America's Deteriorating Budget Outlook CRFB

1. CRFB.org

2. CRFB.org
CBO’s June 2017 Projections
2

3. CRFB.org
The National Debt Was High and Rising
3
Source: Congressional Budget Office

4. CRFB.org
Fiscal Space Was Declining
“Fiscal Space” under Debt-to-GDP Reaching Record Levels
4
Source: CRFB calculations based on Congressional Budget Office data.

5. CRFB.org
Trillion-Dollar Deficits Were Projected to Return by 2022
Billions
Source: CRFB calculations based on Congressional Budget Office data.
$665
$563
$689
$775
$879
$1.0T $1.1T $1.1T
$1.2T
$1.4T
$1.5T
$1.6T
$0
$500
$1,000
$1,500
$2,000
$2,500
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
Prior Law
5

6. CRFB.org
An Updated Fiscal Outlook
(CRFB’s Effort to Approximate
the Next CBO Baseline)
6

7. CRFB.org
Projected Deficits as of June, 2017
Billions of Dollars
Source: CRFB calculations based on Congressional Budget Office data.
$665
$563
$689
$775
$879
$1.0T $1.1T $1.1T
$1.2T
$1.4T
$1.5T
$1.6T
$0
$500
$1,000
$1,500
$2,000
$2,500
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
Prior Law
7

8. CRFB.org
Projected Deficits After the 2017 Tax Bill
Billions
Source: CRFB calculations based on Congressional Budget Office data.
$665 $699
$975
$1.0T
$1.1T
$1.2T $1.2T $1.2T
$1.4T $1.4T $1.5T
$1.6T
$0
$500
$1,000
$1,500
$2,000
$2,500
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
Prior Law Tax Cuts and Jobs Act
8

9. CRFB.org
Projected Deficits After The 2018 Spending Bill and Other
Legislative Changes
Billions
Source: CRFB calculations based on Congressional Budget Office data.
$665
$753
$1.1T $1.1T $1.2T
$1.3T $1.3T $1.3T
$1.4T $1.5T $1.5T
$1.7T
$0
$500
$1,000
$1,500
$2,000
$2,500
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
Prior Law Tax Cuts and Jobs Act Bipartisan Budget Act & Other Changes
9

10. CRFB.org
Projected Deficits If Lawmakers Extend Debt-Busting Policies
Billions
Source: CRFB calculations based on Congressional Budget Office data.
$665
$753
$1.1T
$1.3T
$1.4T
$1.5T $1.6T $1.6T
$1.8T
$2.0T
$2.2T
$2.4T
10
$0
$500
$1,000
$1,500
$2,000
$2,500
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
Prior Law Tax Cuts and Jobs Act Bipartisan Budget Act & Other Changes Alternative Scenario

11. CRFB.org
Debt Will Soon Exceed the Size of the Economy
Percent of GDP
Source: CRFB calculations based on Congressional Budget Office data.
93%
101%
60%
65%
70%
75%
80%
85%
90%
95%
100%
2010 2012 2014 2016 2018 2020 2022 2024 2026 2028
11

12. CRFB.org
12
The Gap Between Revenue and Spending Will Grow
Percent of GDP
13%
15%
17%
19%
21%
23%
25%
27%
1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028
50-Year Avg. Spending: 20.3%
50-Year Avg. Revenue: 17.4%
Spending
Revenue
Alternative Revenue
Alternative Spending
Source: CRFB calculations based on Congressional Budget Office data.

13. CRFB.org
Interest Spending Will Quadruple
Billions
Source: CRFB calculations based on Congressional Budget Office data.
$263
$963
$1.05T
$0
$200
$400
$600
$800
$1,000
$1,200
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
Current Law Alternative Scenario
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14. CRFB.org
What’s Driving Higher Deficits?
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15. CRFB.org
Recent Legislation Caused Half the 2019 Deficits
Contribution to 2019 Budget Deficit
MACRA SGR Fix (2015) ~$ 10 billion
PATH Act (2015) ~$ 75 billion
Tax Cuts & Jobs Act (2017) ~$245 billion
Bipartisan Budget Act (2018) ~$185 billion
Other Legislation ~$ 35 billion
TOTAL DEFICIT IMPACT ~$550 billion
TOTAL 2019 DEFICIT ~$1.1 Trillion
15
Source: CRFB calculations based on Congressional Budget Office data.

16. CRFB.org
Congress Added $2.4 Trillion in Debt Since June 2017
16

17. CRFB.org
The Tax Cuts & Jobs Act Was Expensive
17

18. CRFB.org
18

19. CRFB.org
The Bipartisan Budget Act Was Also Expensive
19Source: CRFB calculations based on Congressional Budget Office data.

20. CRFB.org
Billions
$1,043
$988
$1,012 $1,014
$1,067 $1,070
$1,208
$1,244
$800
$900
$1,000
$1,100
$1,200
$1,300
2012 2013 2014 2015 2016 2017 2018 2019
March 2011 Baseline
BCA Caps
Sequester-Level Caps
The BBA Busted the Original BCA Caps, Gave Both
Sides More than They Asked For
Source: CRFB calculations based on Congressional Budget Office data.
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21. CRFB.org
The Omnibus Spread The Money Around
21

22. CRFB.org
OprahBus?
22
The Omnibus Spreads The Money Around

23. CRFB.org
And Included Some Gimmicks…
23
Empty BA
$3.7B
Spending
Delays
$13.3B
$17.0 Billion of Fake CHIMPS
$0B
$20B
$40B
$60B
$80B
$100B
Defense OCO:
$66.1B
State OCO: $12.0B
AdditionalDisaster:$7.4B
$85.4 Billion in New Uncapped BA
Source: CRFB calculations based on Congressional Budget Office data.

24. CRFB.org
Long-Term Deficits Are Still Rising Mainly Due to Health,
Retirement, and Interest Spending
2017-2028 Nominal Dollar Spending Growth
Source: CRFB calculations based on Congressional Budget Office data.
+35% +29%
+88%
+98%
+267%
0%
50%
100%
150%
200%
250%
300%
Discretionary Other Mandatory Social Security Health Care Interest
24

25. CRFB.org
25
Social Security, Health Care, And Interest
Explain 82% of Spending Growth
Interest
22%
Social Security
27%Medicare
24%
Medicaid/ACA/CHIP
9%
Other Mandatory
7%
Defense
6%
Non-Defense
Discretionary
7%
2018-2028 Spending Growth
Source: CRFB calculations based on Congressional Budget Office data.

26. CRFB.org
Health and Social Security Will Consume More of the Budget
26
Discretio
nary
6.3%
Individual
Income
8.3%
Social
Security
4.9%
Payroll
6.1%
Health
Care
5.3%
Corporate: 1.5%
Other
Mandator
y
2.9%
Other:
1.4%
Interest:
1.4% Deficit:
3.5%
0%
5%
10%
15%
20%
25%
Spending Revenue
2017
Discretio
nary
5.5%
Individual
Income
9.9%
Social
Security
6.1%
Payroll
5.9%
Health
Care
6.9%
Corporate: 1.4%
Other
Mandator
y
2.5%
Other:
1.4%
Interest
3.3% Deficit
5.7%
0%
5%
10%
15%
20%
25%
Spending Revenue
2028
Source: CRFB calculations based on Congressional Budget Office data.

27. CRFB.org
The Fiscal Situation Could Get Much Worse
27

28. CRFB.org
Projected Deficits If Lawmakers Extend Debt-Busting Policies
Billions
Source: CRFB calculations based on Congressional Budget Office data.
$665
$753
$1.1T
$1.3T
$1.4T
$1.5T $1.6T $1.6T
$1.8T
$2.0T
$2.2T
$2.4T
28
$0
$500
$1,000
$1,500
$2,000
$2,500
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
Prior Law Tax Cuts and Jobs Act Bipartisan Budget Act & Other Changes Alternative Scenario

29. CRFB.org
Our Alternative Scenario Projects Far More Debt
29
Debt in Dollars Debt as Share of GDP
Updated Baseline Debt Projections for 2028 $29.4 trillion 101%
Continue Tax Cuts and Jobs Act as written in 2019 +$1.1 trillion +3.6%
Extend budget caps in Bipartisan Budget Act +$1.4 trillion +4.9%
Extend other expiring legislation +$525 billion +1.8%
Extend defunding of ACA cost sharing reductions +$210 billion +0.7%
Net interest effect of above policies +$365 billion +1.2%
Alternative Scenario Debt Projections $33.0 trillion 113%
Memo: Increase in 2028 Debt Due to Extensions $3.6 trillion +12%
Source: CRFB calculations based on Congressional Budget Office data.

30. CRFB.org
Projected Debt If Lawmakers Extend Debt-Busting Policies
Percent of GDP
Source: CRFB calculations based on Congressional Budget Office data.
93%
113%
101%
60%
70%
80%
90%
100%
110%
2010 2012 2014 2016 2018 2020 2022 2024 2026 2028
Alternative Scenario
Prior Law
30

31. CRFB.org
Spending Growth If Lawmakers Extend Debt-Busting Policies
2017-2028 Nominal Dollar Spending Growth
Source: CRFB calculations based on Congressional Budget Office data.
+35% +29%
+88%
+98%
+267%
+51%
+29%
+88%
+100%
+301%
0%
50%
100%
150%
200%
250%
300%
350%
Discretionary Other Mandatory Social Security Health Care Interest
Current Law Alternative Scenario
31

32. CRFB.org
Higher Interest Rates Could Also Drive Up Debt
32
Source: Congressional Budget Office

33. CRFB.org
Higher Interest Rates Would Increase Interest Spending
Billions of Dollars
Source: CRFB calculations based on Congressional Budget Office data.
$965B
$1.3T
$1.5T
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
2016 2018 2020 2022 2024 2026 2028
Current Law
33

34. CRFB.org
Higher Interest Rates Would Drive Up Debt
Percent of GDP
Source: CRFB calculations based on Congressional Budget Office data.
101%
107%
112%
50%
60%
70%
80%
90%
100%
110%
120%
2010 2012 2014 2016 2018 2020 2022 2024 2026 2028
Current Law
34

35. CRFB.org
The President’s Budget Won’t Fix the Debt
Percent of GDP
Source: CRFB calculations based on Congressional Budget Office data, Office of Management and Budget.
93%
96%
73%
101%
60%
65%
70%
75%
80%
85%
90%
95%
100%
105%
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
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