In the closing days of 1987, the Congress and the Administration negotiated and largely put in place a plan to reduce the budget deficit for 1988 and 1989. At the same time, in the wake of the stock market collapse, signs of some temporary weakness in the economy began to emerge. The Congressional Budget Office (CBO) now anticipates that the economy will experience a pronounced slowdown in growth in early 1988, but will regain strength in the second half of 1988 and in 1989. On the basis of CBO's economic assumptions and a continuation of current budgetary policies, the federal deficit is projected to rise from $150 billion in 1987 to $157 billion in 1988 and $176 billion in 1989, before dropping to $167 billion in 1990. These baseline budget projections assume that revenues, offsetting receipts, and entitlement spending are projected according to the laws now on the statute books. Defense and nondefense discretionary appropriations are assumed to be held constant in real terms. The baseline projections are, therefore, not forecasts of future budgets, which will doubtless include numerous policy changes. This year CBO has made minor changes in its baseline to make it identical to the budget base as specified in the Balanced Budget and Emergency Deficit Control Reaffirmation Act of 1987 (Public Law 100-119). Having a single baseline is intended to help focus attention on the fundamentals of the budget situation and reduce any confusion stemming from minor conceptual differences.