CBO Projects Increasing Deficit
June 13, 2003 - In its monthly budget review, released
June 9, the Congressional Budget Office (CBO) projects that
the federal government is likely to end FY 2003 with a deficit
of more than $400 billion, or close to 4 percent of gross
domestic product. This estimate is $100 billion over CBO's
forecast of a month ago [see Washington
Highlights, May 16].
CBO's projection is the first since the Jobs and Growth Tax
Relief Reconciliation Act of 2003 (P.L.
108-27) was signed on May 28. CBO says the new tax law
will add an estimated $61 billion to this year's deficit in
the form of tax cuts, refundable credits, and aid to states.
For the first eight months of 2003, CBO estimates the government
ran a deficit of $291 billion, about twice the shortfall it
incurred in the same period last year. The record federal
budget deficit is $290 billion in FY 2002.
According to CBO, outlays for Medicare and Medicaid are about
6.6 percent higher through May 2003 than for the same period
last year. This represents a significantly slower growth rate
for Medicaid, which previously experienced six consecutive
years of accelerating growth in spending, peaking at 13.2
percent in 2002. CBO states the slowdown "is most likely the
result of smaller increases in payment rates, slower growth
in enrollment, and restrictions on spending associated with
Medicare's upper payment limit."
Information:
Dave Moore, Senior Associate Vice President
AAMC Government Relations
dbmoore@aamc.org
(202) 828-0525
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