amended. Although the relevant provisions of the Deficit Control Act expired at the end of 2006, CBO and the U.S. Office of Management and Budget (OMB) continue to follow that law’s specifications when preparing their baseline projections (which are called “current services” projections by OMB). Although it differs from OMB’s, ours also falls into the “current services” category of baseline types.

  

2. Or provisions of programs.

  

3. In fact, those expiring tax preferences, such as the research and development tax credit, are colloquially known as the “extenders.”

  

4. Although they differ in some details, organizations as diverse as the Center on Budget and Policy Priorities, the Brookings-Urban Tax Policy Center, and the Cato Institute have adjusted the standard CBO baseline in broadly similar ways in their analyses of the budget outlook.

  

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 program as a whole generally rises with wages, which ordinarily grow faster than prices. The key to the apparent paradox is that initial benefits are pegged to wages. Every year a new batch of retirees becomes eligible, with their initial benefits tied to recent wages. And every year other beneficiaries—typically older recipients with benefits tied to wage levels 20 or 25 years ago—die. Because of this constant “churning,” the average benefit grows about as fast as wages.

REFERENCES

Congressional Budget Office. (2009a). CBO’s Long-Term Projections for Social Security: 2009 Update. Washington, DC: Congressional Budget Office.

Congressional Budget Office. (2009b). The Long-Term Budget Outlook. Washington, DC: Congressional Budget Office.

Congressional Budget Office. (2009c). A Preliminary Analysis of the President’s Budget and an Update of CBO’s Budget and Economic Outlook. Washington, DC: Congressional Budget Office.



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