CBO | The Challenge of Deficit Reduction

CBO | The Challenge of Deficit Reduction: In fiscal year 2012, the federal budget deficit surpassed $1 trillion for the fourth year in a row. If lawmakers maintained current policies by preventing most of the tax increases and spending cuts that are scheduled to occur in January, deficits would total almost $10 trillion over the next decade. Federal debt held by the public would increase from nearly 73 percent of gross domestic product (GDP) at the end of 2012 to 90 percent of GDP 10 years from now.

What factors underlie the nation’s budgetary imbalance? What options are available to bring spending and taxes into closer alignment? And what factors might lawmakers and the public weigh when evaluating different approaches to deficit reduction?

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