CBO's Two Scenarios for Long-Run Growth in Federal Spending

In its December 2007 report, The Long-Term Budget Outlook, the Congressional Budget Office forecasted long-term future spending, revenue, and debt levels under several sets of assumptions. CBO developed two scenarios that combine various assumptions about future spending with various revenue assumptions.

Specifically, “the extended-baseline scenario adheres closely to current law, following CBO’s 10-year baseline budget projections from 2008 to 2017 and then extending the baseline concept in its projections for the rest of the years in the 75-year projection period, to 2082. The alternative fiscal scenario deviates from CBO’s baseline projections even during the next 10 years, incorporating some changes in policy that are widely expected to occur and that policymakers have regularly made in the past.” (CBO, The Long-Term Budget Outlook, December 2007, p.2) By design, these scenarios offer a range of outcomes by 2082.

In both scenarios, the combination of spending and revenue policies perpetuates deficits and gradually builds up federal debt to several multiples of GDP, resulting in unsustainable fiscal paths.

Underlying data:download