Figure 1-1.

Primary Spending and Revenues, by Category, Under CBOs Long-Term Budget Scenarios
(Percentage of gross domestic product)
30 25 20 15 10 5

Extended-Baseline Scenario
Actual Revenues Projected Total Primary Spending

30 25 20

Other Noninterest Spending

15 10 5

Medicare, Medicaid, CHIP, and Exchange Subsidies Social Security

0 2000 2005 2010 2015 2020 2025 2030

0 2035

30

Alternative Fiscal Scenario

30 25 20

25 20 15 10 5

Other Noninterest Spending

15 10 5

Medicare, Medicaid, CHIP, and Exchange Subsidies Social Security

0 2000 2005 2010 2015 2020 2025 2030

0 2035

Source: Congressional Budget Office. Notes: Primary spending refers to all spending other than interest payments on federal debt. The extended-baseline scenario adheres closely to current law, following CBOs 10-year baseline budget projections through 2021 and then extending the baseline concept for the rest of the long-term projection period. The alternative fiscal scenario incorporates several changes to current law that are widely expected to occur or that would modify some provisions that might be difficult to sustain for a long period. (For details, see Table 1-1 on page 4.) CHIP = Childrens Health Insurance Program.

Figure 1-2.

Federal Debt Held by the Public Under CBOs Long-Term Budget Scenarios
(Percentage of gross domestic product)
200 175 150

Actual

Projected

200 175 150

Alternative Fiscal Scenario

Extended-Baseline Scenario
50 25 0 2000 2005 2010 2015 2020 2025 2030 50 25 0 2035

Source: Congressional Budget Office. Note: The extended-baseline scenario adheres closely to current law, following CBOs 10-year baseline budget projections through 2021 and then extending the baseline concept for the rest of the long-term projection period. The alternative fiscal scenario incorporates several changes to current law that are widely expected to occur or that would modify some provisions that might be difficult to sustain for a long period. (For details, see Table 1-1 on page 4.)

Figure 1-3.

Reductions in Primary Spending or Increases in Revenues in Various Years Needed to Close the 25-Year Fiscal Gap Under CBOs Alternative Fiscal Scenario
(Percentage of gross domestic product)
14 12.5 12 10 8 6 4 2 0 Actions Begin in 2012 Actions Begin in 2015 Actions Begin in 2020 Actions Begin in 2025 5.9 4.9 8.1

Source: Congressional Budget Office. Notes: Primary spending refers to all spending other than interest payments on federal debt. The fiscal gap is a measure of the difference between projected primary spending and revenues over a given period. It represents the extent to which the government would need to immediately and permanently either raise tax revenues or cut spendingor do both, to some degreeto make the governments debt the same size (relative to gross domestic product) at the end of the period that it was at the beginning of 2011. The alternative fiscal scenario incorporates several changes to current law that are widely expected to occur or that would modify some provisions that might be difficult to sustain for a long period. (For details, see Table 1-1 on page 4.)

Figure 1-4.

One Potential Path for Revenues and Noninterest Spending Sufficient to Close the 25-Year Fiscal Gap
(Percentage of gross domestic product)
30 30

Actual
25 20 15 10 5 0 2000 2005

Projected Primary Spending Under the Alternative Fiscal Scenario

Lower Spending Beginning in 2015

25 20

Revenues Under the Alternative Fiscal Scenario

Higher Revenues Beginning in 2015

15 10 5 0

2010

2015

2020

2025

2030

2035

Source: Congressional Budget Office. Notes: Primary spending refers to all spending other than interest payments on federal debt. The fiscal gap is a measure of the difference between projected primary spending and revenues over a given period. It represents the extent to which the government would need to immediately and permanently either raise tax revenues or cut spendingor do both, to some degreeto make the governments debt the same size (relative to gross domestic product) at the end of the period that it was at the beginning of 2011. The alternative fiscal scenario incorporates several changes to current law that are widely expected to occur or that would modify some provisions that might be difficult to sustain for a long period. (For details, see Table 1-1 on page 4.)

Figure 2-1.

The Effect of the Fiscal Policies Assumed in CBOs Long-Term Budget Scenarios on Real Gross National Product per Person
(2010 dollars)
70,000

Extended-Baseline Scenario

70,000

60,000

60,000

50,000

50,000

40,000 0 2010 2015 2020 2025 2030

40,000 0 2035

Alternative Fiscal Scenario

60,000

60,000

50,000

50,000

40,000 0 2010 2015 2020 2025 2030

40,000 0 2035

GNP with No Economic Effects of the Fiscal Policies

GNP with Weaker Economic Effects of the Fiscal Policies a

GNP with Stronger Economic Effects of the Fiscal Policiesb

Source: Congressional Budget Office. Notes: The extended-baseline scenario adheres closely to current law, following CBOs 10-year baseline budget projections through 2021 and then extending the baseline concept for the rest of the long-term projection period. The alternative fiscal scenario incorporates several changes to current law that are widely expected to occur or that would modify some provisions that might be difficult to sustain for a long period. (For details, see Table 1-1 on page 4.) The range of estimates shown stems from varying assumptions about how much deficits crowd out investment in capital goods such as factories and computers (because a larger portion of peoples savings is being used to purchase government securities) and how much people respond to alterations in after-tax wages and interest rates by changing the number of hours they work and the amount they save. Real (inflation-adjusted) gross national product, or GNP differs from gross domestic product (the more common measure of the , output of the economy) primarily by including the income that U.S. residents earn from their investments abroad and excluding the income that nonresidents earn from their investments in this country. a. The highest estimated value for GNP per person in each year. b. The lowest estimated value for GNP per person in each year.

CBO

Figure 2-2.

Federal Debt Held by the Public, With and Without the Economic Effects of the Fiscal Policies Assumed in CBOs Long-Term Budget Scenarios
(Percentage of gross domestic product)
Extended-Baseline Scenario
250 250

200

200

150

150

100

100

50

50

0 2010 2015 2020 2025 2030

0 2035

Alternative Fiscal Scenario

200

200

150

150

100

100

50

50

0 2010 2015 2020 2025 2030

0 2035

Debt with No Economic Effects of the Fiscal Policies

Debt with Weaker Economic Effects of the a Fiscal Policies

Debt with Stronger Economic Effects of the b Fiscal Policies

Source: Congressional Budget Office. Notes: The extended-baseline scenario adheres closely to current law, following CBOs 10-year baseline budget projections through 2021 and then extending the baseline concept for the rest of the long-term projection period. The alternative fiscal scenario incorporates several changes to current law that are widely expected to occur or that would modify some provisions that might be difficult to sustain for a long period. (For details, see Table 1-1 on page 4.) The range of estimates shown stems from varying assumptions about how much deficits crowd out investment in capital goods such as factories and computers (because a larger portion of peoples savings is being used to purchase government securities) and how much people respond to alterations in after-tax wages and interest rates by changing the number of hours they work and the amount they save. a. The lowest ratio of debt to GDP for each year. b. The highest ratio of debt to GDP for each year.

Figure 3-1.

Distribution of Spending for Health Services and Supplies, 2009

Medicaid and CHIP (17%)

Private Health Insurance (34%)

Medicare (22%)

Consumers' Out-of-Pocket Expenditures (13%)

Other Private Spending (4%)

Source: Congressional Budget Office based on data from the Centers for Medicare and Medicaid Services. Note: CHIP = Childrens Health Insurance Program.

Figure 3-2.

Mandatory Federal Spending on Health Care, by Category, Under CBOs Extended-Baseline Scenario
(Percentage of gross domestic product)
10

Actual Projected

10

Medicaid, CHIP, and Exchange Subsidies

Medicare

0 2000 2005 2010 2015 2020 2025 2030

0 2035

Source: Congressional Budget Office. Notes: The extended-baseline scenario adheres closely to current law, following CBOs 10-year baseline budget projections through 2021 and then extending the baseline concept for the rest of the long-term projection period. (For details, see Table 1-1 on page 4.) CHIP = Childrens Health Insurance Program.

Figure 3-3.

Mandatory Federal Spending on Health Care Under CBOs Long-Term Budget Scenarios
(Percentage of gross domestic product)
12 12

Actual
10 8 6 4 2 0 2000 2005

Projected Alternative Fiscal Scenario

Extended-Baseline Scenario

6 4 2 0

2010

2015

2020

2025

2030

2035

Source: Congressional Budget Office. Note: The extended-baseline scenario adheres closely to current law, following CBOs 10-year baseline budget projections through 2021 and then extending the baseline concept for the rest of the long-term projection period. The alternative fiscal scenario incorporates several changes to current law that are widely expected to occur or that would modify some provisions that might be difficult to sustain for a long period. (For details, see Table 1-1 on page 4.)

Figure 3-4.

Mandatory Federal Spending on Health Care Under CBOs Alternative Fiscal Scenario and Different Assumptions About Excess Cost Growth After 2021
(Percentage of gross domestic product)
12 12

10

Excess Cost Growth of 2.0 Percentage Points Slowing Growtha

10

No Excess Cost Growth

4 0 2011 2015 2019 2023 2027 2031

4 0 2035

Source: Congressional Budget Office. Notes: Excess cost growth refers to the extent to which the annual growth rate of health care spending per beneficiaryadjusted for demographic characteristics of the relevant populationsis assumed to exceed the annual growth rate of nominal gross domestic product per capita. The alternative fiscal scenario incorporates several changes to current law that are widely expected to occur or that would modify some provisions that might be difficult to sustain for a long period. (For details, see Table 1-1 on page 4.) a. In the alternative fiscal scenario, the rate of excess cost growth is assumed to decline each year from an initial value of 1.7 percentage points in 2022.

Figure 4-1.

Spending for Social Security Under CBOs Long-Term Budget Scenarios

Actual

Projected

7 6 5 4 3 2 1 0 2035

Source: Congressional Budget Office. Note: Projected spending for Social Security is identical under CBOs two long-term budget scenarios, the extendedbaseline scenario and the alternative fiscal scenario. (For details of the scenarios, see Table 1-1 on page 4.)

Figure 4-2.

The Population Age 65 or Older as a Percentage of the Population Ages 20 to 64

Actual

Projected

40 35 30 25 20 15 10 5 0 2035

Source: Congressional Budget Office.

Figure 5-1.

Other Federal Spending Under CBOs Long-Term Budget Scenarios

Actual

Projected

16 14 12

Alternative Fiscal Scenario Extended-Baseline Scenario

10 8 6 4 2 0

6 4 2 0 1971 1975 1979 1983 1987 1991 1995 1999 2003 2007 2011 2015 2019 2023 2027 2031

2035

Source: Congressional Budget Office. Notes: Other federal spending is all spending other than for the major mandatory health care programs, Social Security, and interest payments on debt held by the public. The extended-baseline scenario adheres closely to current law, following CBOs 10-year baseline budget projections through 2021 and then extending the baseline concept for the rest of the long-term projection period. The alternative fiscal scenario incorporates several changes to current law that are widely expected to occur or that would modify some provisions that might be difficult to sustain for a long period. (For details, see Table 1-1 on page 4.)

Figure 5-2.

Other Federal Spending, by Category, 1971 to 2010

Defense Discretionary Spending

Nondefense Discretionary Spending

Other Mandatory Spending

0 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007

0 2010

Source: Congressional Budget Office. Note: Other federal spending is all spending other than for the major mandatory health care programs, Social Security, and interest payments on debt held by the public.

Figure 6-1.

Total Revenues Under CBOs Long-Term Budget Scenarios

Actual

Projected

25

Extended-Baseline Scenario
20

20

15

Alternative Fiscal Scenario

15

10

10

0 2000 2005 2010 2015 2020 2025 2030

0 2035

Source: Congressional Budget Office. Note: The extended-baseline scenario adheres closely to current law, following CBOs 10-year baseline budget projections through 2021 and then extending the baseline concept for the rest of the long-term projection period. The alternative fiscal scenario incorporates several changes to current law that are widely expected to occur or that would modify some provisions that might be difficult to sustain for a long period. (For details, see Table 6-1.)

Figure 6-2.

Revenues, by Source, 1971 to 2010

20

Total

20

15

15

10

Individual Income Taxes Social Insurance (Payroll) Taxes Corporate Income Taxes

10

0 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007

0 2010

Source: Congressional Budget Office.

Figure 6-3.

Individual Income Tax Revenues Under CBOs Extended-Baseline Scenario and Two Variants
(Percentage of gross domestic product)
14 13 12 11 10 9 8 7 6 0 2011 2015 2019 2023 2027 2031 14 13 12

Extended-Baseline Scenario

11 10

Variant 2: All Expiring Provisions, Including AMT Relief, Extended Variant 1: All Expiring Provisions Except AMT Relief Extended

9 8 7 6 0 2035

Source: Congressional Budget Office. Notes: The extended-baseline scenario adheres closely to current law, following CBOs 10-year baseline budget projections through 2021 and then extending the baseline concept for the rest of the long-term projection period. (For details, see Table 6-1 on page 13.) AMT = alternative minimum tax.

Figure 6-4.

The Impact of the Alternative Minimum Tax on Individual Income Tax Liability Under CBOs Extended-Baseline Scenario
(By calendar year, in percent)
60 50 40 30 20 10 0 2011 2015 2019 2023 2027 2031 60 50 40

Share of Households Affected by the AMT

Additional Liability Generated by the AMT as a Share of Total Individual Income Tax Revenues

30 20 10 0 2035

Source: Congressional Budget Office. Notes: The shares of households and revenues rise in 2012 after the temporary increase in the AMT exemption expires. After 2012, the shares initially fall because the amount of regular income tax owed rises with the expiration of certain provisions of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (Public Law 111-312). The extended-baseline scenario adheres closely to current law, following CBOs 10-year baseline budget projections through 2021 and then extending the baseline concept for the rest of the long-term projection period. (For details, see Table 6-1 on page 13.) AMT = alternative minimum tax.

Figure A-1.

Comparison of CBOs 2010 and 2011 Budget Projections Under the Extended-Baseline Scenario
(Percentage of gross domestic product)
Primary Spending and Revenues
30 30

25

25

20

20

Spending
15

Revenues 2010 Projection 2011 Projection

2010 Projection 2011 Projection

10 0 2011 2015 2019 2023 2027 2031

2035

200 175 150 125 100

Federal Debt Held by the Public

200 175 150 125 100

2011 Projection
75 50 25 0 2011 2015 2019 2023 2027 2031 75

2010 Projection

50 25 0 2035

Source: Congressional Budget Office. Notes: Primary spending refers to all spending other than interest payments on federal debt. The extended-baseline scenario adheres closely to current law, following CBOs baseline budget projections for the first 10 years and then extending the baseline concept for the rest of the long-term projection period. (For details, see Table 1-1 on page 4.)

Figure A-2.

Comparison of CBOs 2010 and 2011 Projections of Mandatory Federal Spending on Health Care Under the Extended-Baseline Scenario
(Percentage of gross domestic product)
10 9 8 10 9 8

2010 Projection
7 6 5 4 0 2011 2015 2019 2023 2027 2031

2011 Projection

7 6 5 4 0 2035

Source: Congressional Budget Office. Note: The extended-baseline scenario adheres closely to current law, following CBOs baseline budget projections for the first 10 years and then extending the baseline concept for the rest of the long-term projection period. (For details, see Table 1-1 on page 4.)

Figure A-3.

Comparison of CBOs 2010 and 2011 Budget Projections Under the Alternative Fiscal Scenario
(Percentage of gross domestic product)
30

Primary Spending and Revenues

30

25

25

20

20

15

Spending 2010 Projection 2011 Projection

Revenues 2010 Projection 2011 Projection

15

10 0 2011 2015 2019 2023 2027 2031

10 0 2035

200 175 150 125 100 75

Federal Debt Held by the Public

200 175 150

2011 Projection

125 100 75

2010 Projection
50 25 0 2011 2015 2019 2023 2027 2031 50 25 0 2035

Source: Congressional Budget Office. Notes: Primary spending refers to all spending other than interest payments on federal debt. The alternative fiscal scenario incorporates several changes to current law that are widely expected to occur or that would modify some provisions that might be difficult to sustain for a long period. (For details, see Table 1-1 on page 4.)

Figure B-1.

Primary Spending and Revenues, by Category, Under CBOs Long-Term Budget Scenarios Through 2085
(Percentage of gross domestic product)
35 30 25 20 15 10 5

Extended-Baseline Scenario
Actual Total Primary Spending Revenues Projected

35 30 25

Other Noninterest Spending

20 15

Medicare, Medicaid, CHIP, and Exchange Subsidies

10 5

Social Security
0 1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 0

35

Alternative Fiscal Scenario

35 30

30 25 20 15 10 5

Revenues Other Noninterest Spending

Medicare, Medicaid, CHIP, and Exchange Subsidies

10 5

Social Security
0 1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 0

Source: Congressional Budget Office. Notes: Primary spending refers to all spending other than interest payments on federal debt. The extended-baseline scenario adheres closely to current law, following CBOs 10-year baseline budget projections through 2021 and then extending the baseline concept for the rest of the long-term projection period. The alternative fiscal scenario incorporates several changes to current law that are widely expected to occur or that would modify some provisions that might be difficult to sustain for a long period. (For details, see Table 1-1 on page 4.) CHIP = Childrens Health Insurance Program.

Figure B-2.

Federal Debt Held by the Public Under CBOs Long-Term Budget Scenarios Through 2085
(Percentage of gross domestic product)
200 175 150 125 100 75 50 25 0 1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080

Actual

Projected

200 175

Alternative Fiscal Scenario

150 125 100

Extended-Baseline Scenario

75 50 25 0

Source: Congressional Budget Office. Note: The extended-baseline scenario adheres closely to current law, following CBOs 10-year baseline budget projections through 2021 and then extending the baseline concept for the rest of the long-term projection period. The alternative fiscal scenario incorporates several changes to current law that are widely expected to occur or that would modify some provisions that might be difficult to sustain for a long period. (For details, see Table 1-1 on page 4.)

Figure B-3.

Comparison of CBOs 2010 and 2011 Budget Projections Under the Extended-Baseline Scenario Through 2085
(Percentage of gross domestic product)
35

Primary Spending and Revenues

35

30

30

25

25

20

Spending 2010 Projection

Revenues 2010 Projection 2011 Projection

20

15

2011 Projection

15

10 0 2011 2021 2031 2041 2051 2061 2071 2081

10 0

200 175 150 125 100

Federal Debt Held by the Public

200 175 150 125 100

2011 Projection
75 50 25 0 2011 2021 2031 2041 2051 2061 2071 2081 75

2010 Projection

50 25 0

Source: Congressional Budget Office. Notes: Primary spending refers to all spending other than interest payments on federal debt. The extended-baseline scenario adheres closely to current law, following CBOs baseline budget projections for the first 10 years and then extending the baseline concept for the rest of the long-term projection period. In the 2011 projection under this scenario, federal debt held by the public is lower as a percentage of GDP in the later decades of the projection period mainly because of lower projected spending on Medicaid and on insurance subsidies that will be provided through the exchanges created by the March 2010 health care legislation. As discussed in Appendix A, projected spending for Medicaid is lower because of revisions to CBOs 10-year baseline, and projected spending for exchange subsidies grows more slowly because of changes in assumptions about the long-term evolution of eligibility for exchange subsidies and the size of the average subsidy.

Figure B-4.

Comparison of CBOs 2010 and 2011 Budget Projections Under the Alternative Fiscal Scenario Through 2085
(Percentage of gross domestic product)
35 30 25 20 15

Primary Spending and Revenues

35 30 25 20 15

Spending
10 5

Revenues 2010 Projection 2011 Projection

2010 Projection 2011 Projection

0 2011 2021 2031 2041 2051 2061 2071 2081

200 175 150 125 100 75 50 25 0 2011 2021 2031

Federal Debt Held by the Public

200 175 150

2011 Projection

125 100

2010 Projection

75 50 25 0 2041 2051 2061 2071 2081

Source: Congressional Budget Office. Notes: Primary spending refers to all spending other than interest payments on federal debt. The alternative fiscal scenario incorporates several changes to current law that are widely expected to occur or that would modify some provisions that might be difficult to sustain for a long period. Reasons that CBOs projections under that scenario changed between 2010 and 2011 are discussed in Appendix A.