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Federal Deficit Reduction
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The United States is facing fundamental budgetary challenges. Federal debt held by the public exceeds 70 percent of the nation''s annual output or GDP, a percentage not seen since 1950, and a continuation of current policies would boost the debt further. Although debt would decline to 58 percent of GDP in 2022 under the current-law assumptions that underlie the CBO''s baseline projections, those projections depend heavily on significant increases in taxes and decreases in spending that are scheduled to take effect at the beginning of January. If, instead, lawmakers maintained current policies by preventing most of those changes from occurring, what the CBO refers to as the alternative fiscal scenario, debt held by the public would increase to 90 percent of GDP 10 years from now and continue to rise rapidly thereafter. This book reviews the scale and sources of the federal government''s budgetary imbalance, various options for bringing spending and taxes into closer alignment, and criteria that lawmakers and the public might use to evaluate different approaches to deficit reduction.
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