The primary surplus or deficit equals government receipts minus all outlays other than net interest. By excluding net interest, the primary surplus or deficit provides a more direct measure of overall government spending and taxing for a given fiscal year, as opposed to interest costs arising from past years. Historically, sharper drops in the primary surplus or deficit usually coincide with periods of recession, increased government spending, and the implementation of tax cuts. The strikingly rapid drop from a surplus of 4.8% of GDP in 2000 to a deficit of -2.0% in 2003 was the largest increase in the primary deficit outside World War II. Much like earlier drops, the 2000 to 2003 change corresponded with tax cuts and a relatively mild recession.
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