The Congressional Budget Office (CBO) presents its budget outlook through 2026, discussing federal revenues, noninterest spending, and historical trends in deficits relative to GDP. It highlights projections indicating an increase in federal debt, which could vary due to unforeseen economic and demographic changes. Additionally, significant policy adjustments in tax and spending would be necessary to ensure long-term sustainability of federal finances.

1. Congressional Budget Office
The 2016 Budget Outlook
Presentation at the
Peter G. Peterson Foundation’s
2016 Fiscal Summit
Washington, D.C.
May 11, 2016
Keith Hall
Director
This presentation draws on Updated Budget Projections: 2016 to 2026 (March 2016), www.cbo.gov/publication/51384,
Budgetary and Economic Outcomes Under Paths for Federal Revenues and Noninterest Spending Specified by
Chairman Price, March 2016 (March 2016), www.cbo.gov/publication/51260, and The Budget and Economic Outlook:
2016 to 2026 (January 2016), www.cbo.gov/publication/51129.

2. 1CONGRESSIONAL BUDGET OFFICE
CBO’s Budget Projections Through 2026
as of March 2016

3. 2CONGRESSIONAL BUDGET OFFICE
Total Deficits or Surpluses
Percentage of GDP
Actual Projected
Deficits
Surpluses
Average
Deficit,
1966 to 2015
(-2.8%)
1966 1971 1976 1981 1986 1991 1996 2001 2006 2011 2016 2021 2026
-10
-8
-6
-4
-2
0
2
4
-10
-8
-6
-4
-2
0
2
4

4. 3CONGRESSIONAL BUDGET OFFICE
Total Revenues and Outlays
Percentage of GDP
1966 1971 1976 1981 1986 1991 1996 2001 2006 2011 2016 2021 2026
0
4
8
12
16
20
24
28
0
4
8
12
16
20
24
28
Outlays
Revenues
Average Outlays,
1966 to 2015
(20.2%)
Average Revenues,
1966 to 2015
(17.4%)
Actual Projected

5. 4CONGRESSIONAL BUDGET OFFICE
Projected Outlays in Major Budget Categories
Percentage of GDP

6. 5CONGRESSIONAL BUDGET OFFICE
Major Changes in Projected Revenues From 2016 to 2026

7. 6CONGRESSIONAL BUDGET OFFICE
Tax Expenditures and Other Budget Categories in 2016

8. 7CONGRESSIONAL BUDGET OFFICE
CBO’s Budget Projections Through 2040
as of January 2016

9. 8CONGRESSIONAL BUDGET OFFICE
Federal Debt, Spending, and Revenues
Percentage of GDP

10. 9CONGRESSIONAL BUDGET OFFICE
Uncertainty About Projections of Debt
■ Even if future tax and spending policies match the policies
specified in current law, budgetary outcomes will undoubtedly
differ from CBO’s projections.
■ Unexpected changes in the economy, demographics, and other
key factors will occur.

11. 10CONGRESSIONAL BUDGET OFFICE
Components of Federal Spending

12. 11CONGRESSIONAL BUDGET OFFICE
Changes in the Population, by Age Group

13. 12CONGRESSIONAL BUDGET OFFICE
Projected Spending, Compared With Past Averages

14. 13CONGRESSIONAL BUDGET OFFICE
Total Revenues

15. 14CONGRESSIONAL BUDGET OFFICE
Projected Spending, Revenues, and Deficits, Compared
With Past Averages
Percentage of GDP

16. 15CONGRESSIONAL BUDGET OFFICE
Federal Debt Held by the Public
Percentage of GDP

17. 16CONGRESSIONAL BUDGET OFFICE
A Likely Range for CBO’s Projection of Debt
■ The extended baseline represents CBO’s best projection of
federal debt relative to GDP 25 years from now under
current law, but the amount could be higher or lower.
■ Last year, CBO considered a wide range of possible values
for key factors such as interest rates, health care costs, and
productivity.
■ That analysis concluded that federal debt would probably
be at least as high as it is today and would most likely be
much higher.
■ This year, federal debt is projected to be even higher than
it was in last year’s analysis.

18. 17CONGRESSIONAL BUDGET OFFICE
A Sustainable Path for the Long Term
■ Lawmakers would have to make major changes to tax
policies, spending policies, or both.
■ The size of such changes would depend upon the
amount of federal debt that lawmakers considered
appropriate.

19. 18CONGRESSIONAL BUDGET OFFICE
Federal Debt Held by the Public Under Various
Budget Scenarios