CBO’s Assessment of the Long-Term Budget Outlook and Its Approach to Dynamic Analysis
Presentation by Wendy Edelberg, an Associate Director for Economic Analysis at CBO, at the Australian Treasury Research Institute's conference, Modelling for Public Policy Analysis: Emerging Trends and Future Directions.
If current laws governing federal taxes and spending did not change, the United States would face steadily increasing federal budget deficits and debt over the next 30 years, according to projections by CBO. As a result, CBO estimates, public debt would reach 145 percent of GDP by 2047, higher than any percentage previously recorded in the United States.
Federal tax and spending policies can affect the economy through their impact on federal borrowing, private demand for goods and services, people’s incentives to work and save, and federal investment, as well as through other channels. CBO has devoted significant effort to developing analytical tools that enable it to assess the macroeconomic effects of fiscal policies and how such effects, or “macroeconomic feedback,” would affect the federal budget. CBO analyzes the economic effects of federal fiscal policies in current law as well as significant proposed changes in those policies.