The combined effect of the committee’s adjustments to the CBO standard baseline is to increase estimates of future deficits and debt. The cumulative deficits forecast in CBO’s standard baseline over the 2010-2019 period, for example, increase by $2.2 trillion. The study baseline extends to 2083; see Table B-2. Over that period:

  • Total outlays, which were 21 percent of GDP in 2008 and an estimated 27.6 percent in 2009, first decline from 2010 to 2012 to 22.2 percent of GDP (reflecting reduced spending associated with the 2008-2009 recession and the 2009 stimulus legislation) and then rise at an accelerating pace, reaching 60 percent of GDP in 2083.

  • Social Security spending climbs from 4.3 percent of GDP today to about 6 percent in 2035, and then remains roughly stable as a percentage of GDP, reaching 6.2 percent in 2083. Although the demographic challenge posed by retirement of the baby boom generation is the largest short-term contributor to higher Social Security (and Medicare) outlays, rising life expectancy is projected to keep the share of elderly people in the population larger than it is today.

  • Medicare and Medicaid more than double as a share of GDP between now and 2035, from 4.1 percent to 9.9 percent of GDP. Unlike Social Security, outlays for these programs are projected to continue growing steeply thereafter, almost doubling again—to 18.4 percent by 2083. 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 Medicaid 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.

  • All other spending—consisting of defense and nondefense discretionary spending plus mandatory spending programs other than the “big three”—is assumed to follow the CBO baseline for the first 10 years, with the exception of the adjustments noted above. In the study baseline it is held constant as a share of GDP thereafter. Under these assumptions, this third category of spending declines gradually from 10.8 percent of GDP in 2008 and a recession-driven peak of 16.8 percent of GDP in 2009 to 8.6 percent of GDP in 2019, remaining at roughly that level thereafter.

  • Revenues under current policies as defined in the study baseline rise gradually, from 17.7 percent of GDP in 2008 to 21.8 percent in 2083, somewhat less than CBO’s “alternative” baseline. That slow



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