New projections from the Congressional Budget Office show a potential path to significantly reduce federal deficits over the next decade. But it would require elected officials to either stick to current law or find ways to offset any deviation from it — whether that deviation would involve extending tax cuts, enacting new ones or increasing spending.
“These numbers show that if Congress simply went home, the budget would look a lot better over the next 10 years,” said Robert L. Bixby, executive director of The Concord Coalition. “Between the new budget caps, the expiring tax cuts and the triggered spending cuts now in place, the current-law baseline matches the debt stabilization levels of the numerous recent bipartisan fiscal policy proposals, at least in the near term.”
The CBO’s current-law projections show deficits dropping as a share of the economy but still adding $3.5 trillion to the federal debt between next year and 2021. The budget office said there was “especially great” uncertainty in its latest economic forecast, however. It also warned that legislative proposals to extend certain policies could produce “much larger deficits and much greater debt.”
Based on CBO’s new estimates, Concord revised its “plausible” baseline, an alternative scenario with reasonable assumptions about changes that elected officials could make to current law. This scenario presents a troubling picture, with deficits totaling $10.4 trillion over the next decade.
As for the longer term, CBO’s numbers again show that substantial changes in the federal budget will be needed to meet the challenges of an aging population and rising health care costs.
The Concord Coalition’s Updated Plausible Baseline
Concord Statement: Deficit Reduction Committee Would Do Well to Match CBO Baseline
Congressional Budget Office: The Budget and Economic Outlook (August 2011)
Director’s Blog: CBO Releases Annual Summer Update of the Budget and Economic Outlook