The Congressional Budget Office (CBO) recently released their new budget and economic outlook, projecting a debt-to-GDP ratio of 93 percent by 2029 under current law, up from 78 percent today. In “If Not Now, When? New Estimates of the Federal Budget Outlook” (PDF), Alan Auerbach, William Gale, and Aaron Krupkin, provide alternative estimates that build on that analysis. Under a “current policy” scenario similar to CBO's alternative fiscal scenario – in which policymakers routinely extend temporary provisions, as they have in the past – the authors project a debt-to-GDP ratio above 106 percent by 2029, which would be the highest ratio in U.S. history.
If the CBO and current policy projections hold, the next ten years will include the first sustained period in U.S. history with sizable full-employment deficits, which will exceed 4 percent of GDP under current law and rise to 7 percent of GDP under current policy.
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