Continuing Resolutions: Overview of Components and Practices

Summary: The program activities of most federal agencies are generally funded on an annual basis through the enactment of regular appropriations acts. When those annual appropriations acts are not enacted by the beginning of the fiscal year (i.e., by October 1), one or more continuing appropriations acts (commonly known as continuing resolutions or CRs) may be enacted to provide temporary funding to continue certain programs and activities until action on the regular appropriations acts is completed.

Summary: Congress has included six main components in CRs. First, CRs have provided funding for certain activities (coverage), which are typically specified with reference to the prior fiscal year's appropriations acts. Second, CRs have provided budget authority for a specified duration of time. This duration may be as short as a single day or as long as the remainder of the fiscal year. Third, CRs have provided funds based on an overall funding rate. Fourth, the use of budget authority provided in the CR has been prohibited for new activities not funded in the previous fiscal year. Fifth, the duration and amount of funds in the CR, and purposes for which they may be used for specified activities, may be adjusted through anomalies. Sixth, legislative provisions—which create, amend, or extend other laws—have been included in some instances.

Summary: This report provides detailed information on CRs beginning with FY1977, which was the first fiscal year that began on October 1. Congress has enacted one or more CRs in all but three of the last 43 fiscal years (FY1977-FY2019). In addition, in 10 of the last 18 fiscal years, the initial CR—and in some years subsequent CRs—provided continuing appropriations for all the regular appropriations acts.

Summary: After FY1997—the most recent fiscal year that all regular appropriations bills were enacted before the start of the new fiscal year—an average of at least five CRs were signed into law for each fiscal year before the appropriations process was completed for that year. During this period, CRs provided funding for an average of almost five months each fiscal year.

Summary: For some fiscal years, a CR has provided continuing appropriations (i.e., at a rate of operations) through the end of that year (often referred to as a full-year CR). Most recently, a full-year CR was enacted for most of the regular appropriations acts for FY2007, FY2011, and FY2013. In the 1980s, in contrast, some "full-year CRs" actually included the full text of certain regular appropriations acts (i.e., in the form of an omnibus appropriations act rather than a typical CR).

The program activities of most federal agencies are generally funded on an annual basis through the enactment of 12 regular appropriations acts . When those annual appropriations acts are not enacted by the beginning of the fiscal year (i.e., by October 1), one or more continuing appropriations acts may be enacted to provide temporary funding to continue certain programs and activities until action on regular appropriations acts is completed. Such funding is provided for a specified period of time, which may be extended through the enactment of subsequent CRs.

A continuing appropriations act is commonly referred to as a continuing resolution or CR because it has typically been in the form of a joint resolution rather than a bill. But there is no procedural requirement as to its form. Continuing appropriations are also occasionally provided through a bill.

If appropriations are not enacted for a fiscal year through a regular appropriations act or a CR, a "funding gap" occurs until such appropriations are provided. When a funding gap occurs, federal agencies may be directed to begin a "shutdown" of the affected programs and activities. Agencies are generally prohibited from obligating or expending federal funds in the absence of appropriations.

Congress has enacted one or more CRs in all but three of the 43 fiscal years since FY1977. Further information is available in Table 2 of this report. In total, 186 CRs were enacted into law during the period covering FY1977-FY2019, ranging from zero to 21 in any single fiscal year. On average, about four CRs were enacted each fiscal year during this interval. Table 3 and Figure 1 of this report provide more information on this aspect of CRs.

This report provides an overview of the components of CRs and information about congressional practices related to their use. The first section of this report explains six of the typical main components of CRs: coverage, duration, funding rate, restrictions on new activities, anomalies, and legislative provisions. The second section discusses the enactment of regular appropriations acts prior to the start of the fiscal year and the number of CRs enacted, beginning with FY1977, which was the first fiscal year that began on October 1. The third section provides information on the variation in the number and duration of CRs enacted each fiscal year after FY1997—the most recent fiscal year in which all regular appropriations were enacted before the start of the new fiscal year. Finally, the fourth section of this report discusses the features of the 15 "full-year CRs" that provided funding through the remainder of the fiscal year. For further information, see Table 4 in this report. A list of all CRs enacted between FY1977 and FY2019 is provided at the end of this report in Table 5 .

This report has been updated from the previous January 2016 version to include information on FY2017, FY2018, and FY2019.

Main Components of Continuing Resolutions

Congress has included six main components in CRs. First, CRs provide funding for certain activities ( coverage ), which are typically specified with reference to the prior or current fiscal year's appropriations acts. Second, CRs provide budget authority for a specified duration of time. This duration may be as short as a single day or as long as the remainder of the fiscal year. Third, CRs typically provide funds based on an overall funding rate . Fourth, the use of budget authority provided in the CR is typically prohibited for new activities not funded in the previous fiscal year. Fifth, the duration and amount of funds in the CR, and purposes for which they may be used for specified activities, may be adjusted through anomalies . Sixth, legislative provisions —which create, amend, or extend other laws—have been included in some instances.

Although this section discusses the above components as they have been enacted in CRs under recent practice, it does not discuss their potential effects on budget execution or agency operations. For analysis of these issues, see CRS Report RL34700, Interim Continuing Resolutions (CRs): Potential Impacts on Agency Operations .

A CR provides funds for certain activities, which are typically specified with reference to other pieces of appropriations legislation or the appropriations acts for a previous fiscal year. Most often, the coverage of a CR is defined with reference to the activities funded in prior fiscal years' appropriations acts for which the current fiscal year's regular appropriations have yet to be enacted. For example, in Section 101 of P.L. 111-68 (the first CR for FY2010), the coverage included activities funded in selected regular and supplemental appropriations acts for FY2008 and FY2009:

Sec. 101. Such amounts as may be necessary… under the authority and conditions provided in such Acts, for continuing projects or activities (including the costs of direct loans and loan guarantees) that are not otherwise specifically provided for in this joint resolution, that were conducted in fiscal year 2009, and for which appropriations, funds, or other authority were made available in the following appropriations Acts:

(1) Chapter 2 of title IX of the Supplemental Appropriations Act, 2008 ( P.L. 110-252 ).

(2) Section 155 of division A of the Consolidated Security, Disaster Assistance, and Continuing Appropriations Act, 2009 ( P.L. 110-329 ), except that subsections (c), (d), and (e) of such section shall not apply to funds made available under this joint resolution.

(3) Divisions C through E of the Consolidated Security, Disaster Assistance, and Continuing Appropriations Act, 2009 ( P.L. 110-329 ).

(4) Divisions A through I of the Omnibus Appropriations Act, 2009 ( P.L. 111-8 ), as amended by section 2 of P.L. 111-46 .

(5) Titles III and VI (under the heading `Coast Guard ' ) of the Supplemental Appropriations Act, 2009 ( P.L. 111-32 ). [emphasis added]

Less frequently, CRs specify coverage with reference to regular appropriations bills for the current fiscal year that have yet to be enacted. In these instances, it is possible that an activity covered in the corresponding previous fiscal year's appropriations bill might not be covered in the CR. Alternatively, a CR might stipulate that activities funded in the previous fiscal year are covered only if they are included in a regular appropriations bill for the current fiscal year. For example, Section 101 of P.L. 105-240 , the first CR for FY1999, provided that funding would continue only under such circumstances.

SEC. 101. (a) Such amounts as may be necessary under the authority and conditions provided in the applicable appropriations Act for the fiscal year 1998 for continuing projects or activities including the costs of direct loans and loan guarantees (not otherwise specifically provided for in this joint resolution) which were conducted in the fiscal year 1998 and for which appropriations, funds, or other authority would be available in the following appropriations Acts :

(1) the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 1999….

(8) the Departments of Labor, Health and Human Services, and Education, and Related Agencies Appropriations Act, 1999, the House and Senate reported versions of which shall be deemed to have passed the House and Senate respectively as of October 1, 1998, for the purposes of this joint resolution, unless a reported version is passed as of October 1, 1998, in which case the passed version shall be used in place of the reported version for purposes of this joint resolution;

(9) the Legislative Branch Appropriations Act, 1999…. [emphasis added]

CRs may be enacted as stand-alone legislative vehicles or as provisions attached to a regular appropriations bill or an omnibus bill. In instances in which one or more regular appropriations bills are near completion, Congress may find it expeditious to include a CR in that same legislative vehicle to cover activities in the remaining regular bills that are not yet enacted. In such instances, some activities may be covered by reference while funding for others is provided through the text of the measure. For example, Division C of P.L. 115-245 —the Department of Defense and Labor, Health and Human Services, and Education Appropriations Act, 2019, and Continuing Appropriations Act, 2019—provided continuing appropriations through December 7, 2018, by referencing the FY2018 regular appropriations acts, while the other divisions of P.L. 115-245 provided full-year regular appropriations for the FY2019 Defense and Labor-HHS-ED bills.

The duration of a CR refers to the period for which budget authority is provided for covered activities. The period ends either upon the enactment of the applicable regular appropriations act or on an expiration date specified in the CR, whichever occurs first. When a CR expires prior to the completion of all regular appropriations bills for a fiscal year, one or more additional CRs may be enacted to prevent funding gaps and secure additional increments of time to complete the remaining regular appropriations bills. The duration of any further CRs may be brief, sometimes a single day, to encourage the process to conclude swiftly, or it may be for weeks or months to accommodate further negotiations or congressional recesses. In some cases, CRs have carried over into the next session of Congress.

In most of the fiscal years in which CRs have been used, a series of two or more have been enacted into law. Such CRs may be designated by their order (e.g., "first" CR, "second" CR) or, after the initial CR has been enacted, designated as a "further" CR. When action on the regular appropriations bills is not complete by the time when the first CR expires, subsequent CRs will often simply replace the expiration date in the preceding CR with a new expiration date. For example, Section 1 of the third CR for FY2016, P.L. 114-100 , stated that "Public Law 114-53 is amended by striking the date specified in Section 106(3) and inserting 'December 22, 2015.'" This action extended the duration of the preceding CR by six days.

Funds provided by a CR will not necessarily be used by all covered activities through the date the CR expires. In practice, the budget authority provided by a CR may be superseded by the enactment of subsequent appropriations measures or the occurrence of other specified conditions. In an instance in which a regular appropriations bill was enacted prior to the expiration of a CR, the budget authority provided by the regular bill for covered activities would replace the funding provided by the CR. All other activities in the CR, however, would continue to be funded by the CR unless they were likewise superseded or the CR expired. The duration of funds for certain activities could also be shortened if other conditions that are specified in the CR occur. For example, Section 107 of P.L. 108-84 , the first CR for FY2004, provided funds for 31 days or fewer:

Sec. 107. Unless otherwise provided for in this joint resolution or in the applicable appropriations Act, appropriations and funds made available and authority granted pursuant to this joint resolution shall be available until (a) enactment into law of an appropriation for any project or activity provided for in this joint resolution, or (b) the enactment into law of the applicable appropriations Act by both Houses without any provision for such project or activity, or (c) October 31, 2003, whichever first occurs . [emphasis added]

In this instance, funding for all other activities not subject to these conditions would continue under the CR until it expired or was otherwise superseded.

When a CR is attached to a regular appropriations bill, the activities covered by regular appropriations are funded through the remainder of the fiscal year, whereas the activities covered by the CR are funded through a specified date. Congress may also single out specific activities in a CR to receive funding for a specified duration that differs from the vast majority of other accounts and activities. This type of variation in duration is discussed in the " Exceptions to Duration, Amount, and Purposes: Anomalies " section.

As an alternative to the separate enactment of one or more of the regular appropriations bills for a fiscal year, a CR may provide funds for the activities covered in such bills through the remainder of the fiscal year. This type of CR is referred to as a full-year CR. Full-year CRs may provide funding for all bills that have yet to be enacted or include the full text of one or more regular appropriations bills. For example, Division A of P.L. 112-10 contained the text of the FY2011 Defense Appropriations Act, whereas the programs and activities covered by the 11 remaining regular appropriations bills were funded by the full-year CR in Division B.

CRs often fund activities under a formula-type approach that provides budget authority at a restricted level but not a specified amount. This method of providing budget authority is commonly referred to as the "funding rate." Under a funding rate, the amount of budget authority for an account is calculated as the total amount of budget authority annually available based on a reference level (usually a dollar amount or calculation), multiplied by the fraction of the fiscal year for which the funds are made available in the CR. This is in contrast to regular and supplemental appropriations acts, which generally provide specific amounts for each account.

In previous years, many CRs have provided funding across accounts by reference to the amount of budget authority available in specified appropriations acts from the previous fiscal year. For example, Section 101 of P.L. 110-329 , the first CR for FY2010, provided the following funding rate:

Such amounts as may be necessary, at a rate for operations as provided in the applicable appropriations Acts for fiscal year 2008 and under the authority and conditions provided in such Acts, for continuing projects or activities (including the costs of direct loans and loan guarantees) that are not otherwise specifically provided for in this joint resolution, that were conducted in fiscal year 2008, and for which appropriations, funds, or other authority were made available in the following appropriations Acts: divisions A, B, C, D, F, G, H, J, and K of the Consolidated Appropriations Act, 2008 ( P.L. 110-161 ) . [emphasis added]

Other CRs have provided funding by reference to the levels available in the previous fiscal year, with either an increase or decrease from the previous fiscal year's level. For example, Section 101(a) and (b) of P.L. 112-33 , the first CR for FY2012, provided the following funding rate:

(a) Such amounts as may be necessary, at a rate for operations as provided in the applicable appropriations Acts for fiscal year 2011 and under the authority and conditions provided in such Acts, for continuing projects or activities (including the costs of direct loans and loan guarantees) that are not otherwise specifically provided for in this Act, that were conducted in fiscal year 2011, and for which appropriations, funds, or other authority were made available in the following appropriations Acts….

(b) The rate for operations provided by subsection (a) is hereby reduced by 1.503 percent . [emphasis added]

Although these examples illustrate the most typical types of funding rates, other types of funding rates have sometimes been used when providing continuing appropriations. For example, P.L. 105-240 , the first CR for FY1999, provided a variable funding rate for covered activities. Specifically, the CR provided funds derived from three possible reference sources: the House- and Senate-passed FY1999 regular appropriations bills, the amount of the President's budget request, or "current operations" (the total amount of budget authority available for obligation for an activity during the previous fiscal year), whichever was lower. In instances where no funding was provided under the House-and Senate-passed FY1999 appropriations bills, the funding rate would be based on the lower of the President's budget request or current operations. In addition, while the first CR for a fiscal year may provide a certain funding rate, subsequent CRs sometimes may provide a different rate.

CRs have sometimes provided budget authority for some or all covered activities by incorporating the actual text of one or more regular appropriations bills for that fiscal year rather than providing funding according to the rate formula. For example, P.L. 112-10 provided funding for the Department of Defense through the incorporation of a regular appropriations bill in Division A, whereas Division B provided formulaic funding for all other activities for the remainder of the fiscal year. In this type of instance, the formula in the CR applies only to activities not covered in the text of the incorporated regular appropriations bill or bills.

Purpose for Funds and Restrictions on New Activities

CRs that provide a funding rate for activities often stipulate that funds may be used for the purposes and in the manner provided in specified appropriations acts for the previous fiscal year. CRs may also provide that the funds provided may be used only for activities funded in the previous fiscal year. In practice, this is often characterized as a prohibition on "new starts." In addition, conditions and limitations on program activity from the previous year's appropriations acts may be retained by language contained within the resolution's text. An example of such language, from P.L. 112-33 , is below:

Sec. 103. Appropriations made by section 101 shall be available to the extent and in the manner that would be provided by the pertinent appropriations Act. [emphasis added]

Sec. 104. Except as otherwise provided in section 102, no appropriation or funds made available or authority granted pursuant to section 101 shall be used to initiate or resume any project or activity for which appropriations, funds, or other authority were not available during fiscal year 2011. [emphasis added]

This language prevents the initiation of new activities with the funds provided in the CR. Agencies may use appropriated funds from prior fiscal years that remain available, however, to initiate new activities in some circumstances.

Exceptions to Duration, Amount, and Purposes: Anomalies

Even though CRs typically provide funds at a rate, they may also include provisions that enumerate exceptions to the duration , amount , or purposes for which those funds may be used for certain appropriations accounts or activities. Such provisions are commonly referred to as "anomalies." The purpose of anomalies is to preserve Congress's constitutional prerogative to provide appropriations in the manner it sees fit, even in instances when only short-term funding is provided.

A CR may contain anomalies that designate a duration of funding for certain activities that is different from the overall duration provided. For example, Section 112 of P.L. 108-84 provided an exception to the expiration date of October 31, 2003, specified in Section 107(c) of the CR:

For entitlements and other mandatory payments whose budget authority was provided in appropriations Acts for fiscal year 2003, and for activities under the Food Stamp Act of 1977, activities shall be continued at the rate to maintain program levels under current law, under the authority and conditions provided in the applicable appropriations Act for fiscal year 2003, to be continued through the date specified in section 107(c): Provided , That notwithstanding section 107, funds shall be available and obligations for mandatory payments due on or about November 1 and December 1, 2003, may continue to be made . [emphasis added]

Anomalies may also designate a specific amount or rate of budget authority for certain accounts or activities that is different than the funding rate provided for the remainder of activities in the CR. Typically, such funding is specified as an annualized rate based upon a lump sum. For example, Section 120 of P.L. 112-33 provided the following anomaly for a specific account, which was an exception to the generally applicable rate in Section 101:

Notwithstanding section 101, amounts are provided for "Defense Nuclear Facilities Safety Board—Salaries and Expenses" at a rate for operations of $29,130,000. [emphasis added]

Funding adjustments can also be provided in anomalies for groups of accounts in the bill. For example, Section 121 of P.L. 112-33 provided a different rate for certain funds in a group of accounts:

Notwithstanding any other provision of this Act, except section 106, the District of Columbia may expend local funds under the heading "District of Columbia Funds" for such programs and activities under title IV of H.R. 2434 (112 th Congress), as reported by the Committee on Appropriations of the House of Representatives, at the rate set forth under ''District of Columbia Funds—Summary of Expenses'' as included in the Fiscal Year 2012 Budget Request Act of 2011 (D.C. Act 19–92), as modified as of the date of the enactment of this Act. [emphasis added]

Further, anomalies may provide exceptions to amounts specified in other laws. For example, Section 121 of P.L. 110-329 provided that funds may be expended in excess of statutory limits up to an alternative rate.

Notwithstanding the limitations on administrative expenses in subsections (c)(2) and (c)(3)(A) of section 3005 of the Digital Television Transition and Public Safety Act of 2005 ( P.L. 109-171 ; 120 Stat. 21), the Assistant Secretary (as such term is defined in section 3001(b) of such Act) may expend funds made available under sections 3006, 3008, and 3009 of such Act for additional administrative expenses of the digital-to-analog converter box program established by such section 3005 at a rate not to exceed $180,000,000 through the date specified in section 106(3) of this joint resolution. [emphasis added]

CRs may also use anomalies to alter the purposes for which the funds may be expended. Such anomalies may allow funds to be spent for activities that would otherwise be prohibited or prohibit funds for activities that might otherwise be allowed. For example, Section 114 of P.L. 108-309 , the first CR for FY2005, prohibited funds from being available to a particular department for a certain activity:

Notwithstanding any other provision of this joint resolution, except sections 107 and 108, amounts are made available for the Strategic National Stockpile ("SNS") at a rate for operations not exceeding the lower of the amount which would be made available under H.R. 5006, as passed by the House of Representatives on September 9, 2004, or S. 2810, as reported by the Committee on Appropriations of the Senate on September 15, 2004: Provided, That no funds shall be made available for the SNS to the Department of Homeland Security under this joint resolution …. [emphasis added]

Substantive legislative provisions, which have the effect of creating new law or changing existing law, have also been included in some CRs. One reason why CRs have been attractive vehicles for such provisions is that they are often widely considered to be must-pass measures to prevent funding gaps. Legislative provisions previously included in CRs have varied considerably in length, from a short paragraph to more than 200 pages.

House and Senate rules restrict the inclusion of legislative provisions in appropriations bills, but such restrictions are applicable in different contexts. Although House rules prohibit legislative provisions from being included in general appropriations measures (including amendments or any conference report to such measures), these restrictions do not apply to CRs. Senate rules prohibit non-germane amendments that include legislative provisions either on the Senate floor or as an amendment between the houses. While these Senate restrictions do apply in the case of CRs, there is considerable leeway on when such provisions may be included, such as when the Senate amends a legislative provision included by the House. The rules of the House and Senate are not self-enforcing. A point of order must be raised and sustained to prevent any legislative language from being considered and enacted.

Substantive provisions in CRs have included language that established major new policies, such as an FY1985 CR, which contained the Comprehensive Crime Control Act of 1984.

More frequently, CRs have been used to amend or renew provisions of law. For example, Section 140 of P.L. 112-33 retroactively renewed import restrictions under the Burmese Freedom and Democracy Act of 2003 ( P.L. 108-61 ):

(a) Renewal of Import Restrictions Under Burmese Freedom and Democracy Act of 2003.—

(1) In general.—Congress approves the renewal of the import restrictions contained in section 3(a)(1) and section 3A (b)(1) and (c)(1) of the Burmese Freedom and Democracy Act of 2003.

(2) Rule of construction.—This section shall be deemed to be a "renewal resolution" for purposes of section 9 of the Burmese Freedom and Democracy Act of 2003.

(b) Effective Date.—This section shall take effect on July 26, 2011.

CRs have also contained legislative provisions that temporarily extended expiring laws. For example, Section 136 of P.L. 115-298 extended the National Flood Insurance Program:

Sec. 136. Sections 1309(a) and 1319 of the National Flood Insurance Act of 1968 ( 42 U.S.C. 4016(a) and 4026) shall be applied by substituting the date specified in section 105(3) of this Act for 'December 7, 2018.'

Legislative provisions that temporarily extend expiring laws are effective through the date the CR expires, unless otherwise specified.

The Enactment of Regular Appropriations Bills and Use of CRs, FY1977-FY2019

As mentioned previously, regular appropriations were enacted after October 1 in all but four fiscal years between FY1977 and FY2019. Consequently, CRs have been needed in almost all of these years to prevent one or more funding gaps from occurring.

Table 2 provides an overview of the enactment of regular appropriations bills and the use of CRs between FY1977 and FY2019. All appropriations were enacted before the start of the new fiscal year four times during this period: FY1977, FY1989, FY1995, and FY1997. Over half of the regular appropriations bills for a fiscal year were enacted before the start of the new fiscal year in only one instance (FY1978). In all other fiscal years, fewer than six regular appropriations acts were enacted on or before October 1. In addition, in 15 out of the 43 years during this period, no regular appropriations bills were enacted prior to the start of the fiscal year. Ten of these fiscal years have occurred in the interval since FY2001.

CRs were enacted in all but three of these fiscal years (FY1989, FY1995, and FY1997). In FY1977, although all 13 regular appropriations bills became law on or before the start of the fiscal year, two CRs were enacted to provide funding for certain activities that had not been included in the regular appropriations acts.

Duration and Frequency of Continuing Resolutions, FY1998-FY2019

CRs have been a significant element of the recent annual appropriations process. As shown in Table 3 , a total of 117 CRs were enacted into law from FY1998 to FY2019. While the average number of such measures enacted per year was about five, the number enacted ranged from two measures (for FY2009, FY2010, and FY2013) to 21 (for FY2001).

During the past 22 fiscal years, Congress provided funding by means of a CR for an average of almost five months (143 days) each fiscal year. Taking into account the total duration of all CRs for each fiscal year, the period for which continuing appropriations were provided ranged from 21 days to 365 days. On average, each of the 117 CRs lasted for about 39 days; 53 of these were for seven days or fewer. Three full-year CRs were used during this period, for FY2007, FY2011, and FY2013.

In the first four instances (FY1998-FY2001), the expiration date of the final CR was set in the first quarter of the fiscal year on a date occurring between October 21 and December 21. The expiration date in the final CR for the next three fiscal years (FY2002-FY2004) and FY2019, however, was set in the following session of Congress on a date occurring between January 10 and February 20. In six of the next 12 fiscal years (FY2005, FY2006, FY2008, FY2010, FY2012, and FY2016), the expiration dates were in the first quarter of the fiscal year on a date occurring between December 8 and December 31. For the remaining fiscal years, the final CRs were enacted during the next session of Congress. In one instance, the final CR for the fiscal year expired during the month of January (FY2014). In three instances, the final CR expired in March (FY2009, FY2015, and FY2018). Three other final CRs—for FY2007, FY2011, and FY2013—provided funding through the end of the fiscal year.

Figure 1 presents a representation of the duration of CRs for FY1998-FY2019. As the figure shows, there is no significant correlation between these two variables. For example, six CRs were enacted for both FY1998 and FY1999, but the same number of measures lasted for a period of 57 days for FY1998 and only 21 days for FY1999. The largest number of CRs enacted for a single fiscal year during this period—21 for FY2001—covered a period lasting 82 days at an average duration of about four days per act. The smallest number enacted—two each for FY2009, FY2010, and FY2013—covered 162 days, 79 days, and 365 days, respectively.

Figure 1 also shows considerable mix in the use of shorter-term and longer-term CRs for a single fiscal year. For example, for FY2001, 21 CRs covered the first 82 days of the fiscal year. The first 25 days were covered by a series of four CRs lasting between five and eight days each. The next 10 days, a period of intense legislative negotiations leading up to the national elections on November 7, 2000, were covered by a series of 10 one-day CRs. The next 31 days were covered by two CRs, the first lasting 10 days and the second lasting 21 days. The first of these two CRs was enacted into law on November 4, the Saturday before the election, and extended through November 14, the second day of a lame-duck session. The second CR was enacted into law on November 15 and expired on December 5, which was 10 days before the lame-duck session ended. The remaining five CRs, which ranged in duration from one to six days, covered the remainder of the lame-duck session and several days beyond (as the final appropriations measures passed by Congress were being processed for the President's approval).

Table 5 provides more detailed information on the number, length, and duration of CRs enacted for FY1977-FY2019. As indicated previously, this represents the period after the start of the federal fiscal year was moved from July 1 to October 1 by the Congressional Budget Act.

Full-year CRs have been used to provide annual discretionary spending on a number of occasions. Prior to the full implementation of the Congressional Budget Act in FY1977, full-year CRs were used occasionally, particularly in the 1970s. Full-year CRs were enacted into law for four of the six preceding fiscal years (FY1971, FY1973, FY1975, and FY1976). Following the successful completion of all 13 regular appropriations acts prior to the start of FY1977, full-year CRs were used in each of the 11 succeeding fiscal years (FY1978-FY1988) to cover at least one regular appropriations act. Three years later, another full-year CR was enacted for FY1992. Most recently, full-year CRs were enacted for FY2007, FY2011, and FY2013.

Table 4 identifies the 15 full-year CRs enacted for the period since FY1977. Nine of the 15 full-year CRs during this period were enacted in the first quarter of the fiscal year—three in October, two in November, and four in December. The six remaining measures, however, were enacted during the following session between February 15 and June 5.

The full-year CRs enacted during this period also varied in terms of length and the form of funding provided. Full-year CRs prior to FY1983 were relatively short measures, ranging in length from one to four pages in the Statutes-at-Large . Beginning with FY1983 and extending through FY1988, however, the measures became much lengthier, ranging from 19 to 451 pages. The greater page length of full-year CRs enacted for the period covering FY1983-FY1988 may be explained by two factors. First, full-year CRs enacted prior to FY1983 generally established funding levels by formulaic reference. Beginning with FY1983, however, Congress began to incorporate the full text of some or all of the covered regular appropriations acts, thereby increasing its length considerably. None of the full-year CRs enacted between 1985 and 1988 used formulaic funding provisions. Secondly, the number of regular appropriations acts covered by full-year CRs increased significantly during the FY1983-FY1988 period. For the period covering FY1978-FY1982, the number of regular appropriations acts covered by CRs for the full fiscal year ranged from one to six (averaging about three). Beginning with FY1983 and extending through FY1988, the number of covered acts ranged from five to 13, averaging about 10.

The next two full-year CRs, for FY1992 and FY2007, returned to the earlier practice of using formulaic references and anomalies to establish funding levels. Both CRs provided funding only through this means. As a consequence, the length of these measures was considerably shorter than the FY1983 through FY1988 full-year CRs.

The two most recent full-year CRs, for FY2011 and FY2013, in some respects were a hybrid of the earlier and recent approaches. The FY2011 full-year CR provided funding for 11 bills through formulaic provisions and anomalies. It also carried the full text of one regular appropriations bill in a separate division of the act (the FY2011 Department of Defense Appropriations Act). Similarly, the FY2013 CR contained the texts of five regular appropriations bills in Divisions A through E of the act—the FY2013 Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act; the Commerce, Justice, Science, and Related Agencies Appropriations Act; the Department of Defense Appropriations Act; the Department of Homeland Security Appropriations Act; and the Military Construction and Veterans Affairs and Related Agencies Appropriations Act. In addition, Division F was characterized as providing continuing appropriations for the remaining seven regular appropriations bills through formulaic provisions and anomalies. Unlike previous years, the formula for providing continuing appropriations was based on the amount provided in FY2012 rather than a rate.


Fiscal Policy: Economic Effects

Summary: Fiscal policy is the means by which the government adjusts its spending and revenue to influence the broader economy. By adjusting its level of spending and tax revenue, the government can affect the economy by either increasing or decreasing economic activity in the short term. For example, when the government runs a budget deficit, it is said to be engaging in fiscal stimulus, spurring economic activity, and when the government runs a budget surplus, it is said to be engaging in a fiscal contraction, slowing economic activity.

Summary: The government can use fiscal stimulus to spur economic activity by increasing government spending, decreasing tax revenue, or a combination of the two. Increasing government spending tends to encourage economic activity either directly through purchasing additional goods and services from the private sector or indirectly by transferring funds to individuals who may then spend that money. Decreasing tax revenue tends to encourage economic activity indirectly by increasing individuals' disposable income, which tends to lead to those individuals consuming more goods and services. This sort of expansionary fiscal policy can be beneficial when the economy is in recession, as it lessens the negative impacts of a recession, such as elevated unemployment and stagnant wages. However, expansionary fiscal policy can result in rising interest rates, growing trade deficits, and accelerating inflation, particularly if applied during healthy economic expansions. These side effects from expansionary fiscal policy tend to partly offset its stimulative effects.

Summary: The government can use contractionary fiscal policy to slow economic activity by decreasing government spending, increasing tax revenue, or a combination of the two. Decreasing government spending tends to slow economic activity as the government purchases fewer goods and services from the private sector. Increasing tax revenue tends to slow economic activity by decreasing individuals' disposable income, likely causing them to decrease spending on goods and services. As the economy exits a recession and begins to grow at a healthy pace, policymakers may choose to reduce fiscal stimulus to avoid some of the negative consequences of expansionary fiscal policy, such as rising interest rates, growing trade deficits, and accelerating inflation, or to manage the level of public debt.

Summary: In recent history, the federal government has generally followed a pattern of increasing fiscal stimulus during a recession, then decreasing fiscal stimulus during the economic recovery. Prior to the "Great Recession" of 2007-2009 the federal budget deficit was about 1% of gross domestic product (GDP) in 2007. During the recession, the budget deficit grew to nearly 10% of GDP in part due to additional fiscal stimulus applied to the economy. The budget deficit began shrinking in 2010, falling to about 2% of GDP by 2015. In contrast to the typical pattern of fiscal policy, the budget deficit began growing again in 2016, rising to nearly 4% of GDP in 2018 despite relatively strong economic conditions. This change in fiscal policy is notable, as expanding fiscal stimulus when the economy is not depressed can result in rising interest rates, a growing trade deficit, and accelerating inflation. As of publication of this report, interest rates have not risen discernibly and are still near historic lows, and inflation rates show no sign of acceleration. The trade deficit has been growing in recent years; however, it is not clear that this growth in the trade deficit is a result of increased fiscal stimulus.

T he federal government has two major tools for affecting the macroeconomy: fiscal policy and monetary policy. These policy interventions are generally used to either increase or decrease economic activity to counter the business cycle's impact on unemployment, income, and inflation. This report focuses on fiscal policy; for more information related to monetary policy, refer to CRS Report RL30354, Monetary Policy and the Federal Reserve: Current Policy and Conditions , by Marc Labonte.

Fiscal policy is the means by which the government adjusts its budget balance through spending and revenue changes to influence broader economic conditions. According to mainstream economics, the government can impact the level of economic activity, generally measured by gross domestic product (GDP), in the short term by changing its level of spending and tax revenue. Expansionary fiscal policy—an increase in government spending, a decrease in tax revenue, or a combination of the two—is expected to spur economic activity, whereas contractionary fiscal policy—a decrease in government spending, an increase in tax revenue, or a combination of the two—is expected to slow economic activity. When the government's budget is running a deficit, fiscal policy is said to be expansionary: when it is running a surplus, fiscal policy is said to be contractionary.

From a policymaker's perspective, expansionary fiscal policy is generally used to boost GDP growth and the economic indicators that tend to move with GDP, such as employment and individual incomes. However, expansionary fiscal policy also tends to affect interest rates and investment, exchange rates and the trade balance, and the inflation rate in undesirable ways, limiting the long-term effectiveness of persistent fiscal stimulus. Contractionary fiscal policy can be used to slow economic activity if policymakers are concerned that the economy may be overheating, which can cause a recession. The magnitude of fiscal policy's effect on GDP will also differ based on where the economy is within the business cycle—whether it is in a recession or an expansion.

During a recession, aggregate demand (overall spending) in the economy falls, which generally results in slower wage growth, decreased employment, lower business revenue, and lower business investment. Recessions occur for a number of reasons, but as seen during the most recent recession from 2007 to 2009, they can result in serious negative consequences for both individuals and businesses. However, the government can replace some of the lost aggregate demand and limit the negative impacts of a recession on individuals and businesses with the use of fiscal stimulus by increasing government spending, decreasing tax revenue, or a combination of the two. Government spending takes the form of both purchases of goods and services by the government, which directly increase economic activity, and transfers to individuals, which indirectly increase economic activity as individuals spend those funds. Decreased tax revenue via tax cuts indirectly increases aggregate demand in the economy. For example, an individual income tax cut increases the amount of disposable income available to individuals, enabling them to purchase more goods and services. Standard economic theory suggests that in the short term, fiscal stimulus can lessen the negative impacts of a recession or hasten a recovery. However, the ability of fiscal stimulus to boost aggregate demand may be limited due to its interaction with other economic processes, including interest rates and investment, exchange rates and the trade balance, and the rate of inflation.

Potential Offsetting Effects to Expansionary Fiscal Policy

To engage in fiscal stimulus by either increasing spending or decreasing tax revenue, the government must increase the size of its deficit and borrow money to finance that stimulus. This can lead to an increase in interest rates and subsequent decreases in investment and some consumer spending. This rise in interest rates may therefore offset some portion of the increase in economic activity spurred by fiscal stimulus.

At any given time, there is a limited supply of loanable funds available for the government and private parties to borrow from—a global pool of savings. If the government begins to borrow a larger portion of this pool of savings, it increases the demand for these funds. As demand for loanable funds increases, without any corresponding increase in the supply of these funds, the price to borrow these funds, also known as interest rates, increases. Rising interest rates generally depress economic activity, as they make it more expensive for businesses to borrow money and invest in their firms. Similarly, individuals tend to decrease so-called interest-sensitive spending—spending on goods and services that require a loan, such as cars, homes, and large appliances—when interest rates are relatively higher. The process through which rising interest rates diminish private-sector spending is often referred to as crowding out . However, the degree to which crowding out occurs is partially dependent on where the economy is within the business cycle, either in a recession or in a healthy expansion.

During a recession, crowding out tends to be smaller than during a healthy economic expansion due to already depressed demand for investment and interest-sensitive spending. Because demand for loanable funds is already depressed during a recession, the additional demand created by government borrowing does not increase interest rates as much, and therefore does not crowd out as much private spending as it would during an economic expansion.

In addition to fiscal policy, the government can influence the business cycle through the use of monetary policy, which is implemented by the Federal Reserve. The Federal Reserve is an independent government agency charged with maintaining stable prices and maximum employment through its monetary policy. The Federal Reserve can influence interest rates throughout the economy by adjusting the federal funds rate, a very short-term interest rate faced by banks. Decreasing interest rates reduces the cost to businesses and individuals of borrowing funds to make new investments and purchases. Conversely, increasing interest rates raises the cost to businesses and individuals of borrowing funds to make new investments and purchases. The Federal Reserve can conduct monetary policy in a complementary nature to fiscal policy, offsetting the rise in interest rates by decreasing the federal funds rate. Alternatively, the Federal Reserve can pursue a policy that offsets stimulus, pushing interest rates up by increasing the federal funds rate.

Another potential consequence of government fiscal stimulus is an increase in the value of the U.S. dollar and a subsequent increase in the trade deficit, which mitigates some portion of the rise in economic activity resulting from the fiscal stimulus. As discussed above, fiscal stimulus can cause interest rates to rise. In a global context where interest rates are rising in the United States relative to the rest of the world, demand for investment inside the United States is likely to increase among investors around the world as they seek out higher rates of return. The greater demand for investment in the United States is likely to temper the increase in interest rates resulting from fiscal stimulus. However, foreign investors must first exchange their own currency for U.S. dollars to invest in the United States. The increased demand for U.S. dollars increases the value of a U.S. dollar relative to other foreign currencies. As the U.S. dollar appreciates in value, domestic demand for imported goods increases because a U.S. dollar can now buy more goods and services abroad, but foreign demand for U.S. goods and services decreases because they are now relatively more expensive for foreigners. The end result is generally an increase in the U.S. trade deficit, as exports decrease and imports from abroad increase in the United States. An increasing trade deficit, all else equal, means that consumption and production of domestic goods and services are falling, partly offsetting the increase in aggregate demand caused by the stimulus.

As discussed above, however, during a recession interest rates are less likely to rise, or are likely to increase to a lesser degree, due to an already depressed demand for investment and spending within the economy. Without rising interest rates, or if they increase to a lesser degree, the associated increase in the trade deficit is also likely to be smaller. In addition, if the Federal Reserve engages in similarly stimulative monetary policy, it may be able to mitigate some of the anticipated increase in the trade deficit by further preventing an increase in interest rates.

As discussed above, the goal of fiscal stimulus is to increase aggregate demand within the economy. However, if fiscal stimulus is applied too aggressively, or is implemented when the economy is already operating near full capacity, it can result in an unsustainably large demand for goods and services that the economy is unable to supply. When the demand for goods and services is greater than the available supply, prices tend to rise, a scenario known as inflation. A rising inflation rate can introduce distortions into the economy and impose unnecessary costs on individuals and businesses, although economists generally view low and stable inflation as a sign of a well-managed economy. As such, rising inflation rates can hinder the effectiveness of fiscal stimulus on economic activity by imposing additional costs on individuals and interfering with the efficient allocation of resources in the economy.

The Federal Reserve has some ability to limit inflation by implementing contractionary monetary policy. If the Federal Reserve observes accelerating inflation as a result of additional fiscal stimulus, it can counteract this by increasing interest rates. The rise in interest rates results in a slowing of economic activity, neutralizing the fiscal stimulus, and may help to slow inflation as well.

Economists attempt to evaluate the overall impact of fiscal stimulus on the economy by estimating fiscal multipliers , which measure the ratio of a change in economic output to the change in government spending or revenue that causes the change in output. A fiscal multiplier greater than one suggests that for each dollar the government spends, the economy grows by more than one dollar. A multiplier may be larger than one if the initial government stimulus results in further spending by private actors. For example, if the government increases spending on infrastructure projects as part of its stimulus, directly increasing aggregate demand, numerous contractors and construction workers will likely receive additional income as a consequence. If those workers then spend a portion of their new income within the economy, it further increases aggregate demand. Alternatively, a fiscal multiplier of less than one suggests that for each dollar the government spends, the economy grows by less than one dollar, suggesting the expansionary power of the fiscal stimulus is being offset by the contractionary pressures discussed above.

Estimates of fiscal multipliers vary depending on the form of the fiscal stimulus and on which economic model the economist uses to measure the multiplier. For example, a 2012 academic research article estimated fiscal multipliers for various forms of stimulus utilizing several different prominent economic models from the Federal Reserve Board, the European Central Bank, the International Monetary Fund (IMF), the European Commission, the Organisation for Economic Co-operation and Development (OECD), the Bank of Canada, and two models developed by academic economists. The authors found varying estimates (see Table 1 ) for different forms of fiscal stimulus ranging from 1.59 for cash transfers to low-income individuals to 0.23 for reduced labor income taxes. Based on these estimates, increasing government spending on consumption by 1% of GDP would result in a 1.55% increase in GDP, and decreasing labor income taxes by 1% of GDP would result in a 0.23% increase in GDP.

The magnitude of fiscal multipliers likely depends on where the economy is in the business cycle. As discussed above, during a recession fiscal stimulus is less likely to result in offsetting contractionary effects—such as rising interest rates, trade deficits, and inflation—resulting in a larger increase in economic activity from fiscal stimulus. Accordingly, another academic research article attempted to estimate fiscal multipliers depending on whether the economy was in an expansion or a recession, and found that the multiplier for government spending was between 0 and 0.5 during expansions and between 1.0 and 1.5 during recessions.

Long-Term Considerations Regarding Fiscal Stimulus

Persistently applying fiscal stimulus can negatively affect the economy through three main avenues. First, persistent large budget deficits can result in a rising debt-to-GDP ratio and lead to an unsustainable level of debt. Second, persistent fiscal stimulus—particularly during economic expansions—can limit long-term economic growth by crowding out private investment. Third, rising public debt will require a growing portion of the federal budget to be directed toward interest payments on the debt, potentially crowding out other, more worthwhile sources of government spending.

Some economic research has suggested that relatively high public debt negatively impacts economic growth. For example, one academic research paper suggested that for developed countries, a 10-percentage-point increase in the debt-to-GDP ratio is associated with a 0.15- to 0.20-percentage-point decrease in per capita real GDP growth.

As noted, persistent fiscal stimulus can result in a rising debt-to-GDP ratio and lead to an unsustainable level of public debt. A rising debt-to-GDP ratio can be problematic if the perceived or real risk of the government defaulting on that debt begins to rise. As the perceived risk of default begins to increase, investors will demand higher interest rates to compensate themselves.

The tipping point at which public debt becomes unsustainable is difficult to predict. A continually rising debt-to-GDP ratio is likely to lead to an unsustainable level of debt over time. The threshold at which a nation's debt becomes unsustainable depends on a number of factors, such as the denomination of the debt, political circumstances, and, potentially most importantly, underlying economic conditions. A change in these circumstances may shift a nation's debt to unsustainable without the underlying amount of debt changing at all. To date, it does not appear that the United States has an immediate concern with respect to unsustainability; however, the U.S. debt-to-GDP ratio is projected to continually rise under current policy.

Persistent fiscal stimulus, and the associated budget deficits, can decrease the size of the economy in the long term as a result of decreased investment in physical capital. As discussed previously, the government's deficit spending can result in higher interest rates, which generally lead to lower levels of business investment. Business investment—spending on physical capital such as factories, computers, software, and machines—is an important determinant of the long-term size of the economy. Physical capital investment allows businesses to produce more goods and services with the same amount of labor and raw materials. As such, government deficits that lead to lower levels of business investment can result in lower quantities of physical capital, and therefore may reduce the productive capacity of the economy in the long term.

As discussed earlier, some of the increase in interest rates and decline in domestic investment resulting from fiscal stimulus will likely be offset by additional investment in the United States from abroad. The inflow of capital from abroad is beneficial, as it allows for additional investment in the United States economy. However, in exchange for these investment flows, the United States is now sending a portion of its national income to foreigners in the form of interest payments. With a larger portion of investment flows coming from abroad, rather than from within the United States, a larger portion of the U.S. national income will be sent abroad.

Rising public debt may also be of concern due to its associated interest payments. All else equal, an increase in the level of public debt will result in an increase in interest payments that the government must make each year. Rising interest payments may displace government spending on more worthwhile programs. In 2019, interest payments on the debt are projected to be about 1.8% of GDP, or about $382 billion. By 2029 interest payments on the debt are expected to increase significantly, rising to about 3.0% of GDP or about $921 billion.

As the economy shifts from a recession and into an expansion, broader economic conditions will generally improve, whereby unemployment falls and wages and private spending increase. With improving economic conditions, policymakers may choose to begin withdrawing fiscal stimulus by decreasing the size of the deficit or potentially by applying contractionary fiscal policy and running a budget surplus. As discussed in the previous section, policymakers may choose to withdraw fiscal stimulus for a number of reasons. First, persistent fiscal stimulus when the economy is near full capacity can exacerbate the negative consequences of fiscal stimulus, such as decreasing investment, rising trade deficits, and accelerating inflation. Second, decreasing the size of the budget deficit slows the accumulation of public debt.

The government can withdraw fiscal stimulus by increasing taxes, decreasing spending, or a combination of the two. When the government raises individual income taxes, for example, individuals have less disposable income and decrease their spending on goods and services in response. The decrease in spending reduces aggregate demand for goods and services, slowing economic growth temporarily. Alternatively, when the government reduces spending, it reduces aggregate demand in the economy, which again temporarily slows economic growth. As such, when the government reduces the deficit, regardless of the mix of fiscal policy choices used to do so, aggregate demand is expected to decrease in the near term. However, withdrawing fiscal stimulus is expected to result in lower interest rates and more investment; a depreciation of the U.S. dollar and a shrinking trade deficit; and a slowing inflation rate. These effects tend to spur additional economic activity, partly offsetting the decline resulting from withdrawing fiscal stimulus. Whether the decrease in aggregate demand is problematic for overall economic performance depends on the state of the overall economy at that time.

Potential Offsetting Effects to Withdrawing Fiscal Stimulus

Withdrawing fiscal stimulus is likely to put downward pressure on domestic interest rates, which encourages additional spending and investment, increasing economic activity. When the government decreases its budget deficit, the demand for loanable funds decreases because the government reduces the amount of those funds it is borrowing. The decrease in demand for loanable funds decreases the price to borrow those funds (i.e., interest rates decline). Declining interest rates encourage increased business investment into new capital projects and consumer spending into durable goods by reducing the cost of borrowing.

Withdrawing fiscal stimulus is also expected to result in a depreciation of the U.S. dollar and an improved trade balance with the rest of the world. Assuming the shrinking deficit causes a decline in U.S. interest rates relative to interest rates abroad, individuals in the United States and abroad would rather make investments outside of the United States to benefit from those higher interest rates. Individuals shifting their investments outside the United States must first exchange their U.S. dollars for foreign currency, which decreases the value of the U.S. dollar relative to foreign currencies. As the U.S. dollar depreciates, foreign goods and services become relatively more expensive for U.S. residents and U.S. goods and services become relatively less expensive for foreign individuals. This generally results in an improved trade balance as foreign demand for U.S. goods and services (exports) increases and domestic demand for foreign goods and services (imports) decreases.

When fiscal stimulus is withdrawn, aggregate demand for goods and services in the economy also tends to shrink, which is expected to slow inflation. Economists generally view relatively low and stable inflation as beneficial for economic growth, because businesses and consumers are relatively certain about the future price of goods and can make efficient decisions with respect to investment and consumption over time.

The ultimate impact on the economy of withdrawing fiscal stimulus depends on the relative magnitude of its effects on aggregate demand, interest rates and investment, exchange rates and the trade deficit, and inflation. The same fiscal multipliers discussed earlier in the " Fiscal Expansion Multiplier " section can be used to estimate the impact of withdrawing fiscal stimulus by simply reversing the sign for each multiplier. As shown in Table 1 , decreasing government spending on consumption by 1% of GDP is expected to reduce real GDP by 1.55% after the first year, compared to no change in fiscal policy. Alternatively, increasing labor income taxes by 1% of GDP is expected to reduce real GDP by 0.23% after the first year.

Again, monetary policy can be used alongside fiscal policy to affect the overall impact on the economy. For example, the Federal Reserve could lower interest rates to spur aggregate demand as the federal government withdraws fiscal stimulus in an effort to offset the decline in aggregate demand resulting from the shrinking deficit. This could allow the government to withdraw fiscal stimulus without decreasing aggregate demand or economic activity.

As shown in Figure 1 , the federal government has generally been running a budget deficit for much of the past 30 years—save for two short periods in the 1960s and 1990s. This suggests that the federal government has been applying some level of fiscal stimulus to the economy for much of the past three decades, although the level of stimulus has increased and decreased over time. However, simply examining the overall budget deficit to judge the level of fiscal stimulus can be misleading, as the levels of federal spending and revenue differ over time automatically due to changes in the state of the economy, rather than deliberate choices made each year by Congress. During economic expansions, tax revenue tends to increase and spending tends to decrease automatically, as rising incomes and employment result in higher average incomes and therefore greater individual and corporate income tax revenues. Federal spending on income support programs, such as food stamps and unemployment insurance, tends to fall as fewer people need financial assistance and unemployment claims fall during economic expansions. The combination of rising tax revenue and falling federal spending tends to improve the government's budget deficit. The opposite is true during recessions, when federal spending rises and revenue shrinks. These cyclical fluctuations in revenue and spending are often referred to as automatic stabilizers. Therefore, when examining fiscal policy, it is often beneficial to estimate the budget deficit excluding these automatic stabilizers, referred to as the structural deficit , to get a sense of the affirmative fiscal policy decisions made each year by Congress.

As shown in Figure 1 , budget deficits tend to increase during and shortly after recessions (denoted by grey bars) as policymakers attempt to buoy the economy by applying fiscal stimulus. This can be seen explicitly by viewing the structural deficit/surplus, as this only shows affirmative changes in fiscal policy made by Congress. The budget deficit then tends to shrink as the economy enters into recovery and fiscal stimulus is less necessary to support economic growth. However, in recent years, the federal budget has bucked this trend. After the structural deficit peaked in 2009 at roughly 7.5% of GDP, it began to decline through 2014, falling to about 2.0% of GDP. Beginning in 2016, in spite of relatively strong economic conditions, the structural deficit has started to rise again, nearing 4.0% of GDP in 2018.

Given that the economy is arguably at or exceeding full employment currently, the increase in fiscal stimulus since 2016 is notable. As discussed earlier, expanding fiscal stimulus when the economy is not depressed can result in rising interest rates, a growing trade deficit, and higher inflation. As of publication of this report, interest rates and inflation do not appear to have been affected by the additional fiscal stimulus; interest rates are at historic lows and inflation shows no signs of acceleration. The trade deficit has been growing in recent years; however, it is not clear that this growth in the trade deficit is a result of increased fiscal stimulus.