Testimony before the Committee on the Budget, United States Senate.
This statement summarizes CBO’s new baseline budget projections and economic forecast, which cover the period from 2015 to 2025. Those estimates were released in the report titled The Budget and Economic Outlook: 2015 to 2025.
The federal budget deficit, which has fallen sharply during the past few years, is projected to hold steady relative to the size of the economy through 2018. Beyond that point, however, the gap between spending and revenues is projected to grow, further increasing federal debt relative to the size of the economy—which is already historically high.
Those projections by the CBO, based on the assumption that current laws governing taxes and spending will generally remain unchanged, are built upon the agency’s economic forecast. According to that forecast, the economy will expand at a solid pace in 2015 and for the next few years—to the point that the gap between the nation’s output and its potential (that is, maximum sustainable) output will be essentially eliminated by the end of 2017. As a result, the unemployment rate will fall a little further, and more people will be encouraged to enter or stay in the labor force. Beyond 2017, CBO projects, real (inflation-adjusted) gross domestic product will grow at a rate that is notably less than the average growth during the 1980s and 1990s.