The Budget for Fiscal Year 2005

Publication Date: May 2005

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Banking and finance

Type:

Abstract:

CBO's budget report, The Budget and Economic Outlook: Fiscal Years 20062015 (January 25, 2005), included revised baseline estimates (which assume the continuation of current policies) for FY2005. The estimates included a $368 billion deficit for FY2005, only slightly above the President's FY2005 deficit proposal ($364 billion) in February 2004. The President's FY2006 budget contained revised proposals and estimates for FY2005 (with a deficit of $427 billion) in early February 2005. This deficit estimate incorporated the costs of the Administration's $82 billion supplemental request for defense and other funding in FY2005. The FY2006 budget resolution (H.Con.Res. 95; April 28, 2005), using CBO's underlying assumptions other than policy, included an FY2005 deficit of $398 billion

The President's original FY2005 budget (February 2004) included, among many policy proposals, extending and making permanent many of the tax cuts adopted in 2001 and 2003. The budget contained an FY2005 deficit of $364 billion. On May 12, 2004, the Administration requested an additional $25 billion for the ongoing operations in Afghanistan and Iraq. The budget did not include estimates for the cost of the war on terror beyond FY2004, provided limited information on the costs of extending the tax cuts past FY2009 (which is the period in which most of their budget effects would occur), and did not propose providing relief from the expanding middle-class coverage of the alternative minimum tax (AMT) after FY2005.

The Congressional Budget Office's (CBO) January 2004 budget report for FY2005 (the Budget and Economic Outlook: Fiscal Years 2005-2014) estimated the FY2005 baseline deficit at $362 billion. CBO's report provided estimates of the costs of selected alternative policies (measured from the baseline), such as estimates of the cost of extending the tax cuts, reforming the AMT, and alternative assumptions about discretionary spending growth.

In March 2004, CBO released its estimates of the Administration's proposals using CBO's underlying assumptions and budget estimating methods. These produced a deficit of $358 billion in FY2005, falling to $258 billion in FY2009. By extending the effect of the Administration's policies past FY2009, the deficit would climb slightly after FY2010, moving to $284 billion in FY2014.

The lack of a congressionally passed budget resolution for FY2005, added procedural hurdles to resolving already existing policy disputes and further slowed the passage of the annual appropriations. With only one of the 13 regular appropriations enacted as the new fiscal year began, Congress passed the first of three continuing resolutions on appropriations (H.J.Res. 107) on September 29. Congress adopted three more appropriations during October 2004. In the second after-election session, Congress passed and the President signed an omnibus appropriation for FY2005 (The Consolidated Appropriations Act, 2005; P.L.108-447; H.R. 4818) containing the remaining nine regular appropriations. This report will be updated as events warrant.