LONG-RUN BUDGET PROJECTIONS OF 2005 BUDGET POLICY: 2000-2080
(Percent of GDP)
-----------------------------------------------------
2000 2010 2020 2030 2040 2060 2080
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Discretionary Spending Grows with GDP:
Receipts........... 20.9 17.9 18.6 19.0 19.5 20.6 21.6
Outlays............ 18.4 19.3 20.3 24.1 28.2 37.7 53.2
Discretionary.... 6.3 6.2 5.4 5.4 5.4 5.4 5.4
Mandatory........ 9.8 11.0 13.0 15.9 17.9 20.6 24.6
Social Security 4.2 4.2 5.0 6.0 6.2 6.5 6.8
Medicare....... 2.0 2.9 3.9 5.9 7.4 9.6 12.5
Medicaid....... 1.2 1.7 2.1 2.4 2.7 3.3 4.1
Other.......... 2.4 2.3 1.9 1.7 1.5 1.2 1.1
Net Interest..... 2.3 2.1 1.8 2.7 4.9 11.7 23.2
Surplus/Deficit (-) 2.4 -1.4 -1.7 -5.0 -8.7 -17.2 -31.6
Primary Surplus/Def 4.7 0.7 0.1 -2.3 -3.8 -5.5 -8.4
Public Debt........ 35.1 39.3 34.0 51.3 92.2 219.3 432.3
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LONG-RUN BUDGET PROJECTIONS OF 2005 BUDGET POLICY: 2000-2080
(Percent of Receipts)
-----------------------------------------------------
2000 2010 2020 2030 2040 2060 2080
-----------------------------------------------------
Discretionary Spending Grows with GDP
Receipts........... 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Outlays............ 88.0 107.8 109.1 126.8 144.6 183.0 246.3
Discretionary.... 30.1 34.6 29.0 28.4 27.7 26.2 25.0
Mandatory........ 46.9 61.5 69.9 83.7 91.8 100.0 113.9
Social Security 20.1 23.5 26.9 31.6 31.8 31.6 31.5
Medicare....... 9.6 16.2 21.0 31.1 37.9 46.6 57.9
Medicaid....... 5.7 9.5 11.3 12.6 13.8 16.0 19.0
Other.......... 11.5 12.8 10.2 8.9 7.7 5.8 5.1
Net Interest..... 11.0 11.7 9.7 14.2 25.1 56.8 107.4
Surplus/Deficit (-) 11.5 -7.8 -9.1 -26.3 -44.6 -83.5 -146.3
Primary Surplus/Def 22.5 3.9 0.5 -12.1 -19.5 -26.7 -38.9
Public Debt........ 167.9 219.6 182.8 270.0 472.8 1064.6 2001.4
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FEDERAL DEBT HELD BY THE PUBLIC
(Percent of GDP)
--------------------------------------------------------------------
2000 2005 2010 2020 2030 2040 2050 2060 2075 2080
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2005 Budget 35.1 39.3 34.0 51.3 92.2 219.3 432.3
2004 Budget 35.1 35.7 35.1 56.7 98.4 229.4 466.1
2003 Budget 35.0 29.2 19.1 2.9 4.4 20.9 46.5 165.2
2002 Budget 34.7 17.5 2.3 -21.8 -27.5 -17.8 1.3 108.0
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CHANGE IN LONG-RUN BUDGET PROJECTIONS FROM 2004 TO 2005 BUDGET
(Percent of GDP)
-----------------------------------------------------
2000 2010 2020 2030 2040 2060 2080
-----------------------------------------------------
Discretionary Spending Grows with GDP
Receipts........... 0.1 -0.5 -0.2 0.0 0.5 1.4 2.3
Outlays............ 0.0 -0.3 -0.7 -0.3 0.4 1.0 0.5
Discretionary.... 0.0 -0.3 -0.6 -0.6 -0.6 -0.6 -0.6
Mandatory........ 0.0 -0.3 -0.2 0.4 1.1 1.6 1.8
Social Security 0.0 -0.1 -0.3 -0.2 -0.2 -0.1 -0.3
Medicare....... 0.0 0.3 0.5 1.3 1.9 2.6 3.2
Medicaid....... 0.0 -0.2 -0.3 -0.3 -0.5 -0.7 -0.9
Other.......... 0.0 -0.1 -0.2 -0.2 -0.2 -0.3 -0.3
Net Interest..... 0.0 0.3 0.0 -0.2 -0.1 0.0 -0.7
Surplus/Deficit (-) 0.0 -0.2 0.5 0.4 0.1 0.3 1.9
Primary Surplus/Def 0.0 0.1 0.5 0.2 0.0 0.3 1.2
Public Debt........ 0.0 3.6 -1.1 -5.4 -6.2 -10.1 -33.8
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PERCENT CHANGE IN LONG-RUN BUDGET PROJECTIONS FROM 2004 TO 2005 BUDGET*
-----------------------------------------------------
2000 2010 2020 2030 2040 2060 2080
-----------------------------------------------------
Discretionary Spending Grows with GDP
Receipts........... 0.5 -2.7 -1.1 0.0 2.6 7.3 11.9
Outlays............ 0.0 -1.5 -3.3 -1.2 1.4 2.7 0.9
Discretionary.... 0.0 -4.6 -10.0 -10.0 -10.0 -10.0 -10.0
Mandatory........ 0.0 -2.7 -1.5 2.6 6.5 8.4 7.9
Social Security 0.0 -2.3 -5.7 -3.2 -3.1 -1.5 -4.2
Medicare....... 0.0 11.5 14.7 28.3 34.5 37.1 34.4
Medicaid....... 0.0 -10.5 -12.5 -11.1 -15.6 -17.5 -18.0
Other.......... 0.0 -4.2 -9.5 -10.5 -11.8 -20.0 -21.4
Net Interest..... 0.0 16.7 0.0 -6.9 -2.0 0.0 -2.9
Surplus/Deficit (-) 0.0 16.7 -22.7 -7.4 -1.1 -1.7 -5.7
Primary Surplus/Def 0.0 16.7 -125.0 -8.0 0.0 -5.2 -12.5
Public Debt........ 0.0 10.1 -3.1 -9.5 -6.3 -4.4 -7.3
* percent change equals 100 * (old_value - new_value) / old_value
Source: Budget of the United States Government, FY 2005,
Analytical Perspectives, page 191, Table 12-2;
Budget of the United States Government, FY 2004,
Analytical Perspectives, page 41, Table 3-2;
Budget of the United States Government, FY 2003,
Analytical Perspectives, page 45, Table 3-2;
Budget of the United States Government, FY 2002,
Analytical Perspectives, page 24, Table 2-2
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Among the points that the above tables illustrate are the following:
1) Projections of the long-run public debt have risen steadily over the
previous three budgets. In the 2005 Budget, this trend continues in
the shorter term with the projection of the public debt in 2010 being
10.1% higher than it was in last year's budget. Over the longer term,
however, the public debt is projected rise slightly less quickly than
was previously projected resulting in it being 7.3% lower in 2080
than was projected in last year's budget.
2) Despite the slight improvement in the longer term outlook for the
public debt, the cost of Medicare is projected to rise sharply and
to be 34.4% higher in 2080 than was projected in last year's budget.
The budget states (on page 192 of the Analytical Perspectives):
"The projections for Medicare over the next 75 years are based on the
actuarial projections in the 2003 Medicare Trustees' Report, as
adjusted for the effects of the Medicare prescription drug and
modernization bill enacted in December 2003."
3) From 2020 on, the higher projections for Medicare costs are offset
by lower projections for other spending. From 2040 on, Medicare
projections are also offset by higher projections for receipts.
Looking at the one-year change in projections for 2080, Medicare
has risen 3.2% of GDP but is almost exactly offset by a 2.3% of GDP
increase in receipts and a 0.9% of GDP decrease in Medicaid spending.
Beyond this, decreases of 0.6% of GDP in Discretionary spending,
0.3% of GDP in Social Security, 0.3% of GDP in other Mandatory
spending, and 0.7% of GDP in Net Interest are projected to cause the
deficit to be 1.9% of GDP less than was projected in last year's
budget.
4) Discretionary spending from 2020 on is projected to be 0.6% of GDP
less than was projected last year despite the fact that it is still
assumed that it will grow with GDP over the long-run. This is because
all assumptions through 2014 match those of the current budget and the
growth with GDP begins only after that. The President's proposals are
now projected to decrease discretionary spending from the 6.3% of GDP
level that it was at in 2000 to 5.4% of GDP in 2014. The prior budget
proposed to decrease it only to 6.0% of GDP.
5) Starting in about 2010, receipts are projected to increase about 0.5%
of GDP every 10 years. Until then, they are projected to increase
even faster. As can be seen in the table at def05.html, receipts are
projected to reach a low of 15.7% of GDP in 2004. They are then
projected to rise 1.2% of GDP by 2005 and an additional 1.0% of GDP
by 2010.
In 2080, receipts are projected to reach 21.6% of GDP. As can be seen
in the above-mentioned table, this will be the highest that receipts
have been since at least 1940. The previous high was 20.9% of GDP,
reached in 1944, during the Second World War, and in 2000.
