CBO provides additional information to Congressman Jodey Arrington regarding the effects of two illustrative scenarios in which the primary deficit is reduced in relation to CBO’s extended baseline beginning in 2022.
In response to questions from Congressman Jodey Arrington, CBO analyzed the effects of two illustrative scenarios in which the primary deficit is reduced in relation to CBO’s extended baseline beginning in 2022. In the first scenario, primary deficits are 3 percent of gross domestic product (GDP) lower than they are in the extended baseline, and in the second, they are 1 percent of GDP lower than in the extended baseline. These scenarios are similar to those reducing primary deficits by constant shares of GDP that were analyzed in CBO’s recent report The Deficit Reductions Necessary to Meet Various Targets for Federal Debt. As in that report, CBO has made no assumptions about what policies would lead to reductions in primary deficits in relation to the extended baseline. Because particular policies can significantly alter incentives to work, save, and invest, the effects could be very different from those presented here.