The release of the Congressional Budget Office's (CBO) Long-Term Budget Outlook is one of the big events in the budget world, and we'd like to think that this blog is as well: the update of our CRFB Realistic Long-Term Baseline. Based off of the ten-year CRFB Realistic Baseline and CBO data, our long-term baseline draws a plausible path for where our future deficits and debt are headed.
Continuing with CRFB's analysis of CBO's latest long-term budget projections, we now turn our attention to one of the central themes throughout CBO's report: the consequences of large and growing federal debt. Under the CBO's extended baseline, federal debt held by the public will grow to 100 percent by 2038, and continue climbing.
Although some argue that policymakers can wait to solve our long-term entitlement problems, CBO's recent Long-Term Budget Outlook suggests otherwise. According to their projections, the Social Security program is in particular trouble -- and much worse than we thought. According to CBO's latest projections, the trust fund will become insolvent three years earlier than what we previously thought, and its long-term funding gap is 50 percent larger.
Update: The second graph has been corrected to show the correct year for each line.
Politicians and economists have long talked about the negative effects of an accumulating national debt, but cannot always quantify their position. This week's report on the long-term budget outlook from the Congressional Budget Office (CBO) attempts to put some hard numbers behind the consequences of high debt.
Update: CBO has now released its official Alternative Fiscal Scenario estimates (tab 6 of the Excel). They find that debt reaches 165 percent of GDP in 2039, one year later than we estimated.
CBO's Long-Term Budget Outlook is a sizeable 126-page document with tons of facts and figures, and an accompanying spreadsheet with even more data. In order to help people pull out the key findings and takeaways from the report, we've condensed the document down to a concise 7-page analysis of the key facts and figures.
The Congressional Budget Office, on Friday, estimated that the Energy & Commerce Committee’s (E&C) bill to permanently replace the flawed Sustainable Growth Rate (SGR) formula is expected to cost $175.5 billion from 2014-2023, $36 billion higher than the cost of a permanent freeze in Medicare physician payments. !-
Reading the news these days, you might think our debt problem has been solved: the federal deficit has been revised downward and is falling to its lowest level in five years. Yesterday, however, Congressional Budget Office (CBO) Director Doug Elmendorf made clear that he, for one, does not subscribe to that view.