Figure 2 shows the contribution of automatic stabilizers
and discretionary fiscal changes to the total
change in the fiscal surplus (figures for 2002 are
based on the April CBO projections). A positive
value means that the surplus has increased (the
deficit has shrunk) and therefore represents a contractionary
shift in the budget; a negative value
represents a more expansionary policy. During the
recessions in 1970, 1974–1975, and 1990–1991,
almost the entire shift to a larger deficit was the
result of automatic stabilizers at work. In contrast, in
the current recession both automatic and discretionary
fiscal policy changes have worked to reduce
the surplus. Notice, however, that the automatic
stabilizers began to work in 1999, while the major
shift in discretionary fiscal policy did not occur
until later, when the economy had already entered
a recession.