In its latest Budget and Economic Outlook the CBO expects the deficit to decline to $331 billion for 2005. This would be an $81 billion decrease over the 2004 deficit.
CBO now expects the 2005 deficit to total $331 billion—an $81 billion decline from the deficit recorded for 2004 (see Summary Table 1). Relative to the size of the economy, the deficit this year is expected to equal 2.7 percent of gross domestic product (GDP), down from 3.6 percent in 2004.
Part of the reason for this is an increase in revenues. The $85 billion dollar increase in revenues is primarily due to a surge in corporate income tax payments.
Despite this good news the CBO has not substantially altered its long term forecast in regards to the fiscal outlook. Budget deficits are projected out till 2015 where the deficit is projected to be $57 billion or about 0.3% of GDP.
In regards to the economic outlook the CBO is projecting healthy growth for the rest of 2005 and into 2006. The growth rate of GDP is projected to be 3.7% in 2005 and 3.4% in 2006.
