In blog postings this week, I’ve reviewed the historical experience and CBO’s projections for three broad components of the federal budget: revenues; Social Security and the major health care programs; and all other spending excluding interest payments. Today I’ll discuss some of the implications of that experience and those projections for future budget policy.
September 2011
As policymakers consider the composition of policy changes to be used to reduce future budget deficits, it is useful to consider both historical experience and projections for the future for significant components of the budget. Today, I’ll discuss federal spending for programs and activities other than Social Security and the government’s major health care programs.
As policymakers consider the composition of policy changes to be used to reduce future budget deficits, it is useful to consider both historical experience and projections for the future for significant components of the budget. Today, I’ll discuss Social Security and the government’s major health care programs.
As policymakers consider the composition of policy changes to be used to reduce future budget deficits, many factors may play a role. The most fundamental question is what role the government should play in the U.S. economy and society. The amount and composition of federal spending and revenues affect the total amount and types of output that are produced and consumed in the country, the distribution of those material resources among various segments of society, and people’s well-being in a variety of ways.
CBO has a panel of health advisers consisting of widely recognized experts in health policy. Members of the panel have a variety of backgrounds, areas of knowledge, and experience. We host periodic meetings of the advisers at our office and solicit their views between meetings via e-mail exchanges and conference calls. Through these interactions, we benefit from the advisers’ understanding of cutting-edge research and the latest developments in health care delivery and financing. As a result, the quality of CBO’s analysis of health policy is greatly enhanced.
Yesterday I spoke at the Macroeconomic Advisers’ Washington Policy Conference. My presentation focused on the significant and fundamental budgetary challenges facing our nation. I thought I’d spend the majority of this blog post discussing the latter part of my presentation—some alternative broad changes in federal spending and tax policies that might result in a budget that is sustainable over the long term.
This morning I testified before the Joint Select Committee on Deficit Reduction—the body created under the Budget Control Act to propose further deficit reductions totaling at least $1.5 trillion over 10 years. I focused on CBO’s August publication, the Budget and Economic Outlook: An Update, what we have learned about performance of the U.S.
The Budget Control Act of 2011 (enacted on August 2 as Public Law 112-25) made several changes to federal programs and established budget enforcement mechanisms—including caps on future discretionary appropriations—that were estimated to reduce federal budget deficits by a total of at least $2.1 trillion over the 2012–2021 period. The caps on discretionary appropriations will decrease spending (including debt service) by an estimated $0.9 trillion during that period, compared with what such spending would have been if annual appropriations had grown at the rate of inflation.
The federal budget deficit totaled $1.23 trillion through the first 11 months of fiscal year 2011, CBO estimates in its latest Monthly Budget Review—$28 billion less than the deficit incurred in the same period last year. Revenues were about 7.6 percent higher through August than they were at the same point last year, and outlays were 3.7 percent higher.
Last week CBO released its annual summer update of its budget and economic outlook.