CBO | Choices for Deficit Reduction

CBO | Choices for Deficit Reduction: This report reviews the magnitude and causes 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.
How Big Are Projected U.S. Deficits and Debt?

Federal debt held by the public currently exceeds 70 percent of the nation’s annual output (gross domestic product, or GDP), a percentage not seen since 1950. Under the current-law assumptions embodied in CBO’s baseline projections, the budget deficit would shrink markedly—from nearly $1.1 trillion in fiscal year 2012 to about $200 billion in 2022—and debt would decline to 58 percent of GDP in 2022. However, those projections depend heavily on the significant increases in taxes and decreases in spending that are scheduled to take effect at the beginning of January.

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