America's Deteriorating Budget Outlook

1. CRFB.org

2. CRFB.org CBO’s June 2017 Projections 2

3. CRFB.org The National Debt Was High and Rising 3 Source: Congressional Budget Office

4. CRFB.org Fiscal Space Was Declining “Fiscal Space” under Debt-to-GDP Reaching Record Levels 4 Source: CRFB calculations based on Congressional Budget Office data.

5. CRFB.org Trillion-Dollar Deficits Were Projected to Return by 2022 Billions Source: CRFB calculations based on Congressional Budget Office data. $665 $563 $689 $775 $879 $1.0T $1.1T $1.1T $1.2T $1.4T $1.5T $1.6T $0 $500 $1,000 $1,500 $2,000 $2,500 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Prior Law 5

6. CRFB.org An Updated Fiscal Outlook (CRFB’s Effort to Approximate the Next CBO Baseline) 6

7. CRFB.org Projected Deficits as of June, 2017 Billions of Dollars Source: CRFB calculations based on Congressional Budget Office data. $665 $563 $689 $775 $879 $1.0T $1.1T $1.1T $1.2T $1.4T $1.5T $1.6T $0 $500 $1,000 $1,500 $2,000 $2,500 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Prior Law 7

8. CRFB.org Projected Deficits After the 2017 Tax Bill Billions Source: CRFB calculations based on Congressional Budget Office data. $665 $699 $975 $1.0T $1.1T $1.2T $1.2T $1.2T $1.4T $1.4T $1.5T $1.6T $0 $500 $1,000 $1,500 $2,000 $2,500 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Prior Law Tax Cuts and Jobs Act 8

9. CRFB.org Projected Deficits After The 2018 Spending Bill and Other Legislative Changes Billions Source: CRFB calculations based on Congressional Budget Office data. $665 $753 $1.1T $1.1T $1.2T $1.3T $1.3T $1.3T $1.4T $1.5T $1.5T $1.7T $0 $500 $1,000 $1,500 $2,000 $2,500 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Prior Law Tax Cuts and Jobs Act Bipartisan Budget Act & Other Changes 9

10. CRFB.org Projected Deficits If Lawmakers Extend Debt-Busting Policies Billions Source: CRFB calculations based on Congressional Budget Office data. $665 $753 $1.1T $1.3T $1.4T $1.5T $1.6T $1.6T $1.8T $2.0T $2.2T $2.4T 10 $0 $500 $1,000 $1,500 $2,000 $2,500 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Prior Law Tax Cuts and Jobs Act Bipartisan Budget Act & Other Changes Alternative Scenario

11. CRFB.org Debt Will Soon Exceed the Size of the Economy Percent of GDP Source: CRFB calculations based on Congressional Budget Office data. 93% 101% 60% 65% 70% 75% 80% 85% 90% 95% 100% 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 11

12. CRFB.org 12 The Gap Between Revenue and Spending Will Grow Percent of GDP 13% 15% 17% 19% 21% 23% 25% 27% 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 50-Year Avg. Spending: 20.3% 50-Year Avg. Revenue: 17.4% Spending Revenue Alternative Revenue Alternative Spending Source: CRFB calculations based on Congressional Budget Office data.

13. CRFB.org Interest Spending Will Quadruple Billions Source: CRFB calculations based on Congressional Budget Office data. $263 $963 $1.05T $0 $200 $400 $600 $800 $1,000 $1,200 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Current Law Alternative Scenario 13

14. CRFB.org What’s Driving Higher Deficits? 14

15. CRFB.org Recent Legislation Caused Half the 2019 Deficits Contribution to 2019 Budget Deficit MACRA SGR Fix (2015) ~$ 10 billion PATH Act (2015) ~$ 75 billion Tax Cuts & Jobs Act (2017) ~$245 billion Bipartisan Budget Act (2018) ~$185 billion Other Legislation ~$ 35 billion TOTAL DEFICIT IMPACT ~$550 billion TOTAL 2019 DEFICIT ~$1.1 Trillion 15 Source: CRFB calculations based on Congressional Budget Office data.

16. CRFB.org Congress Added $2.4 Trillion in Debt Since June 2017 16

17. CRFB.org The Tax Cuts & Jobs Act Was Expensive 17

18. CRFB.org 18

19. CRFB.org The Bipartisan Budget Act Was Also Expensive 19Source: CRFB calculations based on Congressional Budget Office data.

20. CRFB.org Billions $1,043 $988 $1,012 $1,014 $1,067 $1,070 $1,208 $1,244 $800 $900 $1,000 $1,100 $1,200 $1,300 2012 2013 2014 2015 2016 2017 2018 2019 March 2011 Baseline BCA Caps Sequester-Level Caps The BBA Busted the Original BCA Caps, Gave Both Sides More than They Asked For Source: CRFB calculations based on Congressional Budget Office data. 20

21. CRFB.org The Omnibus Spread The Money Around 21

22. CRFB.org OprahBus? 22 The Omnibus Spreads The Money Around

23. CRFB.org And Included Some Gimmicks… 23 Empty BA $3.7B Spending Delays $13.3B $17.0 Billion of Fake CHIMPS $0B $20B $40B $60B $80B $100B Defense OCO: $66.1B State OCO: $12.0B AdditionalDisaster:$7.4B $85.4 Billion in New Uncapped BA Source: CRFB calculations based on Congressional Budget Office data.

24. CRFB.org Long-Term Deficits Are Still Rising Mainly Due to Health, Retirement, and Interest Spending 2017-2028 Nominal Dollar Spending Growth Source: CRFB calculations based on Congressional Budget Office data. +35% +29% +88% +98% +267% 0% 50% 100% 150% 200% 250% 300% Discretionary Other Mandatory Social Security Health Care Interest 24

25. CRFB.org 25 Social Security, Health Care, And Interest Explain 82% of Spending Growth Interest 22% Social Security 27%Medicare 24% Medicaid/ACA/CHIP 9% Other Mandatory 7% Defense 6% Non-Defense Discretionary 7% 2018-2028 Spending Growth Source: CRFB calculations based on Congressional Budget Office data.

26. CRFB.org Health and Social Security Will Consume More of the Budget 26 Discretio nary 6.3% Individual Income 8.3% Social Security 4.9% Payroll 6.1% Health Care 5.3% Corporate: 1.5% Other Mandator y 2.9% Other: 1.4% Interest: 1.4% Deficit: 3.5% 0% 5% 10% 15% 20% 25% Spending Revenue 2017 Discretio nary 5.5% Individual Income 9.9% Social Security 6.1% Payroll 5.9% Health Care 6.9% Corporate: 1.4% Other Mandator y 2.5% Other: 1.4% Interest 3.3% Deficit 5.7% 0% 5% 10% 15% 20% 25% Spending Revenue 2028 Source: CRFB calculations based on Congressional Budget Office data.

27. CRFB.org The Fiscal Situation Could Get Much Worse 27

28. CRFB.org Projected Deficits If Lawmakers Extend Debt-Busting Policies Billions Source: CRFB calculations based on Congressional Budget Office data. $665 $753 $1.1T $1.3T $1.4T $1.5T $1.6T $1.6T $1.8T $2.0T $2.2T $2.4T 28 $0 $500 $1,000 $1,500 $2,000 $2,500 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Prior Law Tax Cuts and Jobs Act Bipartisan Budget Act & Other Changes Alternative Scenario

29. CRFB.org Our Alternative Scenario Projects Far More Debt 29 Debt in Dollars Debt as Share of GDP Updated Baseline Debt Projections for 2028 $29.4 trillion 101% Continue Tax Cuts and Jobs Act as written in 2019 +$1.1 trillion +3.6% Extend budget caps in Bipartisan Budget Act +$1.4 trillion +4.9% Extend other expiring legislation +$525 billion +1.8% Extend defunding of ACA cost sharing reductions +$210 billion +0.7% Net interest effect of above policies +$365 billion +1.2% Alternative Scenario Debt Projections $33.0 trillion 113% Memo: Increase in 2028 Debt Due to Extensions $3.6 trillion +12% Source: CRFB calculations based on Congressional Budget Office data.

30. CRFB.org Projected Debt If Lawmakers Extend Debt-Busting Policies Percent of GDP Source: CRFB calculations based on Congressional Budget Office data. 93% 113% 101% 60% 70% 80% 90% 100% 110% 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 Alternative Scenario Prior Law 30

31. CRFB.org Spending Growth If Lawmakers Extend Debt-Busting Policies 2017-2028 Nominal Dollar Spending Growth Source: CRFB calculations based on Congressional Budget Office data. +35% +29% +88% +98% +267% +51% +29% +88% +100% +301% 0% 50% 100% 150% 200% 250% 300% 350% Discretionary Other Mandatory Social Security Health Care Interest Current Law Alternative Scenario 31

32. CRFB.org Higher Interest Rates Could Also Drive Up Debt 32 Source: Congressional Budget Office

33. CRFB.org Higher Interest Rates Would Increase Interest Spending Billions of Dollars Source: CRFB calculations based on Congressional Budget Office data. $965B $1.3T $1.5T $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 2016 2018 2020 2022 2024 2026 2028 Current Law 33

34. CRFB.org Higher Interest Rates Would Drive Up Debt Percent of GDP Source: CRFB calculations based on Congressional Budget Office data. 101% 107% 112% 50% 60% 70% 80% 90% 100% 110% 120% 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 Current Law 34

35. CRFB.org The President’s Budget Won’t Fix the Debt Percent of GDP Source: CRFB calculations based on Congressional Budget Office data, Office of Management and Budget. 93% 96% 73% 101% 60% 65% 70% 75% 80% 85% 90% 95% 100% 105% 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 35