America's Deteriorating Budget Outlook
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The document discusses projections from the Congressional Budget Office (CBO) regarding rising US budget deficits and debt levels. It notes that deficits were projected to exceed $1 trillion per year by 2022 under prior law and have increased further due to recent tax and spending legislation. If current policies are extended indefinitely, deficits could reach $2.4 trillion by 2028 and debt could exceed 113% of GDP, posing fiscal and economic risks. Higher interest rates could also significantly increase interest costs and debt levels.
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America's Deteriorating Budget Outlook
- 1. CRFB.org
- 2. CRFB.org CBO’s June 2017 Projections 2
- 3. CRFB.org The National Debt Was High and Rising 3 Source: Congressional Budget Office
- 4. CRFB.org Fiscal Space Was Declining “Fiscal Space” under Debt-to-GDP Reaching Record Levels 4 Source: CRFB calculations based on Congressional Budget Office data.
- 5. CRFB.org Trillion-Dollar Deficits Were Projected to Return by 2022 Billions Source: CRFB calculations based on Congressional Budget Office data. $665 $563 $689 $775 $879 $1.0T $1.1T $1.1T $1.2T $1.4T $1.5T $1.6T $0 $500 $1,000 $1,500 $2,000 $2,500 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Prior Law 5
- 6. CRFB.org An Updated Fiscal Outlook (CRFB’s Effort to Approximate the Next CBO Baseline) 6
- 7. CRFB.org Projected Deficits as of June, 2017 Billions of Dollars Source: CRFB calculations based on Congressional Budget Office data. $665 $563 $689 $775 $879 $1.0T $1.1T $1.1T $1.2T $1.4T $1.5T $1.6T $0 $500 $1,000 $1,500 $2,000 $2,500 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Prior Law 7
- 8. CRFB.org Projected Deficits After the 2017 Tax Bill Billions Source: CRFB calculations based on Congressional Budget Office data. $665 $699 $975 $1.0T $1.1T $1.2T $1.2T $1.2T $1.4T $1.4T $1.5T $1.6T $0 $500 $1,000 $1,500 $2,000 $2,500 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Prior Law Tax Cuts and Jobs Act 8
- 9. CRFB.org Projected Deficits After The 2018 Spending Bill and Other Legislative Changes Billions Source: CRFB calculations based on Congressional Budget Office data. $665 $753 $1.1T $1.1T $1.2T $1.3T $1.3T $1.3T $1.4T $1.5T $1.5T $1.7T $0 $500 $1,000 $1,500 $2,000 $2,500 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Prior Law Tax Cuts and Jobs Act Bipartisan Budget Act & Other Changes 9
- 10. CRFB.org Projected Deficits If Lawmakers Extend Debt-Busting Policies Billions Source: CRFB calculations based on Congressional Budget Office data. $665 $753 $1.1T $1.3T $1.4T $1.5T $1.6T $1.6T $1.8T $2.0T $2.2T $2.4T 10 $0 $500 $1,000 $1,500 $2,000 $2,500 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Prior Law Tax Cuts and Jobs Act Bipartisan Budget Act & Other Changes Alternative Scenario
- 11. CRFB.org Debt Will Soon Exceed the Size of the Economy Percent of GDP Source: CRFB calculations based on Congressional Budget Office data. 93% 101% 60% 65% 70% 75% 80% 85% 90% 95% 100% 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 11
- 12. CRFB.org 12 The Gap Between Revenue and Spending Will Grow Percent of GDP 13% 15% 17% 19% 21% 23% 25% 27% 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 50-Year Avg. Spending: 20.3% 50-Year Avg. Revenue: 17.4% Spending Revenue Alternative Revenue Alternative Spending Source: CRFB calculations based on Congressional Budget Office data.
- 13. CRFB.org Interest Spending Will Quadruple Billions Source: CRFB calculations based on Congressional Budget Office data. $263 $963 $1.05T $0 $200 $400 $600 $800 $1,000 $1,200 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Current Law Alternative Scenario 13
- 14. CRFB.org What’s Driving Higher Deficits? 14
- 15. CRFB.org Recent Legislation Caused Half the 2019 Deficits Contribution to 2019 Budget Deficit MACRA SGR Fix (2015) ~$ 10 billion PATH Act (2015) ~$ 75 billion Tax Cuts & Jobs Act (2017) ~$245 billion Bipartisan Budget Act (2018) ~$185 billion Other Legislation ~$ 35 billion TOTAL DEFICIT IMPACT ~$550 billion TOTAL 2019 DEFICIT ~$1.1 Trillion 15 Source: CRFB calculations based on Congressional Budget Office data.
- 16. CRFB.org Congress Added $2.4 Trillion in Debt Since June 2017 16
- 17. CRFB.org The Tax Cuts & Jobs Act Was Expensive 17
- 18. CRFB.org 18
- 19. CRFB.org The Bipartisan Budget Act Was Also Expensive 19Source: CRFB calculations based on Congressional Budget Office data.
- 20. CRFB.org Billions $1,043 $988 $1,012 $1,014 $1,067 $1,070 $1,208 $1,244 $800 $900 $1,000 $1,100 $1,200 $1,300 2012 2013 2014 2015 2016 2017 2018 2019 March 2011 Baseline BCA Caps Sequester-Level Caps The BBA Busted the Original BCA Caps, Gave Both Sides More than They Asked For Source: CRFB calculations based on Congressional Budget Office data. 20
- 21. CRFB.org The Omnibus Spread The Money Around 21
- 22. CRFB.org OprahBus? 22 The Omnibus Spreads The Money Around
- 23. CRFB.org And Included Some Gimmicks… 23 Empty BA $3.7B Spending Delays $13.3B $17.0 Billion of Fake CHIMPS $0B $20B $40B $60B $80B $100B Defense OCO: $66.1B State OCO: $12.0B AdditionalDisaster:$7.4B $85.4 Billion in New Uncapped BA Source: CRFB calculations based on Congressional Budget Office data.
- 24. CRFB.org Long-Term Deficits Are Still Rising Mainly Due to Health, Retirement, and Interest Spending 2017-2028 Nominal Dollar Spending Growth Source: CRFB calculations based on Congressional Budget Office data. +35% +29% +88% +98% +267% 0% 50% 100% 150% 200% 250% 300% Discretionary Other Mandatory Social Security Health Care Interest 24
- 25. CRFB.org 25 Social Security, Health Care, And Interest Explain 82% of Spending Growth Interest 22% Social Security 27%Medicare 24% Medicaid/ACA/CHIP 9% Other Mandatory 7% Defense 6% Non-Defense Discretionary 7% 2018-2028 Spending Growth Source: CRFB calculations based on Congressional Budget Office data.
- 26. CRFB.org Health and Social Security Will Consume More of the Budget 26 Discretio nary 6.3% Individual Income 8.3% Social Security 4.9% Payroll 6.1% Health Care 5.3% Corporate: 1.5% Other Mandator y 2.9% Other: 1.4% Interest: 1.4% Deficit: 3.5% 0% 5% 10% 15% 20% 25% Spending Revenue 2017 Discretio nary 5.5% Individual Income 9.9% Social Security 6.1% Payroll 5.9% Health Care 6.9% Corporate: 1.4% Other Mandator y 2.5% Other: 1.4% Interest 3.3% Deficit 5.7% 0% 5% 10% 15% 20% 25% Spending Revenue 2028 Source: CRFB calculations based on Congressional Budget Office data.
- 27. CRFB.org The Fiscal Situation Could Get Much Worse 27
- 28. CRFB.org Projected Deficits If Lawmakers Extend Debt-Busting Policies Billions Source: CRFB calculations based on Congressional Budget Office data. $665 $753 $1.1T $1.3T $1.4T $1.5T $1.6T $1.6T $1.8T $2.0T $2.2T $2.4T 28 $0 $500 $1,000 $1,500 $2,000 $2,500 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Prior Law Tax Cuts and Jobs Act Bipartisan Budget Act & Other Changes Alternative Scenario
- 29. CRFB.org Our Alternative Scenario Projects Far More Debt 29 Debt in Dollars Debt as Share of GDP Updated Baseline Debt Projections for 2028 $29.4 trillion 101% Continue Tax Cuts and Jobs Act as written in 2019 +$1.1 trillion +3.6% Extend budget caps in Bipartisan Budget Act +$1.4 trillion +4.9% Extend other expiring legislation +$525 billion +1.8% Extend defunding of ACA cost sharing reductions +$210 billion +0.7% Net interest effect of above policies +$365 billion +1.2% Alternative Scenario Debt Projections $33.0 trillion 113% Memo: Increase in 2028 Debt Due to Extensions $3.6 trillion +12% Source: CRFB calculations based on Congressional Budget Office data.
- 30. CRFB.org Projected Debt If Lawmakers Extend Debt-Busting Policies Percent of GDP Source: CRFB calculations based on Congressional Budget Office data. 93% 113% 101% 60% 70% 80% 90% 100% 110% 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 Alternative Scenario Prior Law 30
- 31. CRFB.org Spending Growth If Lawmakers Extend Debt-Busting Policies 2017-2028 Nominal Dollar Spending Growth Source: CRFB calculations based on Congressional Budget Office data. +35% +29% +88% +98% +267% +51% +29% +88% +100% +301% 0% 50% 100% 150% 200% 250% 300% 350% Discretionary Other Mandatory Social Security Health Care Interest Current Law Alternative Scenario 31
- 32. CRFB.org Higher Interest Rates Could Also Drive Up Debt 32 Source: Congressional Budget Office
- 33. CRFB.org Higher Interest Rates Would Increase Interest Spending Billions of Dollars Source: CRFB calculations based on Congressional Budget Office data. $965B $1.3T $1.5T $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 2016 2018 2020 2022 2024 2026 2028 Current Law 33
- 34. CRFB.org Higher Interest Rates Would Drive Up Debt Percent of GDP Source: CRFB calculations based on Congressional Budget Office data. 101% 107% 112% 50% 60% 70% 80% 90% 100% 110% 120% 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 Current Law 34
- 35. CRFB.org The President’s Budget Won’t Fix the Debt Percent of GDP Source: CRFB calculations based on Congressional Budget Office data, Office of Management and Budget. 93% 96% 73% 101% 60% 65% 70% 75% 80% 85% 90% 95% 100% 105% 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 35