Order Code RL31784
CRS Report for Congress
Received through the CRS Web
The Budget for Fiscal Year 2004
Updated September 3, 2003
Philip D. Winters
Analyst in Government Finance
Government and Finance Division
Congressional Research Service ˜ The Library of Congress

---

The Budget for Fiscal Year 2004
Summary
The Administration’s fiscal year (FY) 2004 Mid-Session Review (MSR; July 15,
2003) estimated the FY2004 deficit at $475 billion, up from the $307 billion deficit
included in the President’s February 2003 budget proposal. Changes in policy, a
slowly recovering economy, and other estimating factors produced the growth in the
deficit estimate. The Administration’s July estimates “do not reflect ... expected but
undetermined additional costs arising from ongoing operations in Iraq, extending
beyond 2003” (the Office of Management and Budget [OMB] Mid-Session Review,
July 15, 2003, p.1). Any increase in outlays (without offsets) will increase the deficit
further.
CBO’s Economic and Budget Outlook: An Update (Update; August 26, 2003)
projected an FY2004 baseline deficit of $480 billion, a $280 billion increase from its
March 2003 baseline estimate and higher than the $458 billion baseline deficit
estimate in OMB’s MSR. Over 80% of the increase resulted from appropriations and
tax cuts adopted between March and August 2003.
The President’s February (2003) FY2004 budget proposals included a deficit of
$307 billion, assuming the adoption of those proposals. The proposals included
speeding up and making permanent many of the tax cuts enacted over the last two
years, along with new tax changes for economic stimulus, tax incentives, and
expiring tax provisions.
On January 31, 2003, CBO released the first of its budget reports. CBO’s
baseline estimates are similar in construction to the current services baseline
produced by OMB for the President. CBO’s baseline had a $145 billion deficit in
FY2004. Because the CBO baseline estimates are constrained by existing policy,
they do not incorporate any expected policy changes, even if they are very likely to
occur.
In March, CBO released its report analyzing the President’s policies, a recasting
of the proposals using CBO assumptions and budget estimating methods. CBO’s
estimates produced an expected deficit of $338 billion for FY2004 under the
Administration’s proposals. CBO’s baseline deficit estimate for FY2004 jumped to
$200 billion.
Congress cleared the conference report (H.Rept. 108-71, H.Con.Res. 95) on the
FY2004 budget resolution on April 11, containing reconciliation instructions for a
tax cut. On May 23, Congress adopted the conference report (H.Rept. 108-126) on
H.R. 2, the bill containing an 11-year, $350 billion tax cut that followed the
reconciliation instructions. It became law (P.L.108-27) on May 28.
As Congress returns in September, it is expected to resume working its way
through the 13 regular appropriations for FY2004. The House had passed 11 and the
Senate four of the regular appropriations when Congress recessed in August. None
has become law. This report will be updated as events warrant.

---

Contents
Background and Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Budget Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Budget Proposals and Estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Uncertainty in Budget Projections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Budget Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Outlays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Receipts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Deficits and Surpluses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
CBO’s Alternative Policies Not Included in the Baseline . . . . . . . . . . 15
The Budget and the Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
For Additional Reading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
CRS Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
List of Tables
Table 1. Budget Estimates for FY2003 and FY2004 . . . . . . . . . . . . . . . . . . . . . . . 2
Table 2. CBO’s Alternative Scenarios, Cumulative Surpluses/Deficits(-);
FY2004-2008 and FY2004-2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Table 3. Outlays for FY2003-2008 and FY2013 . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Table 4. Receipts for FY2002-2008 and FY2013 . . . . . . . . . . . . . . . . . . . . . . . . 12
Table 5. Surpluses/Deficits(-) for FY2004-FY2008 and FY2013 . . . . . . . . . . . . 14

---

The Budget for Fiscal Year 2004
Background and Analysis
Presidents generally submit their budget proposals for the upcoming fiscal year
(FY) early in each calendar year. For FY2004, the Bush Administration released its
budget (The Fiscal Year 2004 Budget of the U.S. Government) on February 3, 2003.
The multiple volumes contained general and specific descriptions of the
Administration’s policy proposals and expectations for the budget for FY2004 and
for the years through FY2008, with information on the revenue changes through
FY2013 and a section on long-term fiscal issues facing the nation. The full set of
budget documents (Budget, Appendix, Analytical Perspectives, Historical Tables,
among several others) contain extensive and detailed budget information, including
estimates of the budget without the proposed policy changes (current service baseline
estimates), historical budget data, detailed outlay and receipt data, selected analysis
of specific budget related topics, and the Administration’s economic forecast. In
addition to its presentation of the Administration’s proposals, the budget documents
are an annual basic reference source for federal budget information.
The Administration’s annual budget submission is followed by congressional
action on the budget. This usually includes the annual budget resolution,
appropriations, and, possibly, a reconciliation bill or bills. During the months of
deliberation on budget legislation, the Administration often revises its original
proposals because of interactions with Congress and changing circumstances in the
economy and the world.
Budget Totals
Table 1 contains budget estimates and proposals for FY2003 and FY2004 from
the Congressional Budget Office (CBO), the Administration (the Office of
Management and Budget, OMB), the revisions produced by OMB and CBO
throughout the year, and, as they become available, from congressional budget
resolutions. Differences in totals occur because of differing underlying economic,
technical, and budget-estimating assumptions and techniques as well as differences
in policy assumptions. Most policy generated dollar differences between the
Administration and congressional proposals or assumptions for an upcoming fiscal
year are often relatively small compared to the budget as a whole. These small
differences may grow, sometimes substantially, producing widely divergent budget
paths over time. Budget estimates should be expected to change over time from
those originally proposed by the President or Congress.
The war on terrorism, the 2001 recession and the slow economic recovery,
changes in policies (tax cuts; spending increases), and changes in the technical

---

CRS-2
assumptions of the underlying budget-economic relationships, have all contributed
to the large deterioration in the budget outlook over the last two years.
Table 1. Budget Estimates for FY2003 and FY2004
(in billions of dollars)
Deficit(-)/
Receipts
Outlays
Surplus
Actual for FY2000
$2,025
$1,789
$236
Actual for FY2001
1,991
1,864
127
Actual for FY2002
1,853
2,011
-158
FY2003 Estimates in 2003
CBO B&E Outlook, 1/31/03
1,922
2,121
-199
OMB, Budget, 2/3/03
1,836
2,140
-304
OMB, Budget, Current Services, 2/3/03
1,867
2,131
-264
CBO Revised Baseline, 3/7/03
1,891
2,137
-246
CBO Estimates of the President’s Policies, 3/7/03
1,856
2,143
-287
House FY2004 Budget Resolution, 3/21/03
1,855
2,143
-288
Senate FY2004 Budget Resolution, 3/26/03
1,865
2,148
-282
Conference FY2004 Budget Resolution, 4/11/03
1,835
2,182
-347
OMB Mid-Session Review, 7/15/03
1,756
2,212
-455
OMB Mid-Session Review, Baseline, 7/15/03
1,756
2,210
-155
CBO Update, Baseline, 8/26/03
1,770
2,170
-401
FY2004 Estimates
CBO B&E Outlook, Baseline, 1/31/03
2,054
2,199
-145
OMB, Budget, 2/3/03
1,922
2,229
-307
OMB, Budget, Current Services, 2/3/03
2,031
2,189
-158
CBO Revised Baseline, 3/7/03
2,024
2,224
-200
CBO Estimates of the President’s Policies, 3/7/03
1,907
2,245
-338
House FY2004 Budget Resolution, 3/21/03
1,908
2,232
-324
Senate FY2004 Budget Resolution, 3/26/03
1,958
2,246
-287
Conference FY2004 Budget Resolution, 4/11/03
1,883
2,268
-385
OMB Mid-Session Review, 7/15/03
1,797
2,272
-475
OMB Mid-Session Review, Baseline, 7/15/03
1,794
2,252
-458
CBO Update, Baseline, 8/26/03
1,825
2,305
-480
B&E Outlook = The Budget and Economic Outlook, CBO.
Budget Proposals and Estimates
CBO’s first budget report for FY2004, the Budget and Economic Outlook:
Fiscal Years 2004-2013 (January 2003), contained baseline estimates and projections
for FY2003 through FY2013.1 CBO’s report showed that, under current policies, the
1 Baseline estimates provide a foundation from which to measure proposed policy changes.
They extrapolate current policies into the future based on expectations of future economic
conditions, other factors that affect the budget, and rules set by Congress that CBO must
follow in creating baseline estimates. They are not meant to predict future budget outcomes.
(continued...)

---

CRS-3
budget would remain in deficit through FY2006 ($16 billion). The baseline
projections showed small surpluses beginning in FY2007 and growing rapidly in
FY2011 through FY2013 as revenues grow rapidly with the scheduled expiration of
the 2001 tax reductions from the Economic Growth and Tax Relief Reconciliation
Act of 2001 (EGTRRA; P.L. 107-16, June 2001).
President Bush’s FY2004 budget called for additional tax cuts and both
increased and decreased spending (as measured against OMB’s baseline estimates)
depending on the activity. The proposed policy changes increased the FY2004 deficit
to $307 billion from OMB’s baseline deficit estimate of $158 billion. OMB’s current
service baseline estimates move into a small ($5 billion) surplus in FY2006 while the
President’s proposals result in a projected deficit of $201 billion in that year. The
proposals would keep the budget in deficit (at least) through FY2008, the last year
of the Administration’s estimates.2
The Administration’s budget did not include any cost estimates for the (then
future) war in Iraq, additions to homeland security funding, or for non-war defense
related spending. On March 24, 2003, the President asked Congress for a $75 billion
supplemental appropriation for FY2003, of which a large portion will occur as
outlays in FY2004.
The Administration argued that the tax cuts are needed to boost the lagging
economy and that the acceleration of economic growth resulting from the tax cuts
will lead to the recovery of much of the lost revenue over future years. The
President’s Council of Economic Advisors, in its annual report stated,
Although the economy grows in response to tax reductions (because of higher
consumption in the short run and improved incentives in the long run), it is
unlikely to grow so much that lost tax revenue is completely recovered by the
higher level of economic activity.3
Both OMB’s and CBO’s FY2004 budget documents were produced prior to the
completion of final work on the FY2003 appropriations. This forced both agencies
to estimate the (discretionary) spending levels Congress would approve and that the
President would agree to for FY2003. This compounded the usual uncertainty in
year-to-year budget comparisons.
CBO’s March report, An Analysis of the President’s Budgetary Proposals for
Fiscal Year 2004 (APBP) reestimated the Administration’s FY2004 budget proposal
1 (...continued)
Because they continue existing policy, the baseline estimates include spending what was
intended for one year only and exclude likely but not-yet-enacted changes (such as the
existing law requirements that most of the recent tax cuts expire during this decade).
2 The long-run outlook for government policies existing at the time of the budget submission
(that are found in the budget; p. 41), indicate that, without substantial changes from those
policies, the budget remains in deficit through much of this century.
3 Council of Economic Advisers, Economic Report of the President. Feb. 2003. pp. 57-58

---

CRS-4
using CBO’s assumptions and budget estimating methods.4 These estimates
produced results similar to those in the President’s budget, with little cumulative
difference in the projections. CBO estimated a cumulative deficit of $1.2 trillion
under the President’s policies over the five years (FY2004-FY2008) compared to the
Administration’s estimate of $1.1 trillion.5 CBO’s 10-year projections of the
Administration’s proposals showed larger deficits (or the smaller surpluses)
compared to the CBO’s own revised (March) baseline in each of the years covered.
CBO estimated that about two-thirds of the increases in the deficits in its estimates
of the President’s proposals (excluding higher net interest costs) resulted from the
lower revenues that would occur with the adoption of the President’s tax cut
proposals.
The March 2003 revised CBO baseline (incorporating the effects of the
Consolidated Appropriations Resolution FY2003 (CAR 2003, P.L. 108-7, February
20) increased the projected baseline deficit by $47 billion in FY2003 and by $55
billion in FY2004. CBO attributed $22 billion of the $55 billion increase in the
deficit in FY2004 to legislative changes since January (almost all from CAR 2003).
The remainder of the increase was attributed to technical changes.
Over the 10-year period covered in the March CBO report, CBO wrote,
For the 2004-2013 period, CBO has reduced its projection of the cumulative
surplus by $446 billion [dropping it from $1,336 billion to $891 billion], nearly
three-quarters of which derives from enactment of the omnibus appropriation act
in February.6
The deterioration in the budget outlook since the January estimates delayed CBO’s
baseline estimate of the budget’s return to surplus by one year, from FY2007 to
FY2008.
The House FY2004 budget resolution (H.Con.Res. 95) included the President’s
request for a $726 billion economic stimulus tax cut (only part of which was put in
the reconciliation instructions). The Senate-passed resolution (S.Con.Res. 23)
contained reconciliation instructions for a $350 billion tax cut. The conference
agreement on the resolution (H.Con.Res. 95; H.Rept. 108-71) included different
reconciliation instructions for the relevant House and Senate committees. The
reconciliation instructions for the House included tax cuts of $550 billion; the
reconciliation instructions for the Senate included tax cuts of $350 billion. The
resolution’s deficit was $385 billion deficit in FY2004, becoming a small, $9.8
billion surplus in FY2012 and rising to a surplus of $37 billion in FY2013. The
reconciliation legislation that Congress passed (the Jobs and Growth Tax Relief
4 The CBO report came out before the adoption of the FY2003 supplemental appropriations
(P.L.108-11, April 6) and therefore did not include any effect that legislation would have
on FY2004’s outlays and deficit.
5 Ibid., p. 1.
6 Congressional Budget Office, An Analysis of the President’s Budgetary Proposals for
FY2004, March 2003, p. 3.

---

CRS-5
Reconciliation; P.L. 108-27; May 23, 2003) contained $350 billion in tax cuts (and
a small amount of spending increases) over the period FY2003 through FY2013.
The summer budget reports from OMB (July 2003, Mid-Session Review) and
CBO (August 2003, The Budget and Economic Outlook: An Update) projected larger
deficits for FY2004 and subsequent years than they had in their earlier budget
reports. OMB estimated that the FY2004 deficit would rise to $475 billion, $168
billion above its January 2003 estimate. Policy changes that differed from those
originally proposed by the President produced $73 billion of the change. The largest
share, $95 billion, resulted from differences in the economic and technical
assumptions underlying the two projections. These changes raised the cumulative
deficit for FY2004 through FY2008 by $372 billion.
CBO’s report pushed the FY2004 baseline deficit to $480 billion, $280 billion
larger than its March estimate. Legislative changes (tax cuts and spending increases)
raised the deficit by $227 billion, while economic and technical revisions raised it by
$52 billion. The five-year (FY2004-FY2008) projected cumulative deficit increased
by $1,083 billion between CBO’s March and August estimates. For CBO’s ten-year
projection period, FY2004 through FY2013, the cumulative increase in its deficit
projections, between March and August, was $2,287. This August estimate
incorporated (as did the March estimate) the assumed expiration of most of the tax
cuts adopted over the last several years. It also includes the assumed continuation of
all the spending increases adopted since March, including the FY2003 supplementals
(P.L. 108-11 and P.L. 108-69), that are unlikely to be repeated throughout the
forecast period.
Neither OMB’s nor CBO’s projections reflect, particularly in the out-years, the
effect of likely policy changes, such as modifications to the Alternative Minimum
Tax (AMT), the costs of the ongoing efforts in Iraq, and the repeal of the expirations
of the tax cuts. The budgetary cost of these policy changes is very large over time
and could, according to CBO estimates, add another $1 trillion to $3 trillion to the
cumulative deficit over the FY2004 through FY2013 period. (See pages 11-14 in the
Update for CBO’s discussion of budget projections under alternative scenarios.) The
projections from CBO indicate that the budget is in a fundamental imbalance that
will not be remedied by a return to normal economic growth. The projections imply
that the only way to restore surpluses is through large spending cuts or tax increases.
Uncertainty in Budget Projections
All budget estimates and projections are inherently uncertain. Their dependence
on assumptions that are themselves subject to substantial variation over relatively
short time periods makes budget estimates and projections susceptible to fairly rapid
and dramatic changes. The last couple of years have demonstrated this volatility.
The original proposals and estimates for FY2002, made in early 2001, changed
drastically over the 20 to 21 months of congressional and presidential action on the
budget. (The budget estimates for five to 10 years in the future that are included in
the OMB and CBO budget documents are subject to even greater variability.) The
early 2001 estimates for FY2002 estimated a surplus of $231 billion to $313 billion.
The year ended on September 30, 2002 with a deficit of $158 billion. The September
2001 terrorist attacks on the United States, the legislation adopted in response, the

---

CRS-6
bursting of the stock market bubble, the weak economy, and a shift in critical
underlying budget relationships, all contributed to a large change in the year’s budget
outcome from the originally proposed or estimated amounts. There is little reason
to expect this volatility to be greatly diminished in the current or future budget
projections.7
Information in chapter 5 (The Uncertainties of Budget Projections) of CBO’s
budget report, The Budget and Economic Outlook: Fiscal Years 2004-2013 (January
2003), indicates how significantly the budget outcome can be altered by changes in
economic and related technical factors that underpin the budget estimates. The
chapter contains optimistic and pessimistic alternative scenarios for its baseline
projection. The optimistic scenario assumes that the favorable economic and budget
conditions of the late 1990s and 2000 recur. The pessimistic scenario assumes that
the economy and the budget revert to the unfavorable conditions that prevailed in the
1970s and most of the 1980s.
The numbers in Table 2 are calculated from data in the January 2003 CBO
budget report. The results reflect the wide range of possible budget outcomes under
the same policies but with different and reasonable underlying assumptions about the
economy and the relationship of the budget to the economy.
Table 2. CBO’s Alternative Scenarios,
Cumulative Surpluses/Deficits(-); FY2004-2008 and FY2004-2013
(in billions of dollars; January 31, 2003)
FY2004-FY2008 FY2004-FY2013
CBO Optimistic Scenario Cumulative Surplus
$566
$4,490
CBO Baseline 1/31/03
-143
1,336
CBO Pessimistic Scenario Cumulative Deficit
-855
-1,856
Source: CBO, The Budget and Economic Outlook: Fiscal Years 2004-2013, Jan. 2003, p.106;
CRS calculations.
The President’s budget includes, in the section, “Charting a Course for the
Federal Budget,” the statement that “... five-year projections are fraught with
uncertainty. The ... error in projecting the surplus or deficit since 1982 ... has been
a $90 billion average absolute forecasting error for the first year alone. A 90-percent
7 Some things are known with certainty about the direction of future budgets. Demographics
can partly determine the shape of future budgets. The upcoming retirement of the baby
boom generation will rapidly drive higher the spending for Social Security and Medicare as
well as other federal spending for the elderly in the next decade. Because all those that will
become eligible for these benefits are alive today, estimating the growth in these programs
is relatively straightforward.

---

CRS-7
confidence range for 2008 would stretch all the way from a $281 billion surplus to
a $661 billion deficit, a range of nearly $1 trillion.”8
Budget projections are very dependent on the underlying assumptions about the
direction of the economy and expected future government policy and how these
interact along with other factors (such as changing demographics) that affect the
budget. Any deviation from the underlying assumptions used in the budget estimates,
such as faster or slower economic growth, higher or lower inflation, differences from
the existing or proposed spending and tax policies, or changes in the technical
components of the budget models (or substantial policy changes) can, and usually do,
have substantial effects on moving the budget outcomes away from the earlier budget
estimates and projections.
Budget Action
CBO and the Administration released their first budget reports for the upcoming
fiscal year, FY2004, in late January and early February 2003. CBO’s report provided
baseline estimates for fiscal years 2003 through 2013. OMB’s documents provided
estimates for FY2004 through FY2008 with a few instances of cumulative estimates
for fiscal years 2004 through FY2013 (these are limited to revenues and provide
almost no data for the individual fiscal years after FY2008).
The Joint Committee on Taxation put out its estimates of the revenue provisions
in the President’s budget on March 4, 2003. In mid-March, CBO made available its
report, An Analysis of the President’s Budgetary Proposals for FY2004, which used
the tax estimates of the Joint Committee on Taxation in its analysis.
The House and Senate Budget Committees adopted their own, differing,
versions of the FY2004 budget resolution (H.Con.Res. 95; S.Con.Res. 23) in mid-
March. The House, after the Republican leadership had to modify the committee-
passed resolution to assure enough support for passage, passed (215-212) its version
on March 21.
The Senate spent more than a week considering its resolution. After adopting
and rejecting numerous amendments, the Senate adopted the resolution on March
26.9 One of the amendments that was adopted limited the size of the reconciliation
tax-cut to $350 billion over 11 years (from the committee-adopted level of $698
billion). The resolution moved to a conference committee April 1, 2003. The
conference reported its agreement on April 10 (H.Rept. 108-71). The agreement
included different tax cut reconciliation instructions for the House and Senate. The
House reconciliation instructions would let it cut taxes (over 11 years) by up to $550
billion (down from the $726 billion in the House-passed resolution). The Senate
8 Office of Management and Budget. Budget of the U.S. Government for FY2004, Feb. 3,
2003, p. 28.
9 The Senate substituted the text of its resolution, S.Con.Res. 23, for the text of the House-
passed resolution, H.Con.Res. 95.

---

CRS-8
reconciliation instructions limited it to tax cuts of $350 billion. Without other
constraints, this would have allowed a $550 billion tax cut to emerge from a
conference on the tax cut legislation. The $550 billion would have been protected
from a Senate filibuster by the reconciliation rules. To make sure the budget
resolution conference report could clear the Senate, the Senate leadership agreed that
the eventual tax cut would not exceed $350 billion.
The House Ways and Means Committee reported the reconciliation tax cut
legislation (H.R. 2; H.Rept. 108-94) on May 8. The legislation provided for the $550
billion tax cut included in the House version of the conference agreement on the
budget resolution. The House passed the bill on May 9.
The Senate Finance Committee reported its initial version of the $350 billion
reconciliation tax cut (S. 2; no report) on May 9. Rules on reconciliation legislation
sent the bill back to the Finance Committee. The Committee re-reported the
legislation, now S. 1054 (again, no report) on May 13. The Senate adopted the
legislation (with the $350 billion tax cut limit) on May 15, after substituting the text
of S. 1054 for that of H.R. 2.
On May 23, after extensive leadership negotiations between the House and
Senate, an agreement was reached resolving the differences between the House- and
Senate-passed versions of the reconciliation tax cut legislation. It provided $350
billion in tax cuts and small spending increases through FY2013. The agreement was
formalized by the conference committee’s report (H.Rept. 108-126) on May 22. The
House adopted the agreement in the early morning hours of May 23. The Senate
adopted it before noon on May 23. The legislation included the automatic expiration
of most of the new tax cuts within 1 or 2 years. The President signed the legislation
into law (P.L. 108-27) on May 28.
Work on the appropriations for FY2004 began in the spring of 2003 and
continued through the summer. When Congress returned in September 2003, the
House had passed 11 of the 13 regular appropriations and the Senate had passed 4.
None of the appropriations has become law. Congress has less than a month to finish
its work on appropriations before the beginning of the new fiscal year (October 1,
2003).
Outlays
The Administration’s FY2004 budget proposed $2,229 billion in outlays for
FY2004, rising to $2,711 billion in FY2008, the last year forecast in the President’s
budget. The current services baseline in the President’s budget (estimates of what
future outlays would be if policies remained unchanged over the forecast period)
showed outlays of $2,189 billion in FY2004 growing to $2,541 billion in FY2008,
both smaller than the amounts proposed.

The Administration’s proposals would raise outlays $89 billion above the
Administration’s proposed FY2003 level and $40 billion above its FY2004 current
services baseline outlay estimate. The difference between the current services

---

CRS-9
baseline outlay estimate and the proposed outlay amount for FY2004 measures the
cost of the Administration’s proposed policies. The year-to-year change (the $89
billion increase) combines the effects of policy changes from year to year with the
relatively automatic growth in large parts of the budget. These increases include
cost-of-living adjustments, growth in populations eligible for program benefits, and
inflation driven increases. The President’s budget did not include estimated costs of
any (at that time, possible future) conflict with Iraq for either FY2003 or FY2004.
Table 3. Outlays for FY2003-2008 and FY2013
(in billions of dollars)
FY2002
FY2003
FY2004
FY2005
FY2006
FY2007
FY2008
FY2013
CBO Adjusted Baseline, 1/31/03
$2,011 a
$2,121
$2,199
$2,298
$2,3878
$2,4795
$2,583 $3,167
President’s F04 Budget, 2/3/03
2,140
2,229
2,343
2,464
2,576
2,711
—
President’s FY04 Current Services, 2/3/03
2,131
2,189
2,276
2,348
2,440
2,541
—
CBO Revised Baseline, 3/03
2,137
2,224
2,328
2,417
2,513
2,621
3,215
CBO Est. of the President’s Policies,3/03
2,143
2,245
2,370
2,491
2,606
2,739
3,452
House FY2004 Budget Resolution, 3/21/03
2,143
2,232
2,337
2,450
2,556
2,675
3,335
Senate FY2004 Budget Resolution,3/26/03
2,148
2,246
2,372
2,491
2,607
2,734
3,338
Conference FY2004 Budg. Res. 4/11/03
2,182
2,268
2,375
2,494
2,607
2,737
3,387
OMB MSR 7/15/03
2,212
2,272
2,338
2,452
2,573
2,706
—
OMB MSR, Baseline, 7/15/03
2,210
2,252
2,304
2,377
2,481
2,587
—
CBO Update, Baseline, 8/26/03
2,170
2,305
2,404
2,501
2,624
2,761
3,422
a. Actual outlays for FY2002.
Total outlays, in the President’s budget, were projected to grow at an average
annual rate of 5.0% between FY2004 and FY2008. When broad components of
spending are examined, the budget functions showed the health budget function
increasing at an annual average rate of 7.9%, the Medicare function increasing at an
annual average rate of 7.8%, and net interest increasing at an annual average rate of
9.6% over these years.10, 11 These three functions account for over 53% of the total
outlay increase during this period. All of the other fifteen budget functions have a
lower annual growth rate than that of total outlays.12 The relatively low growth in
some budget functions (agriculture 0.8%, education, training, employment, and social
services 1.2%, general government 1.2%, and natural resources and environment
1.5%), growth that is lower than the expected rate of inflation, will reduce these
functions’ spending in real terms and as shares of total spending.
10 Budget functions group, “budget data according to the major purpose served” rather than
by agency or program. OMB, Budget of the U.S. Government for FY2004, Analytical
Perspectives, p. 463.
11 The Energy budget function has an even higher rate of increase, growing by an annual
average rate of 18.3%, but since it only makes up 0.04% of total outlays in FY2004 and
0.07% of outlays in 2008, it has little effect on the overall change in outlays.
12 The two budget functions, “allowances,” and “undistributed offsetting receipts,” were
excluded from the total number of functions.

---

CRS-10
The January 2003 CBO baseline, which assumed no changes from existing
government policy, forecast FY2004 outlays of $2,199 billion, FY2008 outlays of
$2,583 billion, and, because CBO’s estimates extended through FY2013, FY2013
outlays of $3,167 billion.13 These are similar to the Administration’s current services
baseline estimates for the same years.
The revisions in CBO’s March 2003 report raised estimated FY2004 baseline
outlays by $25 billion, to $2,224 billion (mostly because of the inclusion of the
effects of adopting the Consolidated Appropriations Resolution, 2003 (P.L. 108-7))
in February. Each of the succeeding year’s outlays in the CBO revisions were larger
than they were in the January baseline. CBO’s March 2003 baseline outlays would
grow by an annual average rate of 4.2% between FY2004 and FY2008 (and by the
same rate for the FY2004-FY2013 period). Total discretionary spending, including
defense and homeland security, would grow by approximately 2.5% a year over both
the 5- and 10-year periods.14 Mandatory spending, including Social Security and
Medicare, would grow at average annual rates of 4.7% (FY2004-FY2008) and 5.4%
(FY2004-FY2013). Because CBO’s baseline shows the budget with a surplus
starting in FY2008, net interest declines in the second five years after growing
quickly in the first five years. Over the 10 years, net interest grows at an annual
average of 1.5% (it grows at an average annual rate of 7.8% over the five years,
FY2004-FY2008). If the deficits do not disappear, as they would not under the
Administration’s proposals, the net interest would continue increasing.
CBO’s March estimates of the President’s policy proposals resulted in higher
outlays under the same policies. The CBO estimates were $16 billion higher in
FY2004 than the Administration’s proposed amount. For FY2008, CBO’s
reestimates pushed total outlays to $2,739 billion, $28 billion higher than in the
Administration’s budget. For the years covered by the President’s budget, FY2004-
FY2008, CBO’s reestimates raised outlays close to $30 billion a year above the
Administration’s estimates (except in FY2004 when the difference was estimated at
$16 billion). By FY2013, the Administration’s outlay proposals, under the CBO
reestimates, reached $3,279 billion.
The House- and Senate-passed budget resolutions contained different levels of
spending for FY2004 and subsequent years and differences in the components of that
spending. The House resolution included $2,232 billion in outlays for FY2004,
while the Senate amount was $2,246 billion, less than a 1% difference. By FY2013,
the House resolution had outlays of $3,289 billion and the Senate resolution had
outlays of $3,338 billion, a 1.5% difference. The House included instructions to cut
spending in a wide selection of many mandatory programs, stating that there should
be enough “waste, fraud, and abuse” in the programs affected to avoid diminishing
13 These projections followed very similar rules as those used by the Administration to
produce its current services baseline estimates. CBO and OMB used different budget
models and a number of different underlying assumptions, which generated much of the
difference in the estimates.
14 Under the rules that CBO must use in producing the baseline estimates, one requires that
discretionary spending growth matches the expected rate of inflation over the time period
of the projection.

---

CRS-11
their effectiveness. The Senate resolution tightly constrained growth in non-defense,
non-homeland security discretionary spending in the second five years of the period.
The conference report (H.Rept. 108-71) included outlays of $2,268 billion in
FY2004 and $3,387 billion in FY2013. In addition, the conference agreement
required most of the authorizing committees in the House and Senate to report the
amount of “waste, fraud, and abuse” within the programs under their jurisdiction to
their respective Budget Committees.
The July 2003 MSR, reflecting the legislation adopted since the February budget
release, raised FY2004 baseline outlays to $2,252 billion from the original baseline
outlays of $2,189 billion. Outlays under the Administration’s policy proposals (some
of which have been modified) grew to $2,272 billion from the originally proposed
$2,229 billion. Some of the change resulted from the differences between the
legislation adopted by Congress and what the President originally proposed. Outlays
under the proposals in the MSR reach $2,706 billion in FY2008, slightly below the
amount originally projected.
CBO’s summer baseline estimates raised outlays by $81 billion from its March
baseline estimates to $2,305 billion for FY2004. By FY2008, baseline outlays would
be $2,761 billion, up from the $2,621 billion in March. The effects of the
consolidated appropriations adopted in March and the supplementals adopted for
FY2003 (with many of the outlays occurring in FHY2004) account for much of these
increases.
Receipts
The Administration’s FY2004 budget included proposals to adopt tax cuts to
boost the economic recovery and to speed up and make permanent many of the tax
changes enacted over the last two years. The Administration divided its revenue
proposals over FY2004-FY2008 period into an economic growth package ($390
billion over FY2004-FY2008); tax incentives ($72 billion); tax simplification (which
would raise receipts by $13 billion); extending expiring tax provisions ($40 billion);
and miscellaneous changes (which would raise receipts by $2 billion). The total
proposal would reduce revenues from current services baseline levels by $493 billion
between FY2004 and FY2008 and by $1,461 billion between FY2004 and FY2013.15
The changes would slow the growth in receipts but would not stop them. They
would grow from $1,922 billion in FY2004 to $2,521 billion in FY2008.
15 These estimate are from the Treasury’s General Explanations of the Administration’s
Fiscal Year 2004 Revenue Proposals. The President’s budget shows a $441 billion revenue
reduction (from baseline estimates) for the FY2004-FY2008 period and a $1,307 billion
reduction for the FY2004-FY2013 period. The Treasury’s estimates were produced after
the release of the President’s budget reflecting modifications to the proposals and
adjustments to the estimates. See also the CRS Report RS21420, President Bush’s 2003 Tax
Cut Proposal: A Brief Overview, and the CRS Issue Brief IB10110, Major Tax Issues in the
108th Congress for more information on the proposals.

---

CRS-12
Table 4. Receipts for FY2002-2008 and FY2013
(in billions of dollars)
FY2002
FY2003
FY2004
FY2005
FY2006
FY2007
FY2008
FY2013
CBO Adjusted Baseline, 1/31/03
$1,853 a
$1,922
$2,054
$2,225
$2,370
$2,505
$2,648
$3,674
President’s F04 Budget, 2/3/03
1,836
1,922
2,135
2,263
2,398
2,521
—
President’s FY04 Current Services 2/3/03
1,867
2,031
2,235
2,352
2,469
2,593
—
CBO Revised Baseline, 3/7/03
1,891
2,024
2,205
2,360
2,504
2,647
3,674
CBO Est. of the President’s Policies,3/7/03
1,856
1,907
2,100
2,273
2,433
2,573
3,350
House FY2004 Budget Resolution, 3/21/03
1,855
1,908
2,107
2,282
2,444
2,587
3,372
Senate FY2004 Budget Resolution, 3/26/03
1,865
1,959
2,154
2,321
2,479
2,620
3,497
Conference FY2004 Budg. Res. 4/11/03
1,835
1,883
2,082
2,277
2,441
2,586
3,424
OMB MSR 7/15/03
1,756
1,797
2,033
2,215
2,360
2,480
—
OMB MSR, Baseline, 7/15/03
1,756
1,794
2,063
2,267
2,403
2,525
—
CBO Update, Baseline, 8/26/03
1,770
1,825
2,064
2,276
2,421
2,564
3,634
a. Actual receipts for FY2002.
The Administration claimed that the economic growth tax-cut proposals would
speed economic growth by enough to recover some or all of the forgone revenue (a
claim countered by CBO’s March report that included dynamic macro-economic
estimates, estimates that included the effects of the tax cuts on the economy in the
budget estimates). None of the three budget models CBO used to calculate the tax-
cut’s effect on future revenues (or outlays) showed more than a minimal feed-back
effect, boosting revenues slightly.
CBO’s January 2003 baseline estimates put the FY2004 revenues at $2,054
billion, using a somewhat different set of underlying assumptions than the
Administration’s current service baseline estimates used. These CBO estimates also
assumed that the automatic expiration of the tax cuts of EGTRRA would occur at the
end of 2010. The reversion to previous tax law produced a large jump in projected
revenues in the fiscal years after FY2010. CBO estimated that extending all the
EGTRRA tax provisions that are set to expire before FY2013 would reduce
cumulative revenues over the FY2004-2013 period by $785 billion (from cumulative
baseline revenues of $27,923 billion).16 The estimated effect of eliminating the
expiring provisions of EGTRRA would be most dramatic after FY2010. In FY2010,
the proposed revenue estimates are $32 billion below the baseline estimates for that
year; in FY2011 the proposed level of receipts would be $156 billion below the
baseline estimates for that year and in FY2013, they would be $260 billion below.
CBO’s March 2003 revised estimate baseline revenues were smaller, by $20
billion to $30 billion, than the January baseline between FY2004 and FY2006, after
which both estimates were very similar. CBO attributed the change to technical
factors. The CBO revenue estimates of the President’s proposals were smaller than
those proposed by relatively small amounts ($15 billion – $30 billion) for fiscal years
16 This estimate does not include the larger interest payments resulting from the larger
deficits or smaller surpluses occurring over this period that increases public debt.

---

CRS-13
2004 through 2006. For subsequent years, CBO’s estimates of the President’s
revenue proposals exceeded the amounts in the budget.
The House (H.Con.Res. 95) and Senate (S.Con.Res. 23) budget resolutions
included different revenue reduction reconciliation instructions. The House included
an estimated $698 billion revenue reduction over 11 years (FY2003-FY2013), closely
matching the President’s tax cut proposals. The Senate included reconciliation
instructions for a tax cut of no more than $350 billion. Additional components of the
President’s original tax proposals were incorporated in the resolution, but not always
in the reconciliation instructions. The conference on the budget resolution produced
separate tax cut reconciliation instructions for the House Ways and Means
Committee and the Senate Finance Committee. Reconciliation instructions required
the Ways and Means Committee to reduce receipts by $550 billion ($535 billion in
tax cuts and $15 in increased outlays). The Finance Committee was instructed to
reduce taxes by no more than $350 billion.
Soon after the House adopted the conference report (H.Rept. 108-71) on the
budget resolution (April 11), the Senate indicated that no eventual tax cut legislation
exceeding $350 billion would be presented to the Senate. Many House members,
expecting the larger tax cut amount ($550 billion) to eventually emerge from a
conference committee on the tax cut legislation, were unhappy with the Senate’s
internal agreement.
The Committee on Ways and Means reported (H.Rept. 108-94) out the
reconciliation bill, H.R. 2 (the Jobs and Growth Reconciliation Tax Act of 2003),
costing $550 billion, including some increased outlays, on May 8. The House passed
it on May 9. The Committee on Finance reported S. 2 (with no written report), its
version of the reconciliation bill, on May 9. It contained revenue reductions of $350
billion (and some increases in outlays). Procedural issues required the Committee
on Finance to report (again with no written report) a new bill (S. 1054) containing
essentially the same contents as S. 2. The Committee reported the bill on May 13.
The Senate, after substituting the text of S. 1054 for the text of H.R. 2, passed the
$350 billion reconciliation bill on May 15.
On May 22, after extensive Republican leadership discussions over the
reconciliation bill, a compromise was reached on a $350 reconciliation bill. The
conference committee on the legislation endorsed the agreement and reported
(H.Rept. 108-126) the modified H.R. 2 on May 22. The Housed passed the bill in the
very early hours of May 23. The Senate passed the bill before noon on May 23. The
President signed it into law (P.L. 108-27, the Jobs and Growth Tax Relief
Reconciliation Act or JGTRRA) on May 28.17
17 Most of the major provisions of the legislation are scheduled to expire after calendar year
2004 or, after calendar year 2008. These expirations kept the total budgetary change from
exceeding the $350 billion limit set by the agreement. Extending the provisions through
2013 would raise the estimated cost of the legislation, compared to the baseline estimates,
close to $1 trillion over the 11 years.

---

CRS-14
OMB’s July 2003 budget report estimated that the JGTRRA would reduce
FY2004 receipts by $138 billion (from baseline estimates). Over the period FY2004
through FY2008, OMB estimated that the law would actually increase receipts
(compared to the Administration’s original proposals) by $48 billion. The law
included the expiration of the tax changes by the end of 2005, with a reversion to
previous law. CBO’s August budget report estimated that JGTRRA would lower
receipts in FY2004 by $135 billion from CBO’s baseline estimate (the law would
also increase outlays by $12 billion). Over the FY2004 through FY2008 period,
CBO estimated that JGTRRA would reduce receipts (compared to CBO’s baseline,
which did not include the Administration’s original tax cut proposal) by $264 billion.
Deficits and Surpluses
Surpluses and deficits are the residuals left after Congress and the President set
policies for spending and receipts. Surpluses reduce federal debt held by the public
which leads to lower net interest payments; deficits increase government debt held
by the public, increasing the government’s net interest payments. Reducing the
deficit and eventually reaching a balanced budget or generating and keeping a surplus
(the government had its first surplus in 30 years in FY1998) was a major focus of the
budget debates in the late 1980s and throughout the 1990s. The President’s FY2004
budget proposals included a deficit of $307 billion in FY2004. CBO’s March 2003
estimates of the President’s proposals produced a deficit that would reach $338
billion in FY2004.
Table 5. Surpluses/Deficits(-) for FY2004-FY2008 and FY2013
(in billions of dollars)
FY2002 FY2003
FY2004
FY2005
FY2006
FY2007
FY2008
FY2013
CBO Adjusted Baseline, 1/31/03
-$158 a
-$199
-$145
-$73
-$16
$26
$65
$508
President’s F04 Budget, 2/3/03
-304
-307
-208
-201
-178
-190
—
President’s FY04 Current Services 2/3/03
-264
-158
-40
5
29
51
—
CBO Revised Baseline, 3/7/03
-246
-200
-123
-57
-9
27
459
CBO Est. of the President’s Policies,3/7/03
-287
-338
-270
-218
-173
-166
-102
House FY2004 Budget Resolution, 3/21/03
-288
-324
-230
-168
-111
-87
37
Senate FY2004 Budget Resolution, 3/26/03
-282
-287
-218
-169
-128
-114
159
Conference FY2004 Budg. Res. 4/11/03
-347
-385
-294
-217
-166
-151
37
OMB MSR 7/15/03
-455
-475
-304
-238
-213
-226
—
OMB MSR, Baseline, 7/15/03
-455
-458
-241
-110
-78
-62
—
CBO Update, Baseline, 8/26/03
-401
-480
-341
-225
-203
-197
211
a. Actual deficit for FY2002.
CBO’s January baseline estimates had the budget returning to surplus in
FY2007 which then grew through FY2013. CBO’s March 2003 revisions increased
the near-term deficits and slowed, by one year, the movement to surplus. The growth
in the surplus, especially after FY2010, was boosted dramatically by the scheduled
expiration of the 2001 tax cut at the end of 2010.

---

CRS-15
The House Budget Committee’s adopted budget resolution would move the
budget into surplus in FY2010; the Senate Budget Committee’s resolution would
move the budget into surplus in FY2013. Both the House- and Senate-passed budget
resolutions amended the two committees’ original resolutions and showed the budget
moving back into surplus in FY2012. The conference report on the budget resolution
(H.Rept. 108-71) had a deficit of $385 billion for FY2004, a $151 billion deficit in
FY2008, and a small $10 billion surplus in FY2012.
The summer 2003 budget reports from OMB (MSR) and CBO (Update) raised
their expected deficit estimates for FY2004 and subsequent years. The MSR’s
current services baseline deficit estimate was $458 billion for FY2004, falling to $62
billion in FY2008. The baseline had a cumulative deficit (FY2004-FY2008) of $949
billion. The Administration’s proposed deficits in the MSR were a deficit of $475
billion in FY2004, falling to $226 billion in FY2008. These proposed deficits
summed to a cumulative deficit of $1,456 billion (FY2004-FY2008), $506 billion
larger than the cumulative baseline deficit estimate. The Administration’s MSR
deficit estimates did not include “what the Administration has previously indicated
are expected but undetermined additional costs arising from the ongoing operations
in Iraq, extending beyond 2003.”18 (In early September 2003, press reports indicated
that the Administration would soon ask Congress for at least $60 billion to fund Iraqi
operations in FY2004.) Implementing the President’s proposals would raise each
year’s deficit and leave very uncertain any future return to surplus.
CBO’s summer estimates raised its baseline deficit to $480 billion in FY2004,
falling to $197 billion in FY2008 (and becoming a surplus of $211 billion in FY2013
after the expiration of various tax cuts at the end of 2010). The cumulative (FY2004-
FY2008) baseline deficit was $1,445 billion in the CBO report. (The FY2004-
FY2013 period had a cumulative baseline deficit of $1397 billion.)
CBO’s Alternative Policies Not Included in the Baseline.
CBO’s summer report (August 2003) also included estimates of the “budgetary
effects of policy alternatives not included in CBO’s baseline.” The alternatives are
policies that have a high probability of being enacted or seriously debated. They
included extending expiring tax provisions, the reform of the alternative minimum
tax (AMT), Medicare reform – including a prescription drug benefit, and increasing
discretionary spending at the growth rate of nominal GDP or at the average rate of
discretionary spending growth from FY1998 through FY2003. The alternatives are
all fairly costly, running from $112 billion for AMT reform for FY2004 through
FY2008 to $608 billion for increasing discretionary spending at its recent historical
growth rate for the same years. Over the 10 years, FY2004-FY2013, these costs
become much large, ranging from $400 billion for both AMT and Medicare reform,
to $1,564 billion to extend the expiring provisions, to $2,833 billion for increasing
discretionary spending at the recent historical rate. Combining these effects (and
excluding the cost of increasing discretionary spending at the rate of nominal GDP
growth) with the baseline deficit estimate and projection raises the FY2004 deficit
to $510 billion, the FY2008 deficit to $577 billion, and, instead of becoming a $161
18 OMB, Mid-Session Review, July 15, 2003, p.1.

---

CRS-16
billion surplus in FY2012, the alternatives produce a deficit of $765 billion in that
year and a deficit of $826 billion in FY2013. Under these alternative policies, the
cumulative deficit for FY2004 through FY2008 rises from $1,455 billion in the
baseline to $2,577 billion under the alternatives. For the 10 year period, FY2004
through FY2013, the cumulative deficit rises from $1,397 billion in the baseline to
$6,193 billion with the alternatives included. Under these alternative policies, the
budget moves further into deficit and shows no signs of moving towards balance.
Over a longer period, one running far into this century, the Administration
indicated (in its budget) that it expects, under existing policies and assumptions, large
and continually growing deficits beginning sometime in the next decade. The
retirement of the baby boom generation, beginning in large numbers withing 15
years, will rapidly drive up spending on Social Security, Medicare, and other
programs for the elderly, doubling their size as a percentage of GDP. Their growth
will raise the deficit (or reduce the surplus, if there is one) and put a severe strain on
both the budget and the economy. The tax cuts and spending increases of the last few
years will intensify these budgetary pressures.
The Budget and the Economy
The budget and the economy affect each other. The relationship is an unequal
one, with small economic changes having a more significant effect on the budget
than large policy changes have on the economy. The worse-than-expected economic
conditions over the last two years played a substantial role, directly or indirectly, in
the deterioration of the budget outlook over those years and into FY2004. After
FY2004, the budget projections include the assumption that the economy has
returned to its normal rate of growth. This implies that the expected continuing
deficits result from an imbalance in fiscal policy, that is that the fairly recent changes
in policy, the tax cuts and spending increases, will keep the deficit from disappearing.
The positive budget outlook forecast in early 2001 was substantially based on
the favorable future economic conditions that were then expected. The positive
outlook continued the overall improvement in the budget situation since the early
1990s. Much of this improvement had come from strong and sustained economic
growth (and the rest from policy changes to reduce the deficit and other changes).
When those favorable economic conditions faltered, so did the string of positive
forecasts of the budget outlook. What good economic conditions give, bad economic
conditions can take away. The unexpectedly lengthy economic weakness into 2003,
the start of a recession in March 2001, the lengthy fall in the stock market, the policy
responses to the September 2001 terrorist attacks, along with negative changes in the
technical components of the budget estimates, raised outlays, reduced receipts
(beyond policy changes), and eliminated the previously expected surpluses.
The FY2004 presidential budget documents and CBO’s January 2003 budget
report included information of the expected economic outlook and the budget’s
sensitivity to changes in selected economic variables. Both reports included tables
showing the budget’s sensitivity to changes in selected economic variables (this year,
it is found in chapter 2 of the Analytical Perspectives volume of the President’s

---

CRS-17
budget and in chapter 5 of CBO’s report). The effects of the variables are generally
symmetrical. A higher rate of real economic growth (than assumed in the budget
proposal) has approximately the same effect on the budget as same-sized lower rate
of economic growth has, but in the opposite direction. If a 1% lower rate of
economic growth reduces the surplus (or increases the deficit) by $30 billion in
FY2004 (from the OMB table; Table 2-6, p. 32, The Budget of the United States
Government, Fiscal Year 2004, Analytical Perspectives), a 1% higher than expected
rate of economic growth would reduce the deficit (or increase the surplus) by
approximately $30 billion. Changes in other variables generally have a smaller effect
on the budgetary balance than changes in real GDP. Sustained changes in the
underlying economic variables tend to produce larger changes in the budget numbers
than the effect of a one or two year change.
Legislation
H.Con.Res. 95
The Concurrent Resolution on the Budget for Fiscal Year 2004. Adopted by the
House Budget Committee (H.Rept. 108-37) on March 17, 2002, on a party-line vote
after rejecting numerous amendments. It follows many of the proposals of the
Administration. After some adjustments by the House leadership to assure passage,
it was adopted by the House (215-212) on March 21. A conference agreement
(H.Rept. 108-71) on the resolution cleared Congress on April 11.
S.Con.Res. 23
The Concurrent Resolution on the Budget for Fiscal Year 2004. Adopted by the
Senate Budget Committee (no report but a committee print, S.Prt. 10-19) on March
14, 2002, on a party-line vote. As passed, the resolution included reconciliation
instructions for approximately half of the President’s economic stimulus tax cut
proposal. The language of S.Con.Res. 23 was substituted for the contents of the
House-passed resolution, H.Con.Res. 95.
H.R. 2
The Jobs and Growth Tax Relief Reconciliation Act of 2003. The legislation
implemented the reconciliation instructions from the FY2004 budget resolution. It
cleared the House on May 9, 2003. A modified version passed the Senate on May
15. After difficult negotiations between the House and Senate leadership, the
conference agreement (H.Rept. 108-126) cleared Congress on May 23. The President
signed the bill into law (P.L. 108-27) on May 28. The legislation would cut taxes
(and includes in that amount small outlay increases) by $350 billion.

---

CRS-18
For Additional Reading
U.S. Congressional Budget Office. The Budget and Economic Outlook: Fiscal
Years 2004-2013. Washington, U.S. Govt. Print. Off., January 31, 2003.
——The Budget and Economic Outlook: An Update, Washington, U.S. Govt. Print.
Off., August 26, 2003.
——Budget Options. Washington, U.S. Govt. Print. Off., March 6, 2003.
U.S. Council of Economic Advisors. The Economic Report of the President.
Washington, U.S. Govt. Print. Off., February 2003.
U.S. Office of Management and Budget. The Budget of the United States
Government for Fiscal Year 2004. Washington, U.S. Govt. Print. Off.,
February 3, 2003.
——Fiscal Year 2004 Mid-Session Review, Washington, U.S. Govt. Print. Off.,
July 15, 2003.
CRS Products
CRS Electronic Briefing Book, Taxation,
[http://www.congress.gov/brbk/html/ebtxr1.shtml]
CRS Report RL30973. 2001 Tax Cut: Description, Analysis, and Background, by
David L. Brumbaugh, Jane G. Gravelle, Steven Maguire, Louis Alan Talley, and
Bob Lyke.
CRS Report RL31414. Baseline Budget Projections: A Discussion of Issues, by
Marc Labonte.
CRS Report RL30297. Congressional Budget Resolutions: Selected Statistics and
Information Guide, by Bill Heniff Jr.
CRS Report 98-511. Consideration of the Budget Resolution, by Bill Heniff Jr.
CRS Report RL31235. The Economics of the Federal Budget Deficit, by Brian W.
Cashell.
CRS Report 95-543. The Financial Outlook for Social Security and Medicare, by
David Koitz and Geoffrey Kollman.
CRS Report RS21136. Government Spending or Tax Reduction: Which Might Add
More Stimulus to the Economy?, by Marc Labonte.
CRS Report RL30839. Income Tax Cuts, the Business Cycle, and Economic
Growth: A Macroeconomic Analysis, by Marc Labonte and Gail Makinen.

---

CRS-19
CRS Report RS21287. Is Another Double Dip Recession Possible?, by Marc
Labonte and Gail Makinen.
CRS Issue Brief IB10110. Major Tax Issues in the 108th Congress. Possible U.S.
Military Intervention in Iraq: Some Economic Consequences, by Marc Labonte.
CRS Report 98-720. Manual on the Federal Budget Process, by Robert Keith and
Allen Schick.
CRS Report RL31585. Possible U.S. Military Intervention in Iraq: Some Economic
Consequences, by Marc Labonte.
CRS Report RS21420. President Bush’s 2003 Tax Cut Proposal: A Brief Overview,
by David Brumbaugh.
CRS Report RL31498. Social Security Reform: Economic Issues, by Jane Gravelle
and Marc Labonte.
CRS Report RL30708. Social Security, Saving, and the Economy, by Brian W.
Cashell.
CRS Report RL31907. Tax Cut Bills in 2003: A Comparison, by David Brumbaugh
and Don Richards.
CRS Report RS21126. Tax Cuts and Economic Stimulus: How Effective Are the
Alternatives?, by Marc Labonte and Gail Makinen.
CRS Report RL31134. Using Business Tax Cuts to Stimulate the Economy, by Jane
Gravelle.

---