CRS Issue Statement on Budget for FY2011

D. Andrew Austin, Coordinator
Analyst in Economic Policy

The federal budgeting decisions, reflecting Congress's "power of the purse," express funding priorities through outlay allocations and revenue collections. In recent years, the federal outlays have accounted for roughly a fifth of the country's gross domestic product (GDP) in past years, which implies that federal spending decisions have important effects on the U.S. economy. Financial turmoil and economic recession, however, have spurred higher spending and have slowed federal revenue collections, leading to sharply higher budget deficits. 

The current economic climate continues to pose major challenges to policymakers shaping the federal budget. For several years, the federal government has faced growing deficits, rising costs of entitlement programs, and significant spending on overseas military operations. Financial turmoil that began in mid-2007 and an economic recession that started in late 2008 presented additional challenges to federal budget policymaking. While the economy has shown some signs of recovery in the second half of 2009, many forecasters expect economic conditions to remain weak due to budgetary pressures on many state and local governments, high levels of household indebtedness, continuing challenges in residential and commercial real estate, and persistent high unemployment rates.


Date of Report: January 8, 2010
Number of Pages: 3
Order Number: IS40262
Price: $7.95

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