Deficit Reduction

Pursuant to a congressional request, GAO reviewed the need for continued deficit reduction and how the current deficit outlook compares to its "no action" scenario. GAO noted that: (1) the "no action" alternative was intended to illustrate the need to take action before external events forced belated policy changes; (2) the Congressional Budget Office (CBO) estimates that the Omnibus Budget Reconciliation Act of 1993 will reduce the deficit by $433 billion from 1994 through 1998; (3) CBO projects that the deficit will be 3.1 percent of the gross domestic product (GDP) in 2003, down from its projections of 6.8 percent a year ago; (4) CBO projects that the deficit and federal debt will increase after 1998, rising from 2.2 percent of GDP in 1998 to 3.3 percent in 2004; and (5) further programmatic policy actions are necessary to bring the deficit down.