Neo,
In the mid-1980s, federal officials predicted that present tax rates and spending levels would produce $200 billion in annual deficits through 1989. To prevent this from happening, Congress passed a $149.2 billion budget reconciliation package in 1984. The principal portions of this sum were $50.8 billion in increased tax revenues and $58.3 billion from reducing the growth of the defense budget.
In 1985, when the deficit for fiscal 1986 was still expected to exceed $200 billion, Congress passed a bill mandating automatic spending cuts to ensure that the deficit disappeared by 1991. If the president submitted a budget with a deficit in excess of that required under the bill, the Congressional Budget Office (CBO) would impose spending cuts to make up the difference. Budgets for interest on the national debt, veterans' benefits, Social Security, and most other entitlement programs were exempted from the automatic cuts, and five health programs (Medicare among them) were subject to smaller cuts. Congress could suspend automatic cuts during a recession or war. The bill cut the deficit by only $11.7 billion for fiscal 1986, however, and subsequent Supreme Court rulings weakened the CBO's deficit-cutting powers. Congress had prepared for this development by writing an alternative procedure into the bill under which the CBO and the Office of Management and Budget (OMB) would negotiate a spending reduction plan. The House-Senate joint committee would consider the plan under expedited procedures, but both houses would then have to approve it for it to become law.
In 1987, Congress passed two bills to cut the budget deficits over the following two years. By curtailing a variety of outlays, the two measures together reduced the deficit by $33.4 billion in fiscal 1988 and $42.7 billion in fiscal 1989. In 1990, Congress hiked taxes to bolster budget reduction efforts. The bill raised taxes on the 600,000 highest-income taxpayers while offering 4 million more a small tax cut. The maximum rate rose from 28 to 31 percent. The bill was expected to raise $137 billion in additional revenue over five years. The Deficit Reduction Act of 1993 combined increased taxes with spending reductions. OMB predicted that these reforms would reduce the deficit by $504.8 billion over five years. The CBO, using a different formula, set the estimate at $433 billion.
brook.edu
Scumbria |
