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

1 The Long-Term Budget Outlook under Alternative Scenarios for Fiscal Policy 1 (August 2018)

handle is hein.congrec/cboltboalt0001 and id is 1 raw text is: AUGUST 2018 The Long-Term Budget Outlook Under Alternative Scenarios for Fiscal Policy Each year, the Congressional Budget Office publishes extended baseline projections-a set of budget projec- tions that incorporate the assumption that current laws generally remain unchanged, extending the agency's 10-year baseline projections beyond the coming decade.' In CBO's most recent extended baseline, rev- enues grow more rapidly than gross domestic product (GDP), rising to levels well above their historical aver- age, because recently enacted tax changes are scheduled to expire and because of the structure of the tax system. In addition, discretionary spending falls substantially in relation to the size of the economy.2 Nevertheless, federal debt held by the public rises from an amount equal to 78 percent of GDP in 2018 to 118 percent of GDP in 2038. This report expands on CBO's extended baseline projec- tions by showing how the federal budget and the nation's economy would evolve under three alternative scenarios. In those scenarios, laws would be changed to continue certain policies now in place, leading to even higher debt (see Figure 1). * In the first scenario, current law is changed to maintain certain major policies that are now in 1. See Congressional Budget Office, The 2018 Long-Term Budget Outlook (June 2018), www.cbo.gov/publication/53919. 2. Discretionary spending is budget authority that is provided or controlled by appropriation acts and the outlays resulting from that budget authority. place-including the individual income tax provi- sions of Public Law 115-97 (originally called the Tax Cuts and Jobs Act and called the 2017 tax act in this report), which are scheduled to expire in 2026 under current law. Most other parts of the tax system's struc- ture are left unchanged, including those that cause revenues to rise as a percentage of GDP. In addition, discretionary spending equals a larger percentage of GDP than under the extended baseline, and that percentage remains roughly flat after 2028. In that scenario, CBO projects, deficits would be larger than they would be under the extended baseline. Federal debt would equal 148 percent of GDP in 2038 and continue to rise in later years. * The second scenario resembles the first scenario initially, but after 2028, tax policy is assumed to be changed so that revenues remain flat as a percent- age of GDP, rather than growing over time. In that scenario, deficits would be even larger than in the first scenario. Debt would equal 151 percent of GDP in 2038 and keep rising thereafter. * The third scenario is like the second, except that tax policy is assumed to be changed so that revenues remain flat in relation to GDP after 2018 rather than after 2028. In that scenario, deficits would be larger still. Debt would equal 165 percent of GDP in 2038 and keep rising. Note: Unless this report indicates otherwise, all years referred to in describing budget projections 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 eco- nomic projections are calendar years. Numbers in the text and tables may not add up to totals because of rounding. The scenarios described are illustrative and are not based on proposed legislation.

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