1.
Prepared by Leigh Angres, Stephanie Hugie Barello, Maureen Costantino, Benjamin Plotinsky, and Julie Topoleski
Source: Congressional Budget Office, July 2016
For more information, see The Long-Term Budget Outlook, www.cbo.gov/publication/51580
All data are for federal fiscal years,
which run from October 1 to September 30.
Numbers may not add up to totals because of rounding.
Less National Saving
and Lower Income
Pressure for Larger
Tax Increases or
Spending Cuts
Reduced Ability to
Respond to
Unexpected Events
Greater Chance of a
Fiscal Crisis
CONSEQUENCES OF RISING DEBT
39% of GDP
(Its 50-year average)
75% of GDP
(Its current level)
In 2017, that would amount to . . .
$560 billion, which is equal to $1,700 per person $330 billion, which is equal to $1,000 per person
2.9% of GDP,
which is equal to a
1.7% of GDP,
which is equal to a
16% increase in revenues
14% cut in spending
9% increase in revenues
8% cut in spending
or a or an
If the changes were increases (of equal percentage) in all types of revenues, one effect
in 2017 is that taxes per household would be higher than under current law by . . .
$1,900 $1,100
Values are for households in the middle fifth of the income distribution.
Under current law, their taxes are projected to average $12,200.
If the changes were cuts (of equal percentage) in all types of noninterest spending, one effect in 2017 is
that initial Social Security benefits would be lower than under current law by . . .
$2,600 $1,500
Values are averages for people in the middle fifth of the lifetime earnings distribution who were born in the 1950s
and who would claim benefits at age 65. Under current law, their benefits are projected to be $18,700.
If lawmakers aimed for debt in 2046 to equal . . .
Each year, they would need to increase revenues or reduce noninterest spending by . . .
CHANGES NEEDED TO MEET TWO GOALS FOR DEBT
2046
2016 23 26 44 6
22 31 26 21
2046
2016 48 33 10 9
54 30 8 8
Percent Social Security Major Health Care Programs Other Noninterest Spending Net Interest
Individual Income Taxes Payroll Taxes
Corporate
Income
Taxes Other Revenues
Spending
Revenues
THE SHIFTING COMPOSITION OF THE BUDGET
Millions of People
2000 2005 2010 2015 2020 2025 2030 2035 2040 2045
0
50
100
150
200
250
300
350
Age 65 or Older
Ages 20 to 64
Actual Projected
Percent
By 2046, 21 percent of the
total population—compared
with 15 percent today—will
be age 65 or older, CBO
anticipates. Social Security,
Medicare, and Medicaid
spending for those people
would account for about half
of all federal noninterest
spending.
The growth of interest costs
would result largely from
interest rates’ rising from
unusually low levels. Greater
federal borrowing would also
boost interest costs.
CBO projects continued excess
cost growth—that is, continued
growth in health care spending
per person that is faster than
the growth of economic output
per person.
2017–2026 2017–20262027 2046
Rate of Excess Cost Growth
2027 2046
0
0.5
1.0
1.5
Medicare Medicaid
Percent
Actual Projected
2000 2005 2010 2015 2020 2025 2030 2035 2040 2045
0
1
2
3
4
5
6
7
KEY FACTORS UNDERLYING GROWTH IN SPENDING
Aging
Health Care Spending
per Person
Interest Rates
2.2
2015
4.7
2046
Rate on 10-Year Treasury Note
The spending growth would be driven by
outlays for Social Security, the major
health care programs, and net interest.
Percentage of GDP
2000 2005 2010 2015 2020 2025 2030 2035 2040 2045
0
10
20
30 Spending
Revenues
Actual Projected
2000
Outlays for the major health programs consist of spending for Medicare (net of offsetting receipts), Medicaid, and the Children’s Health Insurance Program, as well as outlays
to subsidize health insurance purchased through the marketplaces established under the Affordable Care Act and related spending.
2005 2010 2015 2020 2025 2030 2035 2040 2045
0
5
10
15
Social Security
Major Health Care
Programs
Other Noninterest
Spending
Net Interest
Actual Projected
Percentage of GDP
Actual Projected
The federal budget outlook is
projected to worsen considerably
over the next three decades
under current law, with debt
growing larger in relation to the
economy than ever recorded in
U.S. history.
The revenue growth would be driven by
steadily increasing receipts from individual
income taxes.
1946
Percentage of GDP
1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040
0
50
100
150
106
141
2046
2000 2005 2010 2015 2020 2025 2030 2035 2040 2045
0
5
10
15
Corporate
Income Taxes
Individual
Income Taxes
Payroll Taxes
Other
Revenues
Actual Projected
Percentage of GDP
That rising debt would
result from growing budget
deficits; that is, spending
growth would outpace
revenue growth.
GROWING DEFICITS AND RISING DEBT
The 2016 Long-Term Budget Outlook
Congressional Budget Office