Congressional Budget O ice    The Budget and Economic Outlook:            Fiscal Years 2012 to 2022Presentation to the Nat...
Congressional Budget O ice         The Economic Outlook                                2
Real Gross Domestic Product( Trillions of 2005 dollars)    18                                                        Actua...
Gap Between GDP and Potential GDP( Trillions of 2005 dollars)    0.4                                                      ...
Unemployment Rate(Percent)     12                                                                 Actual     Projected    ...
In ation(Percentage change in prices from previous year)  12                                                              ...
Interest Rates(Percent)    16                                                                   Actual     Projected    14...
Congressional Budget O ice           The Budget Outlook                                8
Def i cits or Surpluses, Historically and As Projectedin CBO’s Baseline(Percentage of GDP)     4                          ...
What Policy Assumptions Underlie the Baseline andthe Alternative Fiscal Scenario? Baseline Projections: Current law Altern...
Def i cits or Surpluses, Historically and As Projectedin CBO’s Baseline and Under the Alternative Fiscal Scenario(Percenta...
Def i cits Projected in CBO’s Baseline and Under theAlternative Fiscal Scenario(Percentage of GDP)   8   7   6            ...
Federal Debt Held by the Public, Historically andAs Projected in CBO’s Baseline and Under theAlternative Fiscal Scenario(P...
Components of Mandatory Spending(Percentage of GDP)         8                                                             ...
Social Security Bene ciaries(In Millions, at End of Calendar Year)                                          Actual    Proj...
Discretionary Outlays, by Category(Percentage of GDP)   12                                                                ...
Revenues Projected in CBO’s Baseline andUnder the Alternative Fiscal Scenario(Percentage of GDP)    28                    ...
Selected Major Tax Expenditures in 2012, Comparedwith Other Categories of Revenues and Outlays(Percentage of GDP)    8    ...
E ects of Selected Major Tax Expendituresfrom 2013 to 2022Exclusion of Employers’ Contributions forHealth Care, Health Ins...
Components of the Federal Budget as Shares of GDP:1972-2011 Average and 2022 Projection Under theAlternative Fiscal Scenar...
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CBO Director Doug Elmendorf's Presentation to the National Economists Club

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Transcript of "CBO Director Doug Elmendorf's Presentation to the National Economists Club"

  1. 1. Congressional Budget O ice The Budget and Economic Outlook: Fiscal Years 2012 to 2022Presentation to the National Economists Club Douglas W. Elmendorf Director February 9, 2012
  2. 2. Congressional Budget O ice The Economic Outlook 2
  3. 3. Real Gross Domestic Product( 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 C O N G R E S S I O N A L B U D G E T O F F I C E 3
  4. 4. Gap Between GDP and Potential GDP( 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 C O N G R E S S I O N A L B U D G E T O F F I C E 4
  5. 5. Unemployment Rate(Percent) 12 Actual Projected 10 8 6 4 2 0 1972 1977 1982 1987 1992 1997 2002 2007 2012 2017 2022 C O N G R E S S I O N A L B U D G E T O F F I C E 5
  6. 6. In ation(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 C O N G R E S S I O N A L B U D G E T O F F I C E 6
  7. 7. Interest Rates(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 C O N G R E S S I O N A L B U D G E T O F F I C E 7
  8. 8. Congressional Budget O ice The Budget Outlook 8
  9. 9. Def i cits or Surpluses, Historically and As Projectedin CBO’s Baseline(Percentage of GDP) 4 Actual Projected 2 0 CBO’s Baseline -2 Projection -4 -6 -8 -10 -12 1972 1977 1982 1987 1992 1997 2002 2007 2012 2017 2022 C O N G R E S S I O N A L B U D G E T O F F I C E 9
  10. 10. What Policy Assumptions Underlie the Baseline andthe Alternative Fiscal Scenario? Baseline Projections: Current law Alternative Fiscal Scenario: – All expiring tax provisions (other than the payroll tax reduction) are extended. – The alternative minimum tax (AMT) is indexed for in ation after 2011. – Medicare’s payment rates for physicians’ services are held constant at current level. – The automatic spending reductions required by the Budget Control Act do not take e ect (although the original caps on discretionary appropriations remain in place). C O N G R E S S I O N A L B U D G E T O F F I C E 10
  11. 11. Def i cits or Surpluses, Historically and As Projectedin CBO’s Baseline and Under the Alternative Fiscal Scenario(Percentage of GDP) 4 Actual Projected 2 0 CBO’s Baseline -2 Projection -4 -6 Alternative -8 Fiscal Scenario -10 -12 1972 1977 1982 1987 1992 1997 2002 2007 2012 2017 2022 C O N G R E S S I O N A L B U D G E T O F F I C E 11
  12. 12. Def i cits Projected in CBO’s Baseline and Under theAlternative 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 C O N G R E S S I O N A L B U D G E T O F F I C E 12
  13. 13. Federal Debt Held by the Public, Historically andAs Projected in CBO’s Baseline and Under theAlternative 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 C O N G R E S S I O N A L B U D G E T O F F I C E 13
  14. 14. Components of Mandatory Spending(Percentage of GDP) 8 Actual Projected 7 6 Major Federal Health Care Programs 5 Social Security 4 3 2 Other Mandatory 1 0 1972 1977 1982 1987 1992 1997 2002 2007 2012 2017 2022 C O N G R E S S I O N A L B U D G E T O F F I C E 14
  15. 15. Social Security Bene ciaries(In Millions, at End of Calendar Year) Actual Projected 80 Actual Projected 70 60 50 Total 40 Old-Age and Survivors Insurance 30 20 Disability Insurance 10 0 1972 1977 1982 1987 1992 1997 2002 2007 2012 2017 2022 C O N G R E S S I O N A L B U D G E T O F F I C E 15
  16. 16. Discretionary Outlays, by Category(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 C O N G R E S S I O N A L B U D G E T O F F I C E 16
  17. 17. Revenues Projected in CBO’s Baseline andUnder the 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 C O N G R E S S I O N A L B U D G E T O F F I C E 17
  18. 18. Selected Major Tax Expenditures in 2012, Comparedwith 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 C O N G R E S S I O N A L B U D G E T O F F I C E 18
  19. 19. E ects of Selected Major Tax Expendituresfrom 2013 to 2022Exclusion of Employers’ Contributions forHealth Care, Health Insurance Premiums, Individual Income Tax E ect Payroll Tax E ectand 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 C O N G R E S S I O N A L B U D G E T O F F I C E 19
  20. 20. Components of the Federal Budget as Shares of GDP:1972-2011 Average and 2022 Projection Under theAlternative Fiscal Scenario(Percentage of GDP) 30 1972–2011 Average 25 24.4 2022 Projection Under the Alternative Fiscal Scenario 21.0 20 17.9 18.3 15 12.8 11.4 10 7.3 7.8 6.1 5 3.8 3.0 2.2 0 Social Security and All Other Net Interest Total Outlays Total Revenues De cit Major Federal Programs Health Care Programs C O N G R E S S I O N A L B U D G E T O F F I C E 20

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