The Long-Term Budgetary Impact of Paths for Federal Revenues and Spending Specified by Chairman Ryan

At the request of the Chairman of the House Budget Committee, Congressman Paul Ryan, the Congressional Budget Office (CBO) has calculated the long-term budgetary impact of paths for federal revenues and spending specified by the Chairman and his staff. The calculations presented here represent CBO's assessment of how the specified paths would alter the trajectories of federal debt, revenues, spending, and economic output relative to the trajectories under two scenarios that CBO has analyzed previously. Those calculations do not represent a cost estimate for legislation or an analysis of the effects of any given policies. In particular, CBO has not considered whether the specified paths are consistent with the policy proposals or budget figures released today by Chairman Ryan as part of his proposed budget resolution.
The amounts of revenues and spending to be used in these calculations for 2012 through 2022 were provided by Chairman Ryan and his staff. The amounts for 2023 through 2050 were calculated by CBO on the basis of growth rates, percentages of gross domestic product (GDP), or other formulas specified by Chairman Ryan and his staff. For all years, the Chairman specified that there would be no spending for subsidies to purchase health insurance through new exchanges established under the Affordable Care Act. CBO calculates that, under the specified paths, federal revenues and spending would evolve as follows:

• Revenues—from 15½ percent of GDP in 2011 to 19 percent in both 2030 and 2050;
• Medicare—from 3¼ percent of GDP in 2011 to 4¼ percent in 2030 and 4¾ percent in 2050;
• Medicaid and the Children's Health Insurance Program (CHIP)—from 2 percent of GDP in 2011 to 1¼ percent in 2030 and 1 percent in 2050;
• Social Security—from 4¾ percent of GDP in 2011 to 6 percent in both 2030 and 2050; and
• Other mandatory spending and all discretionary spending—from 12½ percent of GDP in 2011 to 5¾ percent in 2030 and 3¾ percent in 2050.

Under those paths for revenues and spending, federal debt held by the public would be 53 percent of GDP at the end of fiscal year 2030 and 10 percent at the end of fiscal year 2050.

http://www.cbo.gov/publication/43023