Long-Term Baseline Homepage
Revised 6/3/2004
Several times a year, Centrists.Org computes a gimmick-free, long-term budget baseline that includes realistic assumptions about baseline spending and revenues.
Where Will the Deficit Go From Here? New Long-Term Budget Projections
06.03.2004 || Under realistic assumptions, the annual federal deficit is poised to hover around $400 billion through 2007, between 3 and 4 percent of GDP. After that, the deficits will grow as the first waves of baby boomers leave the workforce and join the entitlement rolls.
Earlier Projections...
Background and Assumptions. Three times a year, in late January, March, and August, the Congressional Budget Office (CBO) publishes a "current-law" budget baseline. CBO's baseline is the benchmark against which it estimates the cost of proposals to raise or cut federal spending, and the Joint Committee on Taxation (JCT) uses CBO's baseline projections for revenues as the benchmark for its estimates of tax bills. CBO's baseline assumes that federal tax laws and entitlement programs remain unchanged, and that discretionary spending (that is, spending appropriated for non-entitlement programs, such as defense and domestic programs) grows at the rate of inflation.
At this point, however, CBO's baseline presents a serious problem for policymakers: It is not useful as a rough forecast of federal spending and revenues. That is because several of the assumptions behind the CBO baseline are not politically realistic. For example, many tax cuts are scheduled to expire via so-called "sunset" provisions. Congress is highly likely to extend those provisions. Furthermore, Medicare law contains provisions that would otherwise reduce fees paid to doctors and other health care providers. Either Congress or the Administration will almost certainly find ways to raise those payments. Finally, CBO's baseline assumes that discretionary spending grows only as fast as general inflation. However, spending for defense, international, and domestic programs is currently growing at very rapid rates -- well above the rate of inflation.
Many of these problems are the fault of Congress. Sunset provisions, payment gimmicks, and understated baselines for discretionary spending are legislators' ways of hiding their irresponsibility. CBO's projections don't look that bad under the artificial assumption that tax cuts expire on their sunset dates, health care payments are not fixed, and legislators suddenly downshift the pace of their appropriations.
Centrists.Org's no-BS baseline is different. It is not a purely "current law" baseline. Instead, it attempts to make politically realistic assumptions about technical fixes to the budget that are almost certain to occur. From time to time, the Centrists.Org baseline will assume that legislation that appears imminent will in fact be enacted. This gives the public a better picture of the budget going forward.
In general, the Centrists.Org no-BS baseline assumes that most "sunset" provisions in the tax code are extended, and that discretionary spending -- especially for defense -- grows faster than the rate of inflation (but still considerably slower than discretionary spending growth in recent years). Those actions are not absolutely certain, but they are the most plausible assumption for a reasonable projection of the budget.
Of course, Congress may take actions to rescind tax cuts, cut entitlement spending, and slow the growth of appropriations. In that case, the deficit would be reduced. However, it makes sense to project the budget assuming those things do not happen, so that legislators will have a truer picture of the consequences of their current spending and tax cutting binge.
Earlier Projections
No-BS Long-Term Budget Baseline (Jan. 2004)
01.28.2004
|| Based on updated projections from the Congressional Budget Office (CBO), which were
released earlier today, Centrists.Org's new budget baseline is largely unchanged. That is because previous assumptions about rapid spending growth are coming to fruition, and no significant adjustments were necessary.
A Preliminary Assessment of CBO's New Budget Projectionsrevised 08.29.2003 || Under realistic assumptions, the deficit will be $500 billion in 2004 and will total $6.1 trillion between 2004 and 2013. The public debt will rise from $4 trillion this year to $10 trillion a decade from now. (And after that, things really get bad.)
Centrists.Org No-BS Budget Baselineupdated 07.20.2003 || Centrists.Org's budget baseline shows a deficit of $4.9 trillion over 10 years. This update includes the latest short-term trends for 2003 and 2004 based on the Administration's Mid-Session Budget. Long-term projections are mostly unchanged from June 22.
Centrists.Org No-BS Budget Baselineupdated 06.22.2003 || Centrists.Org's politically realistic budget baseline now shows a 10-year budget deficit of almost $5 trillion. This update includes the latest trends for 2003, and assumes enactment of a 10-year $400 billion Medicare drug benefit, which now seems probable.
Centrists.Org No-BS Budget Baselineupdated 05.24.2003 || Reflects enactment of the "Jobs and Growth" tax cut package.
Centrists.Org No-BS Budget Baseline05.10.2003 || Reflects probable enactment of the Senate's $350 billion tax cut package.
