Meeting Fiscal Goals Under CBO's May 2023 Baseline
We estimate that it would take $16.0 trillion of deficit reduction to balance the budget over a decade, $3.5 trillion to stabilize debt at 110 percent of Gross Domestic Product (GDP) in ten years, or $8.4 trillion of deficit reduction to stabilize debt at its current level as a share of GDP, based on CBO's latest budget projections. We also estimate that primary balance, which excludes interest spending, could be achieved with $8.8 trillion of savings over a decade, and reducing the budget deficit to 4 percent of GDP would require $6.7 trillion of savings.
Savings Needed to Meet Various Fiscal Goals
| Fiscal Goal | Five-Year Savings | Ten-Year Savings |
|---|---|---|
| Debt Targets | ||
| Stabilize debt at 110 percent of GDP | n/a | $3.5 trillion |
| Stabilize debt at 100 percent of GDP | $2.4 trillion | $7.4 trillion |
| Stabilize debt at 97.5 percent of GDP (current level) | $3.2 trillion | $8.4 trillion |
| Reduce debt to 90 percent of GDP | $5.6 trillion | $11.3 trillion |
| Reduce debt to 80 percent of GDP | $8.9 trillion | $15.3 trillion |
| Deficit Targets* | ||
| Reduce deficit to 4 percent of GDP | $2.6 trillion | $7.6 trillion |
| Reduce deficit to 3 percent of GDP | $4.0 trillion | $9.9 trillion |
| Primary Balance^ | $3.8 trillion | $8.8 trillion |
| On-Budget Balance^ | $6.4 trillion | $13.0 trillion |
| Full Budget Balance^ | $7.5 trillion | $16.0 trillion |
Sources: Congressional Budget Office and Committee for a Responsible Federal Budget. Figures include interest. ^Balance figures are adjusted to exclude the effects of timing shifts. *Assumes modified savings path of the CRFB Fiscal Blueprint for Reducing Debt and Inflation.
There is no one right fiscal goal, but as policymakers negotiate a possible budget deal it can be helpful to work toward one. Even incremental progress can help to fight inflation, bolster economic growth, and put the budget on a more sustainable path.
What's Next
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