E C O N O M I C R E P O R T O F T H E P R E S I D E N T

asis, the current expansion also shows evidence of fiscal restraint. Federaloutlays in 1991 were 22.3 percent of GDP. By fiscal 1999 this ratio had fallento 18.7 percent, as efforts to restrain spending combined with strong economicgrowth. This decline in spending of 3.6 percentage points of GDP is muchgreater than the 1.3-percentage-point decline during the 1982-90 expansion.Since this measure typically declines as the economy moves out of recession—andthe deeper the recession, the greater the decline—the comparisonbetween the two expansions is striking given that the current expansion waslaunched from a much shallower recession. Moreover, this decline inspending occurred even as revenues were rising (Chart 1-7).According to the Administration forecast, assuming implementation ofpolicy as proposed by the President, Federal outlays are forecast to fall to 16.7percent of GDP by 2010. This reduction results in part from a decline ininterest costs as debt is paid off.But perhaps the most dramatic illustration of how unusual budget policyhas been in this expansion comes from estimates of the structural budgetdeficit by the Congressional Budget Office (CBO). The structural budgetdeficit adjusts the actual deficit to take out the effect of fluctuations in thebusiness cycle. It estimates what the budget deficit would have been if GDPhad been at its potential. According to the CBO’s estimates, structuraldeficits were pervasive during the long expansion of the 1960s, except at thevery beginning (Chart 1-8). And those deficits increased sharply until the taxincrease of 1968. Throughout its duration, the expansion of the 1980s was32 | Economic Report of the President