The Congressional Budget Office (CBO) provides budget and economic projections to Congress. CBO projects that mandatory spending on major health care programs and Social Security will increase significantly as a share of GDP through 2025 due to an aging population and rising health care costs. To attain a sustainable federal budget, the United States will need to increase revenues more than currently projected or reduce spending on large benefit programs.

1. Congressional Budget Office
Overview of the Federal Budget
Presentation to the Maryland Association of CPAs, Inc.
April 17, 2015
Barry Blom
Principal Budget Analyst, Projections Unit
This presentation provides 10-year budget projections published in Updated Budget Projections:
2015 to 2025 (March 2015), www.cbo.gov/publication/49973, economic forecasts from The Budget and
Economic Outlook: 2015 to 2025 (January 2015), www.cbo.gov/publication/49892, and longer-term budget
projections from Budgetary and Economic Outcomes Under Paths for Federal Revenues and Noninterest
Spending Specified by Chairman Price, March 2015 (March 2015), www.cbo.gov/publication/49977.

2. 1C O N G R E S S I O N A L B U D G E T O F F I C E
CBO’s History and Mission
■ Created by the Congressional Budget and Impoundment
Control Act of 1974
■ Provides objective, timely, and nonpartisan analysis for budget
and economic decisions
■ Most work supports the activities of committees rather than
individual Members of Congress

3. 2C O N G R E S S I O N A L B U D G E T O F F I C E
CBO’s Organization and Staffing
■ CBO has about 230 full-time employees.
■ The director is appointed by the Speaker of the House and the
President pro tempore.
■ The director appoints all CBO staff based solely on professional
competence, not political affiliation.
■ Over 70 percent of CBO’s professional staff have advanced
degrees in economics, public policy, or a related field.

4. 3C O N G R E S S I O N A L B U D G E T O F F I C E
CBO’s Responsibilities
CBO Helps Congress to:
■ Develop a budget plan
■ Stay within its budget plan
■ Assess the impact of federal mandates
■ Consider issues related to the budget and to economic policy

5. 4C O N G R E S S I O N A L B U D G E T O F F I C E
CBO’s Products
■ Annual baseline
■ Analysis of the President’s budget
■ Cost estimates
■ Scorekeeping tabulations
■ Long-term budget outlook
■ Budget options
■ Reports and testimony on budget and economic issues

6. 5C O N G R E S S I O N A L B U D G E T O F F I C E
What CBO Does Not Do
■ Make policy recommendations
– Strictly nonpartisan; no judgments about a legislative proposal’s merits
■ Write legislation
– Instead evaluates different proposals and options
■ Implement programs and regulations and enforce budget rules
– The executive branch does that
■ Audit spending or receipts
– GAO does that

7. 6C O N G R E S S I O N A L B U D G E T O F F I C E
Total Deficits or Surpluses
(Percentage of gross domestic product)
Deficits
Surpluses
Actual Projected
1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025
-10
-8
-6
-4
-2
0
2
4
Average Deficit,
1965 to 2014
(2.7%)

8. 7C O N G R E S S I O N A L B U D G E T O F F I C E
Budget Totals, 2009, 2013, 2015-2016
Billions of Dollars Percentage of GDP
Actual Baseline Actual Baseline
2009 2013 2015 2016 2009 2013 2015 2016
Total Revenues 2,105 2,775 3,191 3,470 14.6 16.7 17.7 18.4
Total Outlays 3,518 3,455 3,677 3,925 24.4 20.8 20.4 20.8
______________________________________ ____________________________________ __________________________________ _______________________________________ _______________________________________ _______________________________________ _______________________________________ _______________________________________
Total Deficit -1,413 -680 -486 -455 -9.8 -4.1 -2.7 -2.4

9. 8C O N G R E S S I O N A L B U D G E T O F F I C E
Total Revenues and Outlays
(Percentage of gross domestic product)
Outlays
Revenues
1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025
0
4
8
12
16
20
24
28 Actual Projected
Average Revenues,
1965 to 2014
(17.4%)
Average Outlays,
1965 to 2014
(20.1%)

10. 9C O N G R E S S I O N A L B U D G E T O F F I C E
GDP and Potential GDP
(Trillions of 2009 dollars)

11. 10C O N G R E S S I O N A L B U D G E T O F F I C E
Actual Values and CBO’s Projections of
Key Economic Indicators

12. 11C O N G R E S S I O N A L B U D G E T O F F I C E
Revenues, by Major Source
(Percentage of gross domestic product)
1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025
0
1
2
3
4
5
6
7
8
9
10
9.5
Individual
Income Taxes
Actual Projected
5.7
1.8
1.2
Payroll Taxes
Corporate
Income Taxes
Other Revenue
Sources

13. 12C O N G R E S S I O N A L B U D G E T O F F I C E
Revenues, Tax Expenditures, and Selected Components of
Spending in 2015
(Percentage of gross domestic product)
Individual
Income
Tax Revenues
Payroll
Tax Revenues
All Other
Revenues
All Tax
Expenditures
Medicare
Spending
Net of
Offsetting
Receipts
Defense
Spending
Social Security
Spending
0
2
4
6
8
10
Corporate Income Tax Expenditures
Payroll Tax Expenditures
Individual Income Tax Expenditures

14. 13C O N G R E S S I O N A L B U D G E T O F F I C E
Projected Spending in Major Budget Categories
(Percentage of gross domestic product)
Major Health Care Programs
6.1
Social Security
5.7
Net Interest
2.9
Nondefense Discretionary
2.5
Other Mandatory
2.3
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
0
1
2
3
4
5
6
7
Defense Discretionary
2.6

15. 14C O N G R E S S I O N A L B U D G E T O F F I C E
Components of the Total Increase in Outlays in
CBO’s Baseline Between 2015 and 2025
Total Increase in Outlays:
$2.4 Trillion
All Other Programs
(16%)
Net Interest
(24%)
Social Security
(29%)
Major Health Care Programs
(31%)

16. 15C O N G R E S S I O N A L B U D G E T O F F I C E
Projected Debt Held by the Public and Net Interest
(Billions of dollars)
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
0
100
200
300
400
500
600
700
800
900
0
5,000
10,000
15,000
20,000
25,000
Net Interest (Left axis)
Debt Held by the Public (Right axis)

17. 16C O N G R E S S I O N A L B U D G E T O F F I C E
Federal Debt Held by the Public
(Percentage of gross domestic product)

18. 17C O N G R E S S I O N A L B U D G E T O F F I C E
Why Does Rising Federal Debt Matter?
■ Boosts interest costs, putting more pressure on the rest of the
budget and making it more difficult to constrain future deficits
■ Restrains economic growth and people’s income in the long
term
■ Limits the ability of the government to respond to future
challenges
■ Increases the risk of a fiscal crisis

19. 18C O N G R E S S I O N A L B U D G E T O F F I C E
Federal Debt Held by the Public
(Percentage of gross domestic product)

20. 19C O N G R E S S I O N A L B U D G E T O F F I C E
Population Age 65 or Older as a Share of the Population
Ages 20 to 64
(Percent)
2000 2005 2010 2015 2020 2025 2030 2035
0
10
20
30
40
0
10
20
30
40
Actual Projected

21. 20C O N G R E S S I O N A L B U D G E T O F F I C E
Spending for Social Security Under CBO’s Extended
Baseline
(Percentage of gross domestic product)
1999 2004 2009 2014 2019 2024 2029 2034 2039
0
2
4
6
8
Actual
2024
2040
6.2
4.9
Extended Baseline Projection
5.62014

22. 21C O N G R E S S I O N A L B U D G E T O F F I C E
Federal Spending on the Major Health Care
Programs, by Category
(Percentage of gross domestic product)
1999 2004 2009 2014 2019 2024 2029 2034 2039
0
1
2
3
4
5
6
7
8
9
Medicare
Medicaid, CHIP, and
Exchange Subsidies
Actual Extended Baseline Projection

23. 22C O N G R E S S I O N A L B U D G E T O F F I C E
Conclusion
Given the aging of the population and rising costs for health care,
attaining a sustainable federal budget will require the United
States to deviate from the policies of the past 50 years in at least
one of the following ways:
■ Letting revenues rise more than they would under current law
■ Reducing spending for large benefit programs to below the
projected amounts
Changes in spending for other federal activities could affect the
magnitude of the changes needed in taxes or large benefit
programs but would not eliminate the need to make such
changes.