Although the administration projects an increase in this year’s deficit due to the slowing economy, the President’s 2009 budget submission still balances the budget by 2012 – as it did last year – through a near freeze on non-Defense and non-Homeland Security discretionary spending and reforms to entitlement programs. Overall spending increases at an average of 3.0 percent per year over the next 5 years, which is well below the projected increase in real gross domestic product [GDP]. The budget reflects the economic growth package agreed to by the President and the House, as well as full 2008 funding for the President’s global war on terrorism request.
The President also, once again, calls for making permanent the tax laws enacted in 2001 and 2003. Even with these policies, the administration projects total revenue to grow an average of 6.3 percent per year. Revenue would increase from $2.5 trillion in 2008 to $3.4 trillion in 2013, or from 17.6 percent of GDP to 18.8 percent. The annual average of Federal revenue as a share of GDP over the past 40 years is 18.3 percent.
Read the full report here.