The Re-Estimated Bipartisan Path Forward

The CBO has now spoken on how the President's budget would affect the fiscal outlook. Debt would fall to 70 percent of GDP by 2023, compared to 73 percent under current law and 76 percent under our latest iteration of the CRFB Realistic baseline (though we are still working on the precise number as we get new information). But what about the Bipartisan Path Forward proposed last month by Fiscal Commission co-chairs Erskine Bowles and Al Simpson?

The plan's "Step 3," included $2.5 trillion of ten years relative to the February CRFB Realistic Baseline, was originally estimated to get debt down to 69 percent of GDP by 2023. Assuming the savings remain the same*, save a small adjustment in our new baseline, the debt would be on even lower than previously estimated, and on a slightly sharper downward path. Specifically, debt would fall from 76.5 percent of GDP in 2014 to about 66 percent by 2023.

^{Source: CBO, CRFB calculations}

Over the 2014-2023 period, spending would total 21.3 percent of GDP and revenue would total 19.2 percent, resulting in average deficits of 2.1 percent. This compares to the 2.4 percent ten-year deficit in the President's budget and the 3.0 percent and 3.2 percent deficits in current law and CRFB Realistic, respectively. In 2023, the final year of the projection window, spending would be 21.3 percent of GDP and revenue would be 19.7 percent, resulting in a 1.6 percent deficit.

^{Source: CRFB calculations}

The Bipartisan Path Forward shows that policymakers can indeed put together a package which puts the debt on a clear downward path. That's true even before accounting for the plans "Step 4" reforms to Social Security and federal health spending. Clearly, a comprehensive fiscal package can be done if lawmakers are willing to put all parts of the budget on the table.

*A number of policies may save different amounts due to changes in CBO's baseline. In particular, the health savings may be less due to downward revisions in health spending, although other policies may save more. The document does include additional savings options to meet the targets if necessary.