Debt under two scenarios
June 15, 2012
SOURCE: Data from the Congressional Budget Office, The 2012 Long-Term Budget Outlook, June 2012.Compiled by PGPF.
Under current policy, federal debt is projected to surpass 90 percent of GDP in a decade and continue to rise to about 200 percent of GDP by 2037. CBO also prepares a current-law scenario which assumes that a number of tax policies that have been repeatedly extended in the past will be allowed to expire, and that certain automatic spending reductions specified in current law will be allowed to take effect. This scenario puts the budget on a sustainable path over the long term but it would impose sharp changes in the short run — so sharp, in fact, that CBO forecasts that it would push the economy back into recession next year. This scenario is also implausible because it allows revenue as a share of the economy to grow well above its historical average, assumes significant spending restraint for health care, and holds all other federal spending well below its historical average.
This chart appeared as part of PGPF's analysis of Congressional Budget Office's 2012 Long-Term Budget Outlook. To read the full report, click here.
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