal, before any adjustments.⁴¹ Though the budget cumulatively achieves deficit reduction over the 10-year budget window, it does not identify which policy initiatives specifically offset the proposed increases in the discretionary caps.

 

Figure 4. Discretionary Cap Changes in the President's

 

FY2016 Budget Proposal

 

 

($ billions of budget authority)

 

 

 

Notes: Figures for President Obama's proposal do not include reclassification of certain nondefense spending (i.e., surface transportation and contract support costs) in the amount of $5-$6 billion per year.

The budget also proposes to eliminate the sequester on mandatory programs through FY2024.⁴² The budget offsets the sequester elimination by reducing spending on Overseas Contingency Operations (OCO).⁴³ Additional deficit reduction is proposed through various changes to the tax code,⁴⁴ immigration reform, and other mandatory health programs. Together, these deficit reduction proposals total $1,809 billion relative to the Administration's Adjusted Baseline between FY2016 and FY2025.⁴⁵

Finally, the President's Budget also includes a Cuts, Consolidations, and Savings section that contains proposed changes to 100 discretionary and mandatory programs, which would save approximately $11 billion in FY2016 if enacted.⁴⁶

Deficit Projections in the FY2016 Budget

Consistent with the presentation of previous budgets, the Obama Administration provided three separate deficit projections.⁴⁷ First, OMB projected a Balanced Budget and Emergency Deficit Control Act (BBEDCA) baseline as required by statute. The BBEDCA baseline assumes that discretionary spending remains constant in real (i.e., inflation-adjusted) terms and revenue and mandatory (or direct) spending continue as under current law.⁴⁸ Under this scenario, the FY2016 deficit is projected to total $544 billion.

The Obama Administration also projected an adjusted baseline, which in its view, provides a more transparent and realistic reflection of the federal government's current fiscal situation. This methodology is used to provide a basis for understanding how new policy choices would affect the fiscal outlook, essentially replacing the current BBEDCA baseline. The Administration's adjusted baseline assumes that discretionary spending will be limited by the discretionary caps put in place as part of the Budget Control Act, various tax benefits will be extended, and Medicare payments to physicians will not be reduced under the Sustainable Growth Rate (SGR) formula.⁴⁹ The deficit under this scenario is projected to reach $535 billion in FY2016.

The final deficit projection, the proposed budget, illustrates the impact on the budget outlook if all of the policies proposed in the budget are implemented. In FY2016, the Administration projects that the deficit will reach $474 billion. For FY2015, the budget deficit is estimated to be 2.6% of GDP, or roughly the same level as the budget projects over the next decade. Under the Proposed Budget, the deficit would remain relatively flat throughout the budget window, averaging 2.5% of GDP over the period. (It rises in dollar terms.)⁵⁰

The proposals in the President's budget are projected to result in deficit reduction of $1,809 billion over the next decade relative to the Administration-calculated adjusted baseline.⁵¹ The deficit levels in the proposed budget scenario in the outyears are projected to be lower than both the CBO baseline and the adjusted baseline figures. Figure 5, below, illustrates how the deficit levels in the President's proposed budget compare to current law (CBO baseline) and the Administration's adjusted baseline (current policy) over the next decade.

 

Figure 5. Budget Deficit Projections

 

 

(% of GDP)

 

 

 

Notes: The proposed budget illustrates the impact on the budget outlook if all of the policies proposed in the budget are implemented. The Administration's adjusted baseline assumes that discretionary spending will be limited by the discretionary caps put in place as part of the Budget Control Act, various tax benefits will be extended, and Medicare payments to physicians will not be reduced under the Sustainable Growth Rate (SGR) formula. This has sometimes been referred to as a current policy baseline. The CBO baseline assumes current law continues. See additional discussion above.

What Do These Baselines Reflect?

As stated above, the adjusted baseline assumes that certain policies due to expire will be continued. The President's budget views the adjusted baseline as the most realistic projection of the budget deficit, and it is used as their benchmark to measure the impact of their budget proposals. The proposed budget, however, is the one that illustrates the resulting budget outlook if all of the policies proposed by the President were implemented. Whether or not a certain policy proposal increases or decreases the deficit depends on which baseline is used as the starting point.

Ultimately, the question of whether or not the amount of deficit reduction is sufficient can only be measured by actual budget outcomes (i.e., whether the budget deficit is higher or lower in the future relative to today) and whether or not the budget is on a sustainable path.

There are no real limits on what assumptions can be used to construct the adjusted baseline as opposed to the BBEDCA baseline, whose parameters were set by legislation. The adjusted baseline in the FY2016 budget assumes, for example, increases in spending as a result of eliminating the reduction in Medicare physician payments under the SGR formula. Because this policy serves to increase the deficit, this policy has no cost in the Administration's proposed budget when it is measured against the constructed adjusted baseline. If it were measured under the BBEDCA baseline, the SGR fix would increase the deficit. In other words, because the Administration assumes that Medicare physician payments would be maintained at current year levels in its Adjusted baseline, at a cost of $108 billion between FY2016 and FY2025, this proposal does not increase the deficit in the Proposed Budget.⁵²

A similar methodology can be used in understanding how the funding for Overseas Contingency Operations is being accounted for in each baseline. Both the adjusted baseline and BBEDCA baseline assume that OCO funding will continue at current year levels, adjusted for inflation. In the proposed budget, the Administration assumes a reduction in OCO funding. As a result, the proposed budget allocates a reduction in the deficit of $557 billion over the FY2016-FY2025 period for reduced OCO costs relative to the adjusted baseline and the BBEDCA baseline.⁵³

The FY2016 Congressional Budget Resolution

The budget committees in the House and Senate each work to develop a budget resolution as they receive information and testimony from various sources, such as the Administration, CBO, and congressional committees with jurisdiction over spending and revenues. House Budget Committee Chairman Tom Price (R-GA) and Senate Budget Committee Chairman Mike Enzi (R-WY) have stated that they are committed to completing budget resolutions by mid-March and having them ready for consideration and passage by the House and Senate before the end of March.⁵⁴

Considerations for Congress

Ongoing budgetary challenges remain, which may result in Congressional action. Issues related to deficit reduction and the long-term budget outlook may continue to dominate the policy debate. Increased spending on entitlement programs, as currently structured, will likely contribute to rising deficits and debt, placing ever-increasing focus on how to achieve fiscal sustainability over the long term.

Addressing Ongoing Budget Issues

Various budget issues may feature prominently in the Congressional debate in the near-term. Ongoing discussions over the budget resolution, finalizing FY2015 appropriations for the Department of Homeland Security, and legislation related to the Budget Control Act may be highlights of the agenda. As discussed above, the Bipartisan Budget Act of 2013 (BBA) put into place new discretionary spending caps for FY2014 and FY2015. The BBA levels were intended to serve as an agreement on the amount of discretionary spending to be provided for at least those fiscal years. Beyond that, however, because the discretionary spending levels for FY2016 to FY2021 remain as originally prescribed in the BCA, it is possible that Congress and the President may work to make further changes to those levels.

Appropriations and Related Legislation

On December 16, 2014, the Consolidated and Further Continuing Appropriations Act, 2015 (P.L. 113-235) was enacted, which provided funding for FY2015 for 11 out of 12 regular appropriations bills covering most departments and agencies. However, funding for the Department of Homeland Security (DHS) was provided only through February 27, 2015, through temporary continuing appropriations included in this law. Subsequently, another continuing resolution (P.L. 114-3) provided funding for DHS through March 6, 2015.⁵⁵ On March 4, 2015, the Department of Homeland Security Appropriations Act, 2015 (H.R. 240) was enacted, providing full year funding for the department for FY2015.⁵⁶

Congress also began work on the FY2016 annual appropriations process. As discussed above, the caps on discretionary spending contained in the Budget Control Act set limits on most discretionary spending for FY2016 at $523 billion for defense and $493 billion for nondefense. These levels are $2 billion above FY2015 limits. Some have proposed raising one or both of these caps, which would require action to change the provisions of the BCA.

Debt Limit

The debate over the debt limit is not expected to resume until sometime during the latter half of 2015. This is a result of legislation enacted on February 15, 2014, which suspended the debt limit through March 15, 2015 (P.L. 113-83). Once the suspension period ends, Treasury plans to begin using extraordinary measures to continue financing government operations. CBO estimated that these measures would probably be exhausted sometime in October or November and further action on the debt limit would be needed to avoid payment delays or a government default on obligations.⁵⁷

Long-Term Considerations

Occasional budget deficits, in and of themselves, are not necessarily problematic. Deficit spending can allow governments to smooth outlays and taxes to shield taxpayers and program beneficiaries from abrupt economic shocks in the short term, while also temporarily boosting GDP when the economy is under performing. Persistent deficits, however, lead to growing levels of federal debt that may lead to higher interest payments and may also have adverse macroeconomic consequences in the long term, including slowing investment and lowering economic growth. Since the debt cannot grow faster than GDP indefinitely, large deficits will eventually need to be reduced through increases in taxes, reductions in spending, or both.

The federal government faces long-term budget challenges. Some measures of fiscal solvency in the long term indicate that, under current policy, the United States faces major future imbalance, specifically as it relates to rising health care costs and the likely impact on government-financed health care spending. Even as Congress and the President worked to enact deficit reduction legislation (i.e., the BCA), these laws were not seen to have made significant changes to the part of the budget that is projected to grow. Therefore, many budget analysts believe that additional savings are required to put the budget on a sustainable path over the long term. Further, over the last two years, many of those deficit reduction provisions have been softened. Under the current law baseline, deficits continue to be projected over the budget window.

CBO, GAO, and the Administration agree that the current mix of federal fiscal policies is unsustainable in the long term. The nation's aging population, combined with rising health care costs per beneficiary, may keep federal health costs rising faster than per capita GDP. CBO projected in July 2014 that under current policy, federal spending on federal health programs (including Medicare, Medicaid, CHIP, and exchange subsidies) would grow from 4.9% of GDP today to 7.5% of GDP in 2035, and 13.4% by 2085.⁵⁸ The 2013 Economic Report of the President also projected that future federal spending on Medicare and Medicaid would rise significantly under current law projections.⁵⁹ Though these forecasts are highly uncertain, it seems probable that spending on these programs will rise as a share of GDP over time.

In addition, growing debt and rising interest rates are projected to cause interest payments to consume a greater share of future federal spending. Under current law, CBO projects that spending to service the federal debt (net interest payments) will grow rapidly from 1.3% of GDP today, to 4.3% of GDP in FY2035, and 9.4% of GDP in FY2085.⁶⁰ GAO's recent long-term fiscal simulations, under an alternative policy scenario, projected that debt held by the public as a share of GDP would exceed the post-World War II historical high in about 15 years.⁶¹

Keeping future federal outlays at 20% of GDP, or approximately at its historical average, and leaving fiscal policies unchanged, according to CBO projections, would require drastic reductions in all spending other than that for Medicare, Social Security, and Medicaid, or reining in the costs of these programs. As shown in Table 2 below, under CBO's extended baseline, maintaining the debt to GDP ratio at today's level (74%) through FY2039 would require an immediate and permanent cut in non-interest spending or revenues or some combination of the two in the amount of 1.2% of GDP (or about $225 billion in FY2015 alone) in each year. Maintaining this debt-to-GDP ratio beyond FY2039 would require additional savings. If policy makers wanted to lower future debt levels relative to today, the annual spending reductions or revenue increases would have to be larger. For example, in order to bring debt as a percentage of GDP in FY2039 down to its historical average over the past 40 years (39% of GDP), spending reductions or revenue increases or some combination of the two would need to total roughly 2.6% of GDP (or $465 billion in FY2015 alone) in each year.⁶²

           Table 2. Fiscal Gap Under CBO's Extended Baseline

The Congressional Budget Office (CBO) provides data and analysis to Congress throughout the budget and appropriations process. Each January, CBO issues a Budget and Economic Outlook that contains current-law baseline estimates of outlays and revenues. In March, CBO typically issues an analysis of the President's budget submission with revised baseline estimates and projections. These documents can be delayed as a result of the legislative agenda or if the President's Budget is off schedule. In late summer, CBO issues an updated Budget and Economic Outlook with new baseline projections.

In these documents, CBO sets a current-law baseline as a benchmark to evaluate whether legislative proposals would increase or decrease outlays and revenue collection. Baseline estimates are not intended to predict likely future outcomes, but to show what spending and revenues would be if current law remained in effect. CBO typically evaluates the budgetary consequences of legislative proposals and the Joint Committee on Taxation (JCT) evaluates the consequences of revenue proposals.

CBO also releases other periodic publications focusing on the future fiscal health of the United States. In their publication, The Long-Term Budget Outlook, CBO makes projections on the state of the federal budget over the next 75 years. They discuss spending and revenue levels and the related issues that they expect will arise under different policy assumptions. In their Budget Options volumes, they provide specific policy options and the impact they will have on spending and revenues over a 10-year budget window. They also provide arguments for and against enacting each policy.

OMB Documents

The President's Budget contains five major volumes: (1) The Budget; (2) Historical Tables; (3) Analytical Perspectives; (4) Appendix; and (5) Supplemental Materials.⁶⁴ These documents layout the Administration's projections of the fiscal outlook for the country, along with spending levels proposed for each of the federal government's departments and programs. The Historical Tables volume also provides significant amounts of budget data, much of which extends back to1962 or earlier. Along with the Administration's budget documents, the Department of the Treasury also releases its Green Book, which provides further detail on the revenue proposals that are contained in the budget.⁶⁵

Author Contact Information

² For more information on the BCA, CRS Report R43411, The Budget Control Act of 2011: Legislative Changes to the Law and Their Budgetary Effects, by Mindy R. Levit.

³ This section provides an outline for the formulation and execution of a budget and appropriations cycle for a fiscal year. However, this timetable is not set in law and is often not adhered to.

⁴ CRS Report 98-325, The Federal Fiscal Year, by Bill Heniff Jr.

⁵ The contents of the Presidential budget submission are governed by 31 U.S.C. § 1105. For reasons why the budget may be delayed, see CRS Report RS20179, The Role of the President in Budget Development, by Clinton T. Brass.

⁶ For more information, see CRS Report RL30297, Congressional Budget Resolutions: Historical Information, by Bill Heniff Jr..

⁷ For more information on the "deeming resolution" and its recent use, see CRS Report RL31443, The "Deeming Resolution": A Budget Enforcement Tool, by Megan S. Lynch.

⁸ S.Con.Res. 13, 111^th Congress.

⁹ For more information on the appropriations and authorization process, see CRS Report R42388, The Congressional Appropriations Process: An Introduction, by Jessica Tollestrup.

¹⁰ Many of the rules governing the baseline contained in § 257 of the Balanced Budget and Emergency Deficit Control Act, as amended, were extended or modified as part of the Budget Control Act of 2011 (P.L. 112-25).

¹¹ The BCA allows for discretionary spending to be adjusted for war funding, disaster, emergency, and program integrity spending.

¹² Most of these tax provisions expired in December 2013 but have been retroactively extended in the past. Others expire at the end of 2017. For more information, see CRS Report R43124, Expired and Expiring Temporary Tax Provisions ("Tax Extenders"), by Molly F. Sherlock. Congress has traditionally enacted a series of laws to override the reductions in physician Medicare payments by adjusting the sustainable growth rate (SGR) formula. For more information, see CRS Report R40907, Medicare Physician Payment Updates and the Sustainable Growth Rate (SGR) System, by Jim Hahn.

¹³ CBO, The Budget and Economic Outlook: 2015 to 2025, February 2015, pp. 21-23.

¹⁴ Unless otherwise noted, budget data in this report are taken from the tables in CBO, The Budget and Economic Outlook: 2015 to 2025, February 2015.

¹⁵ Budget deficits are considered sustainable if the budget deficit as a percentage of GDP does not exceed the growth in the economy. Generally, this implies a budget deficit of less than 3% of GDP.

¹⁶ The division between discretionary and mandatory spending was first put into place in FY1962.

¹⁷ For more information on trends in discretionary and mandatory spending, see CRS Report RL34424, The Budget Control Act and Trends in Discretionary Spending, by D. Andrew Austin and CRS Report RL33074, Mandatory Spending Since 1962, by Mindy R. Levit and D. Andrew Austin.

¹⁸ Net interest is discussed in further detail below in the section "Deficits, Debt, and Interest."

¹⁹ The definition of security spending has varied over time. The Obama Administration has defined security spending as funding for the Department of Defense -- Military, the Department of Energy's National Nuclear Security Administration, International Affairs (budget function 150), the Department of Homeland Security, and the Department of Veterans Affairs. Security spending has defense and non-defense components.

²⁰ The caps on discretionary spending contained in the Budget Control Act expire after FY2021. Beginning in FY2022, the baseline assumes that discretionary spending will grow at the rate of inflation, which is generally less than the projected growth of nominal GDP. Therefore, discretionary spending continues to fall, as a percentage of GDP, throughout the budget window.

²¹ For more information, see CRS Report R41970, Addressing the Long-Run Budget Deficit: A Comparison of Approaches, by Jane G. Gravelle and CRS Report R41778, Reducing the Budget Deficit: Policy Issues, by MarcLabonte.

²² In various reports, the Congressional Budget Office, the Government Accountability Office, and the Administration agree that the federal government's budget is on an unsustainable path. For more information, see the section of this report titled, "Long-Term Considerations."

²³ For more information on ATRA's tax provisions, see CRS Report R42894, An Overview of the Tax Provisions in the American Taxpayer Relief Act of 2012, by Margot L. Crandall-Hollick.

²⁴ For more information, see CRS Report RL32808, Overview of the Federal Tax System, by Molly F. Sherlock and Donald J. Marples.

²⁵ The budget deficit peaked at 9.8% of GDP in FY2009.

²⁶ From an overall budget perspective, these surpluses are used to offset other federal spending, thereby decreasing the current budget deficit while increasing the amount of Treasury securities held in the Social Security Trust Funds. Off-budget surpluses have historically been large. However, declining surpluses in the Social Security program will lead to off-budget deficits beginning in FY2017 according to the CBO baseline.

²⁷ Gross federal debt is also referred to as total debt or total public debt outstanding. Intragovernmental debt is also referred to as intragovernmental holdings or debt held by federal government accounts.

²⁸ An exception to this is with regard to the budgetary treatment of federal credit programs where the size of the budget deficit can differ from the increase in the debt held by the public. This is a result of the accounting rules for federal credit programs under the Federal Credit Reform Act of 1990 whereby the budgetary cost of a new direct loan or loan guarantee is based on the subsidy cost over the life of the loan or loan guarantee rather than its net cash flow for that fiscal year. The impact of same direct loan or loan guarantee program on the debt held by the public is based on its net cash flow. This accounting difference was highlighted, for example, in FY2009 when the deficit was smaller than the increase in debt held by the public due to the nature of the obligations incurred as a result of the government conservatorship of Fannie Mae and Freddie Mac and the TARP program. For more information, see CRS Report R42632, Budgetary Treatment of Federal Credit (Direct Loans and Loan Guarantees): Concepts, History, and Issues for Congress, by Mindy R. Levit.

²⁹ For more information, see CRS Report R43389, The Debt Limit Since 2011, by D. Andrew Austin.

³⁰ The need to raise (or lower) the limit during a session of Congress is driven by previous decisions regarding revenues and spending stemming from legislation enacted earlier in the session or in prior years. The consideration of debt limit legislation often is viewed as an opportunity to reexamine fiscal and budgetary policy.

³¹ For more information, see CRS Report R41633, Reaching the Debt Limit: Background and Potential Effects on Government Operations, coordinated by Mindy R. Levit and U.S. Government Accountability Office, Delays Create Debt Management Challenges and Increase Uncertainty in the Treasury Market, GAO-11-203, February 2011.

³² U.S. Department of Treasury, Daily Treasury Statement, September 30, 2014, Table III-C.

³³ Since FY1970, the U.S. spent an average of 2.1% of GDP on interest payments.

³⁴ This section is not meant to address all changes in budget policy that have been enacted since 2011, but rather to highlight some of the major legislative actions and events.

³⁵ For more information, see CRS Report RL34680, Shutdown of the Federal Government: Causes, Processes, and Effects, coordinated by Clinton T. Brass.

³⁶ For more information, see CRS Report R43411, The Budget Control Act of 2011: Legislative Changes to the Law and Their Budgetary Effects, by Mindy R. Levit.

³⁷ For more information, see CRS Report R42884, The "Fiscal Cliff" and the American Taxpayer Relief Act of 2012, coordinated by Mindy R. Levit and CRS Report R42894, An Overview of the Tax Provisions in the American Taxpayer Relief Act of 2012, by Margot L. Crandall-Hollick.

³⁸ ATRA extended certain unemployment benefits and prevented reductions in Medicare physician payments rates through the end of calendar year 2013. It extended the 2008 farm bill through the end of FY2013. For more information on the current status of these programs, see CRS Report RL33362, Unemployment Insurance: Programs and Benefits, by Julie M. Whittaker and Katelin P. Isaacs, CRS Report R40907, Medicare Physician Payment Updates and the Sustainable Growth Rate (SGR) System, by Jim Hahn, and CRS Report R43076, The 2014 Farm Bill (P.L. 113-79): Summary and Side-by-Side, coordinated by Ralph M. Chite.

³⁹ For more information, see CRS Report R43898, Tax Provisions that Expired in 2014 ("Tax Extenders"), by Molly F. Sherlock.

⁴⁰ For more information on lapses of appropriations, see CRS Report RL34680, Shutdown of the Federal Government: Causes, Processes, and Effects, coordinated by Clinton T. Brass and CRS Report RS20348, Federal Funding Gaps: A Brief Overview, by Jessica Tollestrup.

⁴¹ The Balanced Budget and Emergency Deficit Control Act, as amended by the BCA, allows the discretionary caps to be adjusted for specific types of spending, including spending designated for Overseas Contingency Operations/Global War on Terrorism (OCO), disaster relief, and emergency requirements.

⁴² The BCA's sequester on mandatory spending was put into place through FY2021. It was extended through FY2024 in two pieces of legislation: the Bipartisan Budget Act (BBA; P.L. 113-67) and a bill dealing with the COLA for certain military retirees (P.L. 113-82).

⁴³ OCO spending is currently exempt from the BCA discretionary spending caps. Whether or not savings reducing OCO spending from current levels should be considered savings has been controversial. For CBO's take on the issue, see Congressional Budget Office, Director's Blog, Can Proposed Reductions in Future War-Related Spending Be Used To Offset Proposed Deficit Increases in Other Areas?, February 1, 2012, and CBO, Capping War-Related Spending, February 10, 2014.

⁴⁴ For more detail on some of the proposed changes to the tax code, see CRS Report IN10228, International Tax Reform Proposals in the President's FY2016 Budget Proposal, by Donald J. Marples.

⁴⁵ Office of Management and Budget, Budget of the U.S. Government Fiscal Year 2016, Table S-3.

⁴⁶ Office of Management and Budget, Budget of the U.S. Government Fiscal Year 2016, p. 85.

⁴⁷ For details of these projections, see U.S. Office of Management and Budget, Budget of the U.S. Government Fiscal Year 2016, Tables S-1 (Proposed Budget) and S-8 (BEA Baseline and Adjusted Baseline).

⁴⁸ For a description of the policies included in the various baselines, see U.S. Office of Management and Budget, Budget of the U.S. Government Fiscal Year 2016, Analytical Perspectives, pp. 361-364.

⁴⁹ Currently physician payment rates are scheduled to be reduced on April 1, 2015. The adjusted baseline assumes that there will be a 0% update for physician payment rates after that date.

⁵⁰ U.S. Office of Management and Budget, Budget of the U.S. Government Fiscal Year 2016, Table S-1.

⁵¹ U.S. Office of Management and Budget, Budget of the U.S. Government Fiscal Year 2016, Table S-2.

⁵² This figure does not include related debt service costs. U.S. Office of Management and Budget, Budget of the U.S. Government Fiscal Year 2016, Table S-8.

⁵³ U.S. Office of Management and Budget, Budget of the U.S. Government Fiscal Year 2016, Table S-2.

⁵⁴ Paul M. Krawzak, "Republicans Still Plotting Course for Budget Resolutions," CQ, February 23, 2015.

⁵⁵ For more information, see CRS Report R43776, Congressional Action on FY2015 Appropriations Measures, by Jessica Tollestrup.

⁵⁶ For more information, see CRS Report R43796, Department of Homeland Security: FY2015 Appropriations, coordinated by William L. Painter and CRS Report R43252, FY2014 Appropriations Lapse and the Department of Homeland Security: Impact and Legislation, by William L. Painter.

⁵⁷ Congressional Budget Office, Federal Debt and the Statutory Limit, March 2015, March 2015, p. 1.

⁵⁸ Congressional Budget Office, The 2014 Long-Term Budget Outlook, July 2014, "Supplemental Material."

⁵⁹ If healthcare costs continue to grow at the same rate as GDP, as they have over the past several years, healthcare spending 75 years from now will be roughly equal to what it is today as a percentage of GDP. Historically, however, growth rates in healthcare costs per capita have outpaced the growth in the economy by a significant margin. Council of Economic Advisors, Economic Report of the President, March 2013, Figure 5-8 and p. 30.

⁶⁰ Congressional Budget Office, The 2014 Long-Term Budget Outlook, July 2014, "Supplemental Material."

⁶¹ Government Accountability Office, The Federal Government's Long-Term Fiscal Outlook: Spring 2013 Update (GAO-13-481SP), April 11, 2013, p. 1.

⁶² U.S. Congressional Budget Office, The 2014 Long-Term Budget Outlook, July 2014, p. 11.

⁶³ For a discussion on what point debt might become unsustainable, see CRS Report R40770, The Sustainability of the Federal Budget Deficit: Market Confidence and Economic Effects, by Marc Labonte.

⁶⁴ The President's budget proposals can be found on the OMB website at http://www.whitehouse.gov/omb/. The Supplemental Materials include the Federal Credit Supplement, the Object Class Analysis, the Balances of Budget Authority, and the Public Budget Database.

⁶⁵ The Green Book is available at http://www.treasury.gov/resource-center/tax-policy/Pages/general_explanation.aspx.