Meeting Fiscal Goals Under CBO's May 2023 Baseline
We estimate that it would take $16.0 trillion of deficit reduction to balance the budget over a decade, $3.5 trillion to stabilize debt at 110 percent of Gross Domestic Product (GDP) in ten years, or $8.4 trillion of deficit reduction to stabilize debt at its current level as a share of GDP, based on CBO's latest budget projections. We also estimate that primary balance, which excludes interest spending, could be achieved with $8.8 trillion of savings over a decade, and reducing the budget deficit to 4 percent of GDP would require $6.7 trillion of savings.
Savings Needed to Meet Various Fiscal Goals
|Fiscal Goal||Five-Year Savings||Ten-Year Savings|
|Stabilize debt at 110 percent of GDP||n/a||$3.5 trillion|
|Stabilize debt at 100 percent of GDP||$2.4 trillion||$7.4 trillion|
|Stabilize debt at 97.5 percent of GDP (current level)||$3.2 trillion||$8.4 trillion|
|Reduce debt to 90 percent of GDP||$5.6 trillion||$11.3 trillion|
|Reduce debt to 80 percent of GDP||$8.9 trillion||$15.3 trillion|
|Reduce deficit to 4 percent of GDP||$2.6 trillion||$7.6 trillion|
|Reduce deficit to 3 percent of GDP||$4.0 trillion||$9.9 trillion|
|Primary Balance^||$3.8 trillion||$8.8 trillion|
|On-Budget Balance^||$6.4 trillion||$13.0 trillion|
|Full Budget Balance^||$7.5 trillion||$16.0 trillion|
Sources: Congressional Budget Office and Committee for a Responsible Federal Budget. Figures include interest. ^Balance figures are adjusted to exclude the effects of timing shifts. *Assumes modified savings path of the CRFB Fiscal Blueprint for Reducing Debt and Inflation.
There is no one right fiscal goal, but as policymakers negotiate a possible budget deal it can be helpful to work toward one. Even incremental progress can help to fight inflation, bolster economic growth, and put the budget on a more sustainable path.