An Analysis of the Recent Deterioration in the Fiscal Condition of the U.S. Government

In early September, the Congressional Budget Office released its estimate of the fiscal 2004 federal budget deficit, indicating that government outlays would exceed revenues by a total of $422 billion—the largest budget deficit in history. The fiscal '04 deficit exceeds the previous record, a $375 billion deficit set just last year, by nearly 13 percent.

Even more striking than the size of these deficits is the speed with which the nation has developed them. As recently as fiscal 2001, the federal budget was still in surplus, and as recently as fiscal 2000, the nation had the largest budget surplus in its history.

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