Director Doug Elmendorf spoke yesterday about the main factors that are causing federal health care spending to grow much faster than the economy. He also summarized CBO’s analysis of a wide range of approaches to address that growth.
CBO Blog
The slow recovery of the labor market largely reflects slow growth in the demand for goods and services. Output will grow more rapidly in the next few years than it has recently but recovery in the labor market will take some time.
CBO projects that the economy will grow more rapidly from 2014 to 2017—at an average rate of about 3 percent a year—than it did in 2013. But the unemployment rate will decline only gradually, finally dropping below 6.0 percent in 2017.
Revenues are projected to continue rebounding from a post-recession low of 14.6 percent of GDP in 2009 and 2010—rising to 18.2 percent in 2015. They are projected to stay between 18.0 percent and 18.4 percent of GDP from 2016 through 2024.
Under current law, outlays for Social Security, major health care programs, and net interest will grow over the coming decade, CBO estimates, while spending for other programs will decline relative to the size of the economy.
How will the labor market evolve? How rapidly will potential and actual output grow? What will be the paths of inflation and interest rates? Director Doug Elmendorf addressed these and other questions about CBO's outlook for the economy.
In calendar year 2013, ARRA raised real GDP by between 0.1 percent and 0.4 percent and increased the number of full-time-equivalent jobs by 0.1 million to 0.5 million compared with what would have occurred otherwise, CBO estimates.
CBO reports annually to the Congress on programs funded for the current fiscal year whose authorizations of appropriations have expired and on programs whose authorizations of appropriations will expire during the current fiscal year.
During his presentation, Director Doug Elmendorf emphasized that federal debt remains on an unsustainable path, and the composition of federal spending is changing dramatically from what it has been in the past.
In recent years, debt held by the public has been significantly greater relative to GDP than at any time since just after World War II; under current law it will continue to be quite high by historical standards during the next decade.