Extending current tax laws has a significant impact on future deficits
Jan 01, 2012
Percent of GDP
SOURCE: Data from the Congressional Budget Office, The Budget and Economic Outlook: Fiscal Years 2012 to 2022: January 2012, Summary Figure 1. "Continue tax policies" reflects a continuation of the 2001, 2003, and 2009 tax cuts for individuals and businesses (excluding the payroll tax deduction), and that Congress continues to "patch" the Alternative Minimum Tax. "Cancel spending cuts" prevents scheduled reductions in Medicare physician payments and automatic enforcement procedures in the Budget Control Act from taking effect. GDP is gross domestic product.
Congressional Budget Office (CBO) projections provide important insights into the decisions that lie ahead for lawmakers. Under current laws, annual deficits would decline over the next 10 years. However, this outlook assumes that several policies — including the 2001/2003/2009 individual income tax cuts — would expire as scheduled and that the automatic spending cuts in the Budget Control Act would take effect. Because lawmakers are generally expected to reject such changes, CBO provides an alternative baseline that assumes that many current policies continue. Under this current-policy scenario, deficits remain at unsustainable levels.
This chart appeared as a part of PGPF's analysis of the January 2012 report by the Congressional Budget Office, The Budget and Economic Outlook: Fiscal Years 2012 to 2022. To read the full report, click here.
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Continuing Current Policies
Federal Deficits Projection
Revenue, Spending, and Primary Deficits Under Two Scenarios
Where The Growth In Spending Comes From
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