The Congressional Budget Office (CBO) in a recent report says the deficit will brought to a very manageable 61% of GDP if…and only if…Congress doesn’t make any changes in existing law. In other words, the best thing Congress could do for the deficit is to stay out of Washington and not meet.
This from the CBO from its most recent analysis of the country’s debt.
If the recovery continues as CBO expects, and if tax and spending policies unfold as specified in current law, deficits will drop markedly as a share of GDP over the next few years. Under CBO's baseline projections, which generally reflect the assumption that current law will not change, deficits fall to 6.2 percent of GDP next year and 3.2 percent in 2013, and they average 1.2 percent of GDP from 2014 to 2021. Those projections incorporate the effects of the deficit reduction measures in the recently enacted Budget Control Act of 2011; they also reflect the sharp increases in revenues that will occur when provisions of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (the 2010 tax act) expire.
In CBO's baseline, cumulative deficits total $3.5 trillion between 2012 and 2021, and by the end of 2021, debt held by the public equals 61 percent of GDP.
However, if Congress does something and changes the current law, deficits will grow:
If some of the changes specified in current law did not occur and current policies were continued instead, much larger deficits and much greater debt could result...[A]nnual deficits from 2012 through 2021 would average 4.3 percent of GDP, compared with 1.8 percent in CBO's baseline projections. With cumulative deficits during that decade of nearly $8.5 trillion, debt held by the public would reach 82 percent of GDP by the end of 2021, higher than in any year since 1948.
This CBO presentation tells the full story:
Charts from CBO's Budget and Economic Outlook: An Update
View more presentations from Congressional Budget Office
Read the report here: http://www.cbo.gov/doc.cfm?index=12316
See the slideshow here: http://www.slideshare.net/cbo/charts-from-cbos-budget-and-economic-outlook-an-update