Choosing the Nation's Fiscal Future (2010) / Chapter Skim
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Appendix B: Baseline Assumptions and Estimates
Appendix B: Baseline Assumptions and Estimates
Pages 237-246
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From page 237... ...
The Congressional Budget Office (CBO) produces detailed, widely cited, and -- in the committee's view -- highly credible baseline projections.
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From page 238... ...
It is important to understand several assumptions under the standard rules: • the expiration of the 2001 and 2003 tax cuts and of other tempo rary tax breaks; • the rapid expansion of the Alternative Minimum Tax (AMT) that will apply to more than 40 million tax filers, 10 times today's number; • the omission of the likely costs of funding operations in Iraq and Afghanistan in the near term; and • congressional agreement to allow physician payment rates in Medi care to fall sharply under that program's "sustainable growth rate" (SGR)
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From page 239... ...
At the administration's behest, Congress has funded operations in Iraq and Afghanistan chiefly through supplemental appropriations (that is, outside the regular annual defense bill) and it has acted to prevent cuts in physician fees under the Medicare SGR formula.
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From page 240... ...
to 75,000 by 2013 Freeze Medicare physician 0 –7 –17 –22 –18 –23 –28 –35 -42 –45 –47 payment ratesc Future major disastersd –1 –3 –3 –2 –3 –5 –7 –8 –9 –9 –10 Total –31 –88 –291 –336 –333 –346 –366 –387 –414 –438 –466 Debt-service effect of 0 2 6 16 30 49 70 92 116 149 186 adjustmentse Total adjust of surplus (+) or –31 –90 –297 –352 –363 –395 –436 –480 –529 –587 –652 deficit (–)
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From page 241... ...
or Deficit (–) –3.2 –12.1 –8.5 –6.6 –4.3 –4.0 –4.1 –4.0 –4.3 –4.3 –4.5 –5.1 Debt held by public 40.8 55.0 60.9 64.8 66.5 67.6 69.0 70.4 72.1 73.8 73.8 76.1 NOTE: The deficit effect of the change "Extend other expiring tax provisions" was assigned wholly to revenues, even though this item includes the outlay effect of a refundable tax credit.
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From page 242... ...
For Social Security, the committee uses CBO's "scheduled benefits" scenario, which assumes payments will be made on the basis of current law, regardless of the balance available in the trust fund. This spending projection implicitly assumes that other sources will be found to continue scheduled benefits, which otherwise by law would drop to the level of current trust fund revenues when it is exhausted, currently projected to occur in 2043.
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From page 243... ...
SOURCES: Data fromTable B-1, CBO's June 2009 long-term budget outlook, and staff calculations.
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From page 244... ...
Unlike Social Security, essentially a defined benefit pension program in which total outlays roughly grow with the elderly population and the average wage,5 Medicare and Med icaid represent the government's pledge to pay for health care at prevailing usage patterns and prices. Over the past few decades, rapid technological change, among other factors, has driven up federal spending at a rate faster than GDP growth.
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From page 245... ...
. If excess cost growth continued instead at about 2.5 percent annually, health care spending would account for an estimated 99 percent of GDP in 2082 (Congressional Budget Office 2007a:27)
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From page 246... ...
5. It seems paradoxical that, after retirement, benefits for individual beneficiaries on the Social Security rolls are adjusted only for inflation, but the average benefit for the pro gram as a whole generally rises with wages, which ordinarily grow faster than prices.
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