In its most recent baseline projections, CBO reduced its estimates of spending for the Medicare and Medicaid programs compared with its estimates in the August 2012 baseline.
I testified twice this week about CBO’s latest projections for the economy and the budget—on Tuesday to the Senate Budget Committee, and on Wednesday to the House Budget Committee.
During the past 40 years, federal spending for major means-tested programs and tax credits for low-income households more than tripled as a share of gross domestic product. In 2012, such spending totaled $588 billion.
On Tuesday CBO published a new economic forecast in The Budget and Economic Outlook: Fiscal Years 2013-2023.
Yesterday CBO released The Budget and Economic Outlook: Fiscal Years 2013 to 2023. In that report, CBO projects that the federal deficit will drop to $845 billion in 2013—its smallest size since 2008.
Under current law, federal debt will stay at historically high levels relative to the economy, CBO projects. Economic growth will be slow in 2013 but pick up thereafter. Even so, the unemployment rate will be above 7.5 percent through 2014.
CBO examined three budgetary paths that would increase or reduce budget deficits relative to current law. Through 2023, those paths would result in considerably different trajectories of federal debt and the nation’s output and income.