Under CBO's analysis of the President's 2013 budget, debt is still on an unsustainable trajectory
March 16, 2012
SOURCE: Data from the Congressional Budget Office, An Analysis of the President's 2013 Budget, March 2012; and the Congressional Budget Office, Updated Budget Projections: Fiscal Years 2012 to 2022, March 2012. Compiled by PGPF.
In its March 2012 analysis, CBO projects that as the economy recovers, debt under the President’s budget proposals would reach 76 percent of GDP in 2022.
The above chart puts these policies in context relative to two “baseline” scenarios that the Congressional Budget Office (CBO) publishes. The current law baseline, in blue, assumes that several popular policies—including the 2001/2003/2009 individual income tax cuts—would expire as scheduled and that discretionary spending would fall to historically low levels. Relative to this baseline, the President’s budget increases the debt in 2022 by 15 percent of GDP. Because lawmakers are generally expected to reject such significant changes, however, CBO provides an alternative baseline that assumes that many current policies continue. Under this current-policy scenario, over the next decade, the debt would climb to 93 percent of GDP, a level that many economists believe is risky to economic growth. Relative to this baseline, the President’s budget reduces the debt in 2022 by 17 percent of GDP. However, beyond 2022, the President’s budget reveals that deficit and debt climb to unsustainable levels due to a combination of an aging population and the growth in health care costs. That is why it is important to look beyond the 10-year window to understand the impact of proposed budget policies.
This chart appeared as a part of PGPF's analysis of the March 2012 report by the Congressional Budget Office, An Analysis of the President's 2013 Budget. To read the full report, click here.
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