About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline
LOG IN
LOG IN

1 Dan Ready, et al., How Changes in Economic Conditions Might Affect the Federal Budget: 2023 to 2033 1 (April 28, 2023)

handle is hein.congrec/hwcgsieccns0001 and id is 1 raw text is: he Congressional Budget Office's budget projec- tions are subject to uncertainty for many reasons. Some of that uncertainty is related to demo- graphic trends, possible actions by federal agen- cies, the extent of participation in federal programs, and a variety of other factors. In addition, significant uncertainty stems from the fact that the federal budget is sensitive to economic conditions, which are difficult to accurately fore- cast. If conditions differed noticeably from those in CBO's economic forecast, budgetary outcomes could diverge from those in the agency's baseline budget projections.1 To show how variations in economic conditions might affect its budget projections, CBO analyzed how rev- enues, outlays, and deficits might change if the values of key economic variables differed from those in the agency's forecast. To do so, the agency generated four economic scenarios that would result in larger budget deficits. In isolation, each of those scenarios would cause cumulative deficits to be larger than the amounts projected in CBO's baseline by between $110 billion and $307 billion over the 2024-2033 period. (The total deficit projected for that period is $20.3 trillion.) The four scenarios that CBO analyzed are as follows: - Slower productivity growth. If productivity grew at a rate that was 0.1 percentage point slower each year than it is in the agency's economic forecast, annual deficits would be larger than projected by amounts that would reach $51 billion in 2033, CBO estimates. Over the 2024-2033 period, the cumulative deficit would be $261 billion larger than it is in CBO's baseline budget projections. 1. This analysis is based on the agency's most recent baseline budget and economic projections. For details, see Congressional Budget Office, The Budget and Economic Outlook: 2023 to 2033 (February 2023), www.cbo.gov/publication/58848. - Slower growth in the labor force. If the labor force grew at a rate that was 0.1 percentage point slower each year than the rate in CBO's economic forecast, and if the unemployment rate remained unchanged, annual deficits would be larger than those in the agency's baseline budget projections by amounts that would increase each year, reaching an estimated $24 billion in 2033. (The unemployment rate is a measure of the number of jobless people who are available for work and are actively seeking jobs, expressed as a percentage of the labor force.) The cumulative deficit for 2024 to 2033 would be $110 billion larger than it is in the agency's baseline projections. - Higher interest rates. If all interest rates-including those on 3-month Treasury bills and 10-year Treasury notes-were 0.1 percentage point higher each year than they are in CBO's economic forecast, deficits would increase progressively over the projection period by amounts that would reach $47 billion in 2033, if other variables were held constant. The cumulative deficit for 2024 to 2033 would be $303 billion larger than it is in the agency's baseline projections. Higher inflation and interest rates. If all wage and price indexes-including the gross domestic product (GDP) price index, the consumer price index for all urban consumers (CPI-U), the chained CPI-U, and the employment cost index for wages and salaries of workers in private industry-grew at a rate that was 0.1 percentage point faster each year than the rate in CBO's economic forecast, annual deficits would be larger than projected by amounts that would climb to $53 billion in 2033. In this scenario, real values (that is, values adjusted to remove the effects of inflation) for GDP, interest rates, and other variables affected by inflation are the same as in CBO's baseline. The total Notes: All years referred to in describing the budgetary effects of changes in the economy are federal fiscal years, which run from October 1 to September 30 and are designated by the calendar year in which they end. Years referred to in describing estimated changes to the economy are calendar years. Numbers in the text and tables may not add up to totals because of rounding.

What Is HeinOnline?

HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.



Short-term subscription options include 24 hours, 48 hours, or 1 week to HeinOnline.

Purchase Access

Contact us for annual subscription options:

Contact Us

Already a HeinOnline Subscriber?

Log In

profiles profiles most