As we explained in our recent analysis of CBO's Long-Term Budget Outlook, the debt is on an unsustainable path. Only a decade from now, under their Alternative Fiscal Scenario, debt will surpass 100 percent of GDP. And by 2037, it will exceed 200 percent.
Driving this is the increasing cost of entitlement spending -- Social Security, Medicare, Medicaid and (to a lesser extent) other health spending. But what drives the growth of these programs?
With the release of CBO's Long-Term Outlook, we thought it would be useful to break down the assumptions that the Extended-Baseline and the Alternative Fiscal Scenario make. Considering the huge divergence in the debt paths of these two scenarios, it is important to understand what they do.
Update: Our paper on CBO's Long Term Outlook has been released.
CBO has just released its 2011 Long Term Outlook, detailing spending, revenue, and debt levels over the next 75 years. The report shows a similar trend in both the Extended Baseline and Alternative Fiscal Scenarios: worsening in the short term, improvement in the long term compared to last year.
Recently, CBO Director Doug Elmendorf spoke to the Federal Reserve Bank of New York about current policies and how they affect the nation's fiscal future. Elmendorf’s presentation, titled Federal Budget Math: We Can’t Repeat the Past, highlighted key aspects of federal budget policy in the last forty years and of CBO’s projections for 2021.
This afternoon, the University of Maryland's School of Public Policy is hosting a panel on the budget deficit and national debt. Panelists include former Congressional Budget Office directors and CRFB board members Alice Rivlin, Doug Holtz-Eakin, Rudolph Penner, and Robert Reischauer. The event starts at 3:00 pm so be sure to check it out.
Click here to watch the event live on C-SPAN.
In the past few days, CBO has released a few documents that might be of interest to budget wonks.
The first is a further analysis of the final FY 2011 spending agreement that was passed a month ago. The estimate not only shows CBO's updated discretionary spending estimates for this year, but also what discretionary spending will be over ten years using CBO's baseline convention of inflation growth.
In response to Representative Paul Ryan's (R-WI) FY 2012 Budget proposal, CBO has released a long-term analysis of the proposal. The analysis, which includes the numbers reflected in Ryan's proposal released today, also goes into the policy effects of the various reforms he is offering and the long-term effects of his proposal.