Post on 16-Jan-2017
Congressional Budget Office
CBO’s Recent Budget and Economic Projections
Presentation to the American University
Department of Economics
April 26, 2016
Keith Hall Director
This presentation draws on Updated Budget Projections: 2016 to 2026 (March 2016), www.cbo.gov/publication/51384, and The Budget and Economic Outlook: 2016 to 2026 (January 2016), www.cbo.gov/publication/51129.
1 CO N GR ES S IO N A L B UDGE T O F F IC E
The Congressional Budget Office, along with the House and Senate Budget Committees, was created by the Congressional Budget and Impoundment Control Act of 1974 to play an important role in the budget process of the United States.
2 CO N GR ES S IO N A L B UDGE T O F F IC E
CBO was created to provide the Congress with analysis of budgetary and economic issues in an objective and impartial manner. The agency is strictly nonpartisan.
3 CO N GR ES S IO N A L B UDGE T O F F IC E
CBO’s Products and Activities
Baseline budget projections and economic forecasts covering the 10-year period used in the Congressional budget process
Analysis of the President’s budget
Cost estimates for legislation, including analyses of federal mandates
Scorekeeping for enacted legislation
Long-term budget projections
Analytic reports examining specific federal programs, aspects of the tax code, and budgetary and economic challenges
4 CO N GR ES S IO N A L B UDGE T O F F IC E
CBO does not:
Make policy recommendations
Enforce budget rules
Write legislation
Implement programs or regulations
Evaluate historical performance of government programs
5 CO N GR ES S IO N A L B UDGE T O F F IC E
CBO’s Estimates
• CBO’s cost estimates generally focus on the next 5 or 10 years but sometimes look out 20 years or more.
• They are meant to reflect the middle of the distribution of possible outcomes.
6 CO N GR ES S IO N A L B UDGE T O F F IC E
The estimates incorporate behavioral responses to the extent feasible, on the basis of the available evidence.
They are open to new information and may change as a result, and they include explanations of the analysis to the extent feasible.
7 CO N GR ES S IO N A L B UDGE T O F F IC E
Growth of Real Gross Domestic Product
Percent, Fourth Quarter to Fourth Quarter
8 CO N GR ES S IO N A L B UDGE T O F F IC E
Labor Force Participation Rates
Percent
9 CO N GR ES S IO N A L B UDGE T O F F IC E
Interest Rates on Treasury Securities
Percent
10 CO N GR ES S IO N A L B UDGE T O F F IC E
Total Deficits or Surpluses
Percentage of Gross Domestic Product
Actual Projected
Deficits
Surpluses
Average Deficit,
1966 to 2015 (-2.8%)
1966 1971 1976 1981 1986 1991 1996 2001 2006 2011 2016 2021 2026 -10
-8
-6
-4
-2
0
2
4
-10
-8
-6
-4
-2
0
2
4
11 CO N GR ES S IO N A L B UDGE T O F F IC E
Federal Debt Held by the Public
Percentage of Gross Domestic Product
12 CO N GR ES S IO N A L B UDGE T O F F IC E
Total Revenues and Outlays
Percentage of Gross Domestic Product
1966 1971 1976 1981 1986 1991 1996 2001 2006 2011 2016 2021 2026 0
4
8
12
16
20
24
28
0
4
8
12
16
20
24
28
Outlays
Revenues
Average Outlays, 1966 to 2015
(20.2%)
Average Revenues, 1966 to 2015
(17.4%)
Actual Projected
13 CO N GR ES S IO N A L B UDGE T O F F IC E
Components of the Total Increase in Outlays in CBO’s Baseline Between 2016 and 2026
Total Increasein Outlays:$2.5 Trillion
All Other Programs(17%)
Net Interest(23%)
Social Security(28%)
Major Health Care Programs(32%)Medicare
(20%)
Other(12%)
14 CO N GR ES S IO N A L B UDGE T O F F IC E
Projected Outlays in Major Budget Categories
Percentage of Gross Domestic Product
15 CO N GR ES S IO N A L B UDGE T O F F IC E
Spending and Revenues Projected in CBO’s Baseline, Compared With Actual Values in 1966 and 1991 Percentage of Gross Domestic Product