Today, Wonkblog published a “Know More” feature arguing that “You Should Tune Out Politicians Who Are Still Talking about Government Debt.” As evidence for this claim, they cite the recent Center on Budget and Policy Priorities (CBPP) report that shows the long-term debt situation has improved relative to its 2010 projections, and quote the report’s assertion that "no deficit or debt crisis looms, and the weak labor market remains the nation’s most immediate economic concern."
With April's updated projections from the Congressional Budget Office (CBO), spending on major federal health care programs (Medicare, Medicaid, and the Affordable Care Act's exchange subsidies) has now been revised downward by $900 billion, or 0.4 percent of GDP, cumulatively from 2011 through 2021, just since their March 2011 projections.
The Center on Budget and Policy Priorities (CBPP) released a new set of long-term debt projections today. They find that while the debt will remain stable at about 74 percent of GDP through 2020, it will rise significantly thereafter, reaching 89 percent of GDP by 2030 and exceeding 100 percent by 2040.
Every year when the President releases his budget, CBO re-estimates the budget using a baseline set of economic assumptions – the same as it uses for measuring Congressional legislation. This year, they found that the President's budget would reduce deficits by about $500 billion less than the budget itself indicated, because CBO scored some provisions as saving less or costing more than the President claimed.
Shortly after the President's budget was released, we suggested CBO might be somewhat more pessimistic in its debt projections than OMB. Specifically, we predicted CBO would estimate debt on a slight upward path by the end of the decade, reaching 73 percent of GDP by 2024; by comparison, OMB estimated that debt would be on a downward path, falling to 69 percent of GDP by 2024 under the President's budget.
CBO has released their analysis of the President's FY 2015 Budget and CFRB released a report summarizing the findings. CBO finds a less optimistic outlook than the President's Office of Management and Budget (OMB) with debt up to 74.3 percent of GDP in 2024 as opposed to OMB’s projection of debt on a downward path toward 69.0 percent of GDP.
The Congressional Budget Office (CBO) has released its analysis of the President's FY 2015 budget, applying its own budget baseline and methodology to the President's policies. The agency finds that the budget would reduce debt relative to CBO's baseline by significantly less than the Administration anticipates, with debt on a modest upward path in the latter part of the ten-year budget window, increasing to 74.3 percent of GDP in 2024, rather than falling to 69 percent of GDP as OMB previously estimated.
CBO's most recent budget projections show debt on an unsustainable path – rising from a post-war record 73 percent of GDP today to 78 percent by 2024. Importantly, however, CBO's projections do not always reflect where debt is likely to go after accounting for the actions that lawmakers might take.
In advance of the release of their analysis of the President's budget, the Congressional Budget Office (CBO) has updated their budget baseline for fiscal years 2015-2024. While the newest projections are a slight improvement over their previous estimates in February, they still show debt on a clear upward path as a share of GDP starting in 2018 and likely continuing over the long term.