Read on Twitter
Chartstorm: Today, CBO new released the new 30-year budget baseline. This rosy scenario assumes the 2017 tax cuts expire, no new tax/spending legislation, and low interest rates.
Spending soars to 31.2% of GDP, revenues rise to 18.6%. The 40-yr averages are 20% and 17%. (1/)
Spending soars to 31.2% of GDP, revenues rise to 18.6%. The 40-yr averages are 20% and 17%. (1/)
Overall, debt would rise to nearly 200% of GDP under CBO's rosy scenario. And if interest rates rise, add 15% of GDP debt per for every percentage point. (CBO assumes rates gradually rise to 4.4% over three decades) (2/)
What's driving this debt? Nearly all $104 trillion in projected budget deficits over 30 years comes from sharply rising general revenue transfers needed to make up Social Security and Medicare's annual cash deficits. That's the ballgame. (3/)
In fact, by 2050 the Medicare & Social Security systems will be running a staggering 14.2% of GDP annual cash shortfall (including the resulting interest costs). The rest of the budget will be running a surplus. (4/)
Social Security is straightforward: It will run a pretty steady 1.9% of GDP annual cash deficit - but including the interest costs of these yearly deficits will push that annual shortfall to 4.2% of GDP. (5/)
Medicare is in much worse shape. Its annual cash shortfall will leap from 2.0% to 4.6% of GDP -- or 9.9% when including the interest costs. That's the equivalent of a $2 trillion annual cash shortfall in today's GDP. (6/)
Overall, Social Security will collect $52 trillion in dedicated taxes, and pay out $74 trillion in benefits (plus $12T in interests costs).
Repaying the SocSec Trust Fund (also from new taxes) covers less than $3 trillion of the gap. Its not the cause of these deficits. (7/)
Repaying the SocSec Trust Fund (also from new taxes) covers less than $3 trillion of the gap. Its not the cause of these deficits. (7/)
Medicare is in deep trouble. It will collect $17 trillion in payroll (and other) taxes, and pay out $60 trillion in benefits (net of premiums) - while also costing $27 trillion in interest. That $71 trillion shortfall is responsible for 67% of all budget deficits over 30 yrs (9/)
By the way, advocates of Medicare-for-all should grapple with the current Medicare system's $70 trillion shortfall over 30 years (9.9% of GDP by 2050). Perhaps we should figure out how to pay for our current commitments before making expensive new ones. (10/)
The Social Security & Medicare shortfalls are driven by: A) 74 million retiring baby boomers, and B) systems that pay the typical retiree much more in benefits than they ever contribute in taxes & premiums (even adjusted into present values) (/11)
Because everyone has their "easy" (and mathematically-wrong) tax solution -- here is CBO data on how much the typical taxes would rise.
And yes, eliminating the SocSec wage cap would raise 0.85% of GDP - but SocSec's baseline shortfall rises 1.9%, so need much more. (12/12)
And yes, eliminating the SocSec wage cap would raise 0.85% of GDP - but SocSec's baseline shortfall rises 1.9%, so need much more. (12/12)
Bonus chart: The CBO assumes the 2017 tax cuts expire on schedule, but just for fun - if they were extended, how would they compare to the Social Security and Medicare shortfalls?
