The Magnitude of Changes That Would Be Required to Balance the FY2011 Budget

Marc Labonte
Specialist in Macroeconomic Policy

A balanced federal budget is a bipartisan goal of many Members of Congress. In addition, moving the budget closer to balance is a long-term necessity because the national debt cannot grow as a percentage of GDP indefinitely, as it would under current policy. The budget deficit in FY2011 is projected to be between $980 billion and $1.27 trillion. Mathematically, the budget could be balanced by reducing total spending by 28%-35%, or mandatory spending by 47%-57%, or discretionary spending by 70%-87%, or by raising income tax rates by 76%-110%. Since nonmilitary discretionary spending is projected to be less than the total budget deficit in FY2011, the budget could not be balanced solely through reductions in this category of spending. The budget is unlikely to return to balance "on its own," as some have suggested, because higher growth rates should be incorporated in the projections; research suggests that the revenue estimates of tax cuts are unlikely to be significantly overstated; and the decline in the deficit found in the CBO baseline for FY2010 to FY2014, or in the President's budget for FY2011 to FY2014, rests on assumptions that differ substantially from what is typically thought of as current policy.


Date of Report: March 12, 2010
Number of Pages: 8
Order Number: RS21939
Price: $29.95

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