1. Def i cits or Surpluses January 2012
http://go.usa.gov/nPi
(Percentage of GDP)
4 Actual Projected
2
0
CBO’s Baseline
Projection
-2
Alternative
Fiscal Scenario
-4
-6
-8
-10
-12
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
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2. Congressional Budget O ice
The Budget and Economic Outlook
January 2012
The Budget Outlook

3. Def i cits or Surpluses Since 1946 January 2012
http://go.usa.gov/nPi
(Percentage of GDP)
6
4
2 Projected
0
-2
-4
-6
-8
-10
-12
1946 1952 1958 1964 1970 1976 1982 1988 1994 2000 2006 2012
As a percentage of GDP, the federal budget will show a de cit of 7.0 percent in 2012, according to CBO’s current-law baseline, nearly
2 percentage points below the shortfall recorded last year but still higher (in percentage terms) than any de cit between 1947 and 2008.
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4. Outlays Recorded for the January 2012
http://go.usa.gov/nPi
Troubled Asset Relief Program
(Billions of dollars)
200 Actual Projected
150
100
2009
50
0 2012
2011
-50
2010
-100
-150
Adjustments to the estimated costs of the TARP have had a signi cant impact on budget de cits since 2009. Initial estimates of the cost
of transactions in 2009 under the program turned out to be too high and were reduced in both 2010 and 2011. Adjustments recorded
in 2012 will increase the de cit by $23 billion, CBO estimates. C ONGRESSIONAL
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5. Def i cits or Surpluses, Historically and January 2012
http://go.usa.gov/nPi
As Projected in CBO’s Baseline and Under an
Alternative Fiscal Scenario
(Percentage of GDP)
4 Actual Projected
2
0
CBO’s Baseline
Projection
-2
-4
-6
Alternative
-8 Fiscal Scenario
-10
-12
1972 1977 1982 1987 1992 1997 2002 2007 2012 2017 2022
Under current law, CBO projects that de cits will drop markedly, averaging only 1.5 percent of GDP over the 2013-2022 period.
But under an alternative scal scenario, in which some changes speci ed in current law would not occur and certain current policies
would continue instead, annual de cits from 2013 through 2022 would be much higher—averaging 5.4 percent of GDP. C ONGRESSIONAL
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6. Def i cits Projected in CBO’s Baseline and Under an January 2012
http://go.usa.gov/nPi
Alternative Fiscal Scenario
(Percentage of GDP)
8
7
6
Additional Debt Service
5
Prevent Spending Cuts
4
3
Extend Tax Policies
2
1
Baseline
0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Preventing certain spending cuts scheduled under current law (the automatic spending reductions scheduled for 2013 and reductions
in Medicare's payment rates for physicians) and extending certain expiring or recently expired tax provisions would boost de cits
substantially relative to the baseline. C ONGRESSIONAL
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7. Federal Debt Held by the Public, Historically and January 2012
http://go.usa.gov/nPi
As Projected in CBO’s Baseline and Under an
Alternative Fiscal Scenario
(Percentage of GDP)
140 Actual Projected
120
Alternative
100 Fiscal Scenario
80
60
CBO’s Baseline
Projection
40
20
0
1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020
With modest de cits anticipated for much of the 10-year projection period of CBO’s current-law baseline, debt held by the public
recedes as a percentage of GDP. However, if some of the changes speci ed in current law did not occur and certain current policies
were continued instead, debt held by the public would rise to 94 percent of GDP by the end of 2022, the highest gure since just C ONGRESSIONAL
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after World War II.

8. Congressional Budget O ice
The Budget and Economic Outlook
January 2012
The Economic Outlook

9. Real Gross Domestic Product January 2012
http://go.usa.gov/nPi
( Trillions of 2005 dollars)
18 Actual Projected
16
Potential GDP
14
GDP
12
10
8
0
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
Although CBO projects the growth in real (in ation-adjusted) GDP to pick up after 2013, the agency expects that the economy’s output
will remain below its potential—a level that corresponds to a high rate of use of labor and capital—until the rst half of 2018.
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10. Gap Between GDP and Potential GDP January 2012
http://go.usa.gov/nPi
( Trillions of 2005 dollars)
0.4
Actual Projected
0.2
$2.6 $3.1
Trillion Trillion
0
-0.2
-0.4
-0.6
-0.8
-1.0
-1.2
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
A large portion of the economic and human costs of the recession and slow recovery remains ahead. From the rst quarter of the
recession through the third quarter of 2011, the cumulative di erence between GDP and estimated potential GDP amounted to
$2.6 trillion; by the time the nation’s output rises back to its potential level, the cumulative shortfall is expected to equal $5.7 trillion C ONGRESSIONAL
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(the tan-shaded areas in the chart).

11. Unemployment Rate January 2012
http://go.usa.gov/nPi
(Percent)
12 Actual Projected
10
8
6
4
2
0
1972 1977 1982 1987 1992 1997 2002 2007 2012 2017 2022
In CBO’s forecast, the unemployment rate in 2012 and 2013 remains largely unchanged from its value last year. However, in the forecast,
as growth picks up after 2013, the unemployment rate falls to 6.9 percent by the end of 2015 and 5.6 percent by the end of 2017.
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12. In ation January 2012
http://go.usa.gov/nPi
(Percentage change in prices from previous year)
12 3.5
Actual Projected Actual Projected
3.0
10
2.5
2.0
8
1.5
6 1.0
0.5
4 Overall
Core 0
2010 2011 2012 2013
2
0
1972 1977 1982 1987 1992 1997 2002 2007 2012 2017 2022
According to the agency’s projections, the price index for personal consumption expenditures (PCE) will increase by 1.2 percent in 2012
(as measured by the change from the fourth quarter of the previous year) and by 1.3 percent in 2013. The core PCE price index—which
excludes prices for food and energy—is projected to increase by a similar amount. C ONGRESSIONAL
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13. Interest Rates January 2012
http://go.usa.gov/nPi
(Percent)
16 Actual Projected
14
12
10
10-Year Treasury Notes
8
6
4
2
3-Month Treasury Bills
0
1972 1977 1982 1987 1992 1997 2002 2007 2012 2017 2022
CBO projects that interest rates will remain very low for the next several years and then will rise to
more-normal levels as output approaches its potential.
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14. Vacant Housing Units January 2012
http://go.usa.gov/nPi
(Percentage of total units)
16
14
12
10
8
0
1966 1971 1976 1981 1986 1991 1996 2001 2006 2011
The number of vacancies remains very high. For that reason, among others, CBO projects weak near-term growth
in residential investment.
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15. Net Business Fixed Investment January 2012
http://go.usa.gov/nPi
(Percentage of GDP)
6 Actual Projected
5
4
3
2 2.2%
1958
1.8% 1.7%
1992 2003
1
0.6%
2009
0
1950 1960 1970 1980 1990 2000 2010 2020
CBO’s forecast of solid growth in business investment in structures, equipment, and software, especially after 2013,
re ects the very low level of net investment (gross investment minus depreciation) in those items relative to GDP.
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16. Labor Income January 2012
http://go.usa.gov/nPi
(Percentage of gross domestic income)
70
Actual Projected
65
61.6
60.1
60 59.6
55
50
0
1972 1977 1982 1987 1992 1997 2002 2007 2012 2017 2022
Labor income has fallen sharply as a share of gross domestic income (GDI) since 2009. In CBO’s projections, labor income grows faster
than GDI over the next decade, bringing its share from about 59 percent of GDI in late 2011 to about 62 percent by 2022, approaching
its historical average since 1980. C ONGRESSIONAL
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17. Economic Growth in the United States and Among January 2012
http://go.usa.gov/nPi
Its Leading Trading Partners
(Percentage change from same quarter of previous year)
6 Actual Projected
5
4
Leading Trading Partners
3
2 United States
1
0
2010 2012 2014 2016 2018 2020 2022
CBO expects that an increase in real net exports will make a small contribution to the growth of real GDP this year and next, on
average. A primary reason for that projection is that average growth among the nation’s leading trading partners will probably be
stronger than that in the United States over the period. C ONGRESSIONAL
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18. Congressional Budget O ice
The Budget and Economic Outlook
January 2012
The Spending Outlook

19. Outlays Projected in CBO’s Baseline and Under an January 2012
http://go.usa.gov/nPi
Alternative Fiscal Scenario
(Percentage of GDP)
28
Actual Projected
26
Alternative
Fiscal Scenario
24
22
CBO’s Baseline
20 Projection
18
16
14
0
1972 1977 1982 1987 1992 1997 2002 2007 2012 2017 2022
In CBO’s baseline, annual spending averages 21.9 percent of GDP from 2013 through 2022, a percentage that is elevated by historical
standards. Under an alternative scal scenario, in which some changes speci ed in current law would not occur and certain current
policies would continue instead, outlays between 2013 and 2022 would be higher by 1.4 percent, or $2.9 trillion, than those presented C ONGRESSIONAL
in the baseline. B UDGET O FFICE

20. Outlays, by Category January 2012
http://go.usa.gov/nPi
(Percentage of GDP)
16
Actual Projected
14
Mandatory
12
10
8
6
Discretionary
4
2
Net Interest
0
1972 1977 1982 1987 1992 1997 2002 2007 2012 2017 2022
In CBO’s baseline projections, the biggest di erence in federal spending relative to GDP in the coming decade—as compared with
outlays over the past 40 years—will be the widening gap between mandatory and discretionary spending.
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21. Outlays for Income Security Programs January 2012
http://go.usa.gov/nPi
(Billions of dollars)
500 Actual Projected
400
300
Unemployment Compensation
Refundable Tax Credits
200
Supplemental Nutrition Assistance Program
100
Other Income Security Programs
0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Federal spending for income security programs peaked in 2010 at $438 billion; in contrast, such spending totaled $202 billion in 2007,
before the economic downturn. The surge in spending occurred partly because outlays for many of those programs tend to rise
automatically when the economy falters (and ebb later as the economy recovers) and partly because lawmakers enacted temporary C ONGRESSIONAL
measures to augment payments to needy populations. B UDGET O FFICE

22. Outlays for Unemployment Bene ts January 2012
http://go.usa.gov/nPi
(Billions of dollars) (Percent)
180 12
Actual Projected
160
10
140
120 8
Emergency
Unemployment Rate Bene ts and
100
(Right scale) Federal Additional 6
Compensation
80
60 4
40
Regular and 2
20 Extended Bene ts
0 0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Since late 2008, spending for unemployment compensation has been boosted signi cantly by changes in law that temporarily provide
additional bene ts to people who have been out of work for more than 26 weeks. Payments for those temporary programs will start to
phase out in March 2012 under current law. C ONGRESSIONAL
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23. Discretionary Outlays, by Category January 2012
http://go.usa.gov/nPi
(Percentage of GDP)
12
Actual Projected
Total Discretionary
10
8
Defense
6
4
Nondefense
2
0
1972 1977 1982 1987 1992 1997 2002 2007 2012 2017 2022
Discretionary outlays declined from about 10 percent of GDP during much of the 1970s and 1980s to 6.2 percent in 1999. Those outlays
then began to increase again relative to the size of the economy, reaching 7.0 percent of GDP in 2002 and 7.9 percent in 2008. In 2009,
2010, and 2011, such outlays were 8.8, 9.3, and 9.0 percent of GDP, respectively. By 2022, under current law, those outlays will have C ONGRESSIONAL
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fallen to 5.6 percent of GDP, CBO projects.

24. Congressional Budget O ice
The Budget and Economic Outlook
January 2012
The Revenue Outlook

25. Revenues Projected in CBO’s Baseline and January 2012
http://go.usa.gov/nPi
Under an Alternative Fiscal Scenario
(Percentage of GDP)
28
Actual Projected
26
24
22 Average, CBO’s Baseline
1972-2011 Projection
20 (17.9%)
18
Alternative
Fiscal Scenario
16
14
0
1972 1977 1982 1987 1992 1997 2002 2007 2012 2017 2022
CBO projects that under current law, total revenues as a percentage of GDP will rise from their recent unusually low levels to well above
their historical average of about 18 percent of GDP. Under an alternative scal scenario, in which some changes speci ed in current law
would not occur and certain current policies would continue instead, projected revenues would be near their historical average. C ONGRESSIONAL
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26. Revenues, by Major Source January 2012
http://go.usa.gov/nPi
(Percentage of GDP)
12
Actual Projected
10 Individual
Income Taxes
8
6 Social Insurance
(Payroll) Taxes
4
Corporate Income Taxes
2
Other Revenue Sources
0
1972 1977 1982 1987 1992 1997 2002 2007 2012 2017 2022
Individual income taxes have uctuated more over the past 40 years than the other major revenue sources—ranging from
6.3 percent to 10.2 percent of GDP but showing no clear trend over that period.
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27. Average Corporate Tax Rate and Corporations’ January 2012
http://go.usa.gov/nPi
Domestic Economic Pro ts
(Percent)
50 Actual Projected
40 Annual Average Tax Rate
(Corporate receipts as a Average Tax Rate
percentage of domestic 1987-2008
economic pro ts) (25.6%)
30
20
Domestic Economic Pro ts
(As a percentage of gross domestic product)
10
0
1972 1977 1982 1987 1992 1997 2002 2007 2012 2017 2022
The average tax rate on corporations’ domestic economic pro ts (taxes as a percentage of pro ts) has been unusually low in recent
years. CBO expects that by 2014, that rate will rise to around the 25.6 percent average seen over the 1987–2008 period.
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28. Selected Major Tax Expenditures in 2012, Compared January 2012
http://go.usa.gov/nPi
with Other Categories of Revenues and Outlays
(Percentage of GDP)
8
Revenues Outlays
6
Payroll Tax
Expenditures
4
Individual
Income Tax
Expenditures
2
0
Individual Social Corporate Income Selected Major Medicare Defense Social
Income Taxes Insurance Taxes and Tax Expenditures Security
Taxes Other Revenues
In 2012, major tax exclusions, deductions, and other tax expenditures will total 5.3 percent of GDP, CBO projects—equal to about
one-third of projected revenues for the year and greater than projected spending on Social Security, defense, or Medicare.
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29. E ects of Selected Major Tax Expenditures January 2012
http://go.usa.gov/nPi
from 2013 to 2022
Exclusion of Employers’ Contributions for
Health Care, Health Insurance Premiums, Individual Income Tax E ect Payroll Tax E ect
and Long-Term Care Insurance Premiums
Net Exclusions of Pension
Contributions and Earnings
Income Exclusions
Exclusion of Capital Gains at Death
Exclusion of Untaxed Social Security
and Railroad Retirement Bene ts
Deduction for Mortgage Interest
on Owner-Occupied Residences
Deductions
Deduction for State and Local Taxes
Deduction for Charitable Contributions
Reduced Tax Rates on Dividends
and Long-Term Capital Gains Preferential Rates
Earned Income Tax Credit
Credits
Child Tax Credit
0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0
Percentage of Gross Domestic Product
The exclusion of employers’ health insurance contributions is the single largest tax expenditure in the individual income tax code.
Including e ects on payroll taxes, it is projected to equal 1.8 percent of GDP between 2013 and 2022.
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