CBO: The Cyclically Adjusted and Standardized Budget Measures

by Sabrina I. Pacifici on April 19, 2008

The Cyclically Adjusted and Standardized Budget Measures, April 2008

  • “The size of the budget deficit is influenced by temporary factors, such as the effects of the business cycle or onetime shifts in the timing of federal tax receipts and spending, and by the longer-lasting impact of such factors as tax and spending legislation, changes in the long-term (trend) growth rate of the economy, and movements in the distribution and proportion of income subject to taxation. To help separate out those factors, this report presents estimates of two adjusted budget measures: the cyclically adjusted deficit or surplus (which attempts to filter out the effects of the business cycle) and the standardized-budget deficit or surplus (which removes the effects of other factors in addition to those of the
    business cycle).”
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