CRFB's Realistic Baseline
In May, CBO released an update to its Budget and Economic Outlook, showing cumulative deficits from 2014 to 2023 of $6.3 trillion and debt reaching 73.6 percent of GDP in 2023. We have also updated our Realistic Baseline, which incorporates the fiscal effect of policies that are more likely to occur. These policies include:
- Repeal of sequestration after 2013, with the sequester remaining in place for FY2013
- A permanent extension of several tax credit expansions scheduled to expire in 2017
- Permanent repeal of the Sustainable Growth Rate, which requires a 25 percent reduction to Medicare physician payments in 2014, a patch which is often referred to as the “doc fix"
- A drawdown of war spending closer in line with current plans, instead of having funds grow with inflation from current levels
- A correction of the CBO current law projection of disaster relief, removing the assumption that temporary relief spending on Hurricane Sandy will grow annually with inflation
CRFB's Realistic Baseline shows higher debt and deficits than CBO's current law projections. The Realistic Baseline has ten year deficits of $6.8 trillion and debt reaching 75.5 percent of GDP in 2023.
The table below shows CBO's current law baseline, the CRFB Realistic baseline, and the sources of difference between the two.
| CRFB Realistic Baseline Deficits (billions) | ||||||||||||
| 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | Ten Year | ||
| Current Law Deficit | -$560 | -$378 | -$432 | -$482 | -$542 | -$648 | -$733 | -$782 | -$889 | -$895 | -$6,340 | |
| Repeal Sequester | -$60 | -$88 | -$98 | -$100 | -$103 | -$103 | -$103 | -$103 | -$93 | -$90 | -$941 | |
| Extend Refundables | $0 | $0 | $0 | $0 | -$2 | -$28 | -$28 | -$28 | -$28 | -$27 | -$140 | |
| Enact "Doc Fix" | -$9 | -$13 | -$13 | -$13 | -$13 | -$14 | -$15 | -$16 | -$17 | -$17 | -$139 | |
| Reduce Troops in Afghanistan | $15 | $34 | $46 | $54 | $57 | $61 | $62 | $64 | $66 | $67 | $526 | |
| Draw Down Disaster Spending | $2 | $10 | $18 | $26 | $31 | $36 | $39 | $41 | $43 | $45 | $291 | |
| Net Interest | $0 | -$1 | -$2 | -$5 | -$8 | -$10 | -$13 | -$16 | -$18 | -$21 | -$94 | |
| CRFB Realistic Deficit | -$611 | -$436 | -$480 | -$521 | -$579 | -$707 | -$791 | -$838 | -$935 | -$938 | -$6,836 | |
| Spending (% of GDP) | 21.2% | 21.0% | 21.0% | 20.8% | 20.8% | 21.2% | 21.4% | 21.6% | 22.0% | 22.0% | 21.3% | |
| Revenues (% of GDP) | 17.7% | 18.6% | 18.5% | 18.3% | 18.2% | 18.1% | 18.1% | 18.2% | 18.4% | 18.5% | 18.3% | |
| Deficits (% of GDP) | -3.5% | -2.4% | -2.5% | -2.5% | -2.7% | -3.1% | -3.3% | -3.4% | -3.6% | -3.5% | -3.1% | |
| Debt (% of GDP) | 73.9% | 72.7% | 71.1% | 69.8% | 69.5% | 69.9% | 70.5% | 71.2% | 72.2% | 73.0% | N/A | |
Source: CBO and CRFB calculations
Last June, CBO released long-term projections of the budget for the next 75 years, projecting both a current law scenario (Extended Baseline) and the alternative fiscal scenario (AFS). We have applied the same CRFB Realistic Baseline assumptions to the long-term outlook based off the May 2013 baseline, and the other projections based on the newest CBO outlook. Under the Realistic Baseline, debt as a percent of GDP rises from 73 percent in 2012 to 99 percent by 2037, 140 percent by 2052, and 428 percent by 2087.
Source: CBO and CRFB calculations
Past CRFB Realistic Baselines