Congressional Budget Office
The 2016 Budget Outlook
Presentation at theForecasters Club of New York
New York City, NY
June 29, 2016
Keith HallDirector
This presentation draws on Updated Budget Projections: 2016 to 2026 (March 2016), www.cbo.gov/publication/51384, Budgetary and Economic Outcomes Under Paths for Federal Revenues and Noninterest Spending Specified by Chairman Price, March 2016 (March 2016), www.cbo.gov/publication/51260, and The Budget and Economic Outlook: 2016 to 2026 (January 2016), www.cbo.gov/publication/51129.
1CO N GR ES S IO N A L B UDGE T O F F IC E
CBO’s Budget Projections Through 2026 as of March 2016
2CO N GR ES S IO N A L B UDGE T O F F IC E
Total Deficits or Surpluses
Percentage of GDP
Actual Projected
Deficits
Surpluses
AverageDeficit,
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
3CO N GR ES S IO N A L B UDGE T O F F IC E
Total Revenues and Outlays
Percentage of GDP
1966 1971 1976 1981 1986 1991 1996 2001 2006 2011 2016 2021 20260
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
4CO 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
5CO N GR ES S IO N A L B UDGE T O F F IC E
Projected Net Interest Outlays
6CO N GR ES S IO N A L B UDGE T O F F IC E
Projected Outlays in Major Budget Categories
Percentage of GDP
7CO N GR ES S IO N A L B UDGE T O F F IC E
Major Changes in Projected Revenues From 2016 to 2026
8CO N GR ES S IO N A L B UDGE T O F F IC E
Tax Expenditures and Other Budget Categories in 2016
9CO N GR ES S IO N A L B UDGE T O F F IC E
CBO’s Budget Projections Through 2040 as of January 2016
10CO N GR ES S IO N A L B UDGE T O F F IC E
Federal Debt, Spending, and Revenues
Percentage of GDP
11CO N GR ES S IO N A L B UDGE T O F F IC E
Uncertainty About Projections of Debt
■ Even if future tax and spending policies match the policies specified in current law, budgetary outcomes will undoubtedly differ from CBO’s projections.
■ Unexpected changes in the economy, demographics, and other key factors will occur.
12CO N GR ES S IO N A L B UDGE T O F F IC E
Components of Federal Spending
13CO N GR ES S IO N A L B UDGE T O F F IC E
Changes in the Population, by Age Group
14CO N GR ES S IO N A L B UDGE T O F F IC E
Projected Spending, Compared With Past Averages
15CO N GR ES S IO N A L B UDGE T O F F IC E
Total Revenues
16CO N GR ES S IO N A L B UDGE T O F F IC E
Projected Spending, Revenues, and Deficits, Compared With Past Averages
Percentage of GDP
17CO N GR ES S IO N A L B UDGE T O F F IC E
Federal Debt Held by the Public
Percentage of GDP
18CO N GR ES S IO N A L B UDGE T O F F IC E
A Likely Range for CBO’s Projection of Debt
■ The extended baseline represents CBO’s best projection of federal debt relative to GDP 25 years from now under current law, but the amount could be higher or lower.
■ Last year, CBO considered a wide range of possible values for key factors such as interest rates, health care costs, and productivity.
■ That analysis concluded that federal debt would probably be at least as high as it is today and would most likely be much higher.
■ This year, federal debt is projected to be even higher than it was in last year’s analysis.
19CO N GR ES S IO N A L B UDGE T O F F IC E
A Sustainable Path for the Long Term
■ Lawmakers would have to make major changes to tax policies, spending policies, or both.
■ The size of such changes would depend upon the amount of federal debt that lawmakers considered appropriate.
20CO N GR ES S IO N A L B UDGE T O F F IC E
Federal Debt Held by the Public Under Various Budget Scenarios
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