U.S. Federal Budget FY 2008 - Overview and Impact on the U.S. Economy

U.S. Federal Budget FY 2008 Primer: This primer will guide you through the U.S. Federal Budget for FY 2008, including:

• Assumptions about the U.S. economy,
• Revenue projections,
• Discretionary and mandatory spending proposals, and
• The impact of deficit spending.

It provides a summary of the key proposals and how the proposals, if passed, would impact the U.S. economy. It also highlights important areas that the U.S. Federal Budget for FY 2008 disregards. Finally, this primer provides background issue papers available for further reading.

Assumptions About the U.S. Economy: The Federal Budget is based on assumptions about the U.S. economy and trends for the future. These assumptions are outlined in the Economic Report of the President - FY 2008, which provides an excellent discussion of key economic trends.

However, an important issue that is not discussed is The U.S. Debt and How It Got So Big.

There is also no mention made of the the current Inverted Yield Curve, which could be a signal of impending recession.

Revenue Projections: Three questions must be answered to determine whether the revenue projections are realistic:

1. Are the GDP forecasts realistic?
2. Are revenue projections accurate?
3. Does the budget postpone a revenue crisis?

These questions are answered in the analysis of U.S. Federal Budget - Revenue Projections.

However, the revenue projections do not address the impact of the Alternative Minimum Tax. The budget also assumes the continuation of the EGTRRA and JGTRRA tax relief acts, which may not be passed by Congress.

Spending Proposals: Most of the budget debate in Congress will be about the President’s spending proposals.

The U.S. Federal Budget - Military Spending reports on the request for huge increases, while spending needs for FY 2009 and beyond is not really addressed.

The military budget is part of U.S. Federal Budget - Discretionary Spending. The non-military portion of discretionary spending is projected to decline over the next five years, which will significantly impact certain segments of the U.S. population.

U.S. Federal Budget - Mandatory Spending describes the huge impact Social Security will have on the U.S. economy over the next 30 years.

Deficit Spending: The U.S. Federal Budget is forecasted to be balanced by 2012. Find out the issues surrounding the U.S. Federal Budget Deficit and why it will be so difficult to erase.

Background Reading: To help understand the U.S. Federal Budget FY 2008, the following may provide good background reading:

• U.S.Federal Budget Income and Taxes Primer
• U.S. Federal Budget and Spending Primer
• Who’s Who in the U.S. Federal Budget