When Congress passed the stimulus package in 2008, specifically the Economic Stimulus Act of 2008, it was aimed at counteracting the economic downturn resulting from the financial crisis. As a consequence of its implementation, the size of the cyclically adjusted budget deficit increased. This increase occurred due to the additional government spending and tax relief measures, which were designed to boost economic activity during a recession.
In general, such fiscal measures can lead to higher deficits, especially in times of economic contraction, as revenues typically decline while expenditures rise. The cyclically adjusted budget deficit is a measure that removes the effects of the economic cycle on the budget, focusing on the underlying structural deficit. Therefore, in this context, the stimulus package contributed to an increase in the cyclically adjusted budget deficit as part of the broader financial response to the economic downturn.