Three times each year the Congressional Budget Office releases its budget projection for the next 10 years. This "baseline" makes a variety of assumptions about taxation, spending, and the economy. Some of these assumptions are reasonable and others are not because of the peculiarities of budget law. Historically, our baseline compensated for the more unreasonable assumptions and presented a more plausible scenario. Recent CBO reports have included an "alternative scenario" following estimates similar to the ones we used in constructing our "plausible baseline". Like the official CBO baseline, neither Concord's Plausible baseline or CBO's alternative scenario are predictions, but a projection of where current trends are leading.
For the underlying chart data click here. (PDF spreadsheet download)
The Concord Baseline and CBO alternative make some key assumption changes to the CBO baseline. CBO is required to assume that congressional appropriations continue increasing at the rate specified in law -- following the budget caps and sequester policy enacted in the 2011 Budget Controll Act. For tax legislation, they assume current law will govern -- so if there are tax cuts that have sunsets, CBO is required to project revenues assuming the tax cuts expire as written in the legislation. They also project economic growth in a very conservative fashion -- they do not try to anticipate major changes in the economy, either recessions or accelerations.
As of February 2013, after the permanent extension of the largest sunsetted tax cuts, The Concord Coalition uses the CBO alternative scenario as a reasonable projection for current policy over 10 years. The main assumptions in this alternative are that the sequester from the Budget Control Act does not go into effect, that Medicare physician payment cuts (under the Sustainable Growth Rate (SGR) are postponed, as they have been for the last several years, and that small tax cuts often extended on an annual basis are continually extended. Finally, CBO includes a calculation for the increased debt service (interest payments) that these policies (both on the tax and spending side) would cause by their increasing the deficit. No changes are made to CBO's economic assumptions.