Final answer:
The stimulus package in 2008 led to an increased size of the cyclically adjusted budget deficit due to reduced tax revenues and increased government spending, which were partly offset by state and local government spending cuts.
Step-by-step explanation:
When Congress passed the stimulus package in 2008, it caused the size of the cyclically adjusted budget deficit to increase. The Great Recession, which began in late 2007, brought about a reduction in tax revenues due to less economic activity. This, in conjunction with the implementation of automatic stabilizers and the stimulus package, led to larger short-term deficits. However, these deficits were somewhat offset by spending cuts from state and local governments. Yet, the federal budget deficit grew significantly due to the combination of lower tax collections and increased spending.