Jan 24 (Reuters) - The Congressional Budget Office's projections for sharply lower U.S. budget deficits and eventual surpluses assume no change in current tax laws and ignore an expected Bush administration request for $100 billion in supplemental war funding for Iraq and Afghanistan.

Thus, the estimates assume strong revenues as tax cuts expire in 2011 and as millions more Americans are ensnared by the alternative minimum tax -- two controversial issues likely to draw legislative action in coming years.

As such, the CBO provided several "what if" scenarios for how changes in these areas would affect the budget.

The following shows key options and their estimated effect on budgets in fiscal 2008, 2012 and 2017. CBO's baseline estimates showed a $98 billion deficit for 2008, a $170 billion surplus in 2012 and a $248 billion surplus in 2017. (To view CBO baseline projections through 2012, please click on [ID:nN24383862])

-- Rapidly reduce the number of troops deployed for military operations in Iraq and Afghanistan and other activities related to the war on terrorism to 30,000 by 2010 from 225,000 in 2007. Effect on budget:

2008: -$55 billion, increases deficit to $153 billion

2012: +$43 billion, increases surplus to $213 billion

2017: +$74 billion, increases surplus to $322 billion

-- Longer draw-down of troop strength in Iraq and Afghanistan, reducing the numbers deployed to 75,000 by 2013. Effect on budget:

2008: -$61 billion, increases deficit to $159 billion

2012: -$27 billion, decreases surplus to $143 billion

2017: +$12 billion, increases surplus to $260 billion

-- Extend Bush administration's 2001 and 2003 tax cuts past their expiration at the end of 2010. Effect on budget:

2012: -$268 billion, turns surplus to $98 billion deficit

2017: -$424 billion, turns surplus to $176 billion deficit

-- Index alternative minimum tax for inflation. Effect on budget:

2008: -$61 billion, increases deficit to $159 billion

2012: -$49 billion, decreases surplus to $121 billion

2017: -$108 billion, decreases surplus to $140 billion

-- Extend Bush tax cuts and index alternative minimum tax for inflation, which includes some interactive negative effects on revenues in later years:

2008: -$61 billion, increases deficit to $159 billion

2012: -$378 billion, turns surplus to $208 billion deficit

2017: -$537 billion, turns surplus to $289 billion deficit

-- Increase regular discretionary appropriations at the rate of nominal growth for gross domestic product. Effect on budget:

2008: -$12 billion, increases deficit to $110 billion

2012: -$122 billion, decreases surplus to $48 billion

2017 -$316 billion, turns surplus to $68 billion deficit.

NOTE: Amounts include debt service costs where indicated. War spending scenarios are based on previously appropriated funds and assume that Congress will provide an additional $75 billion in budget authority in 2007 to carry out operations in Iraq and Afghanistan.

AlertNet news is provided by

Delicio.us  |   Digg  |   NewsVine  |   Reddit                                                                                  Permalink