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1、 MDart10/SJUNE|2023The 2023 Long-Term Budget Outlookf11photo/SAt a GlanceEach year,the Congressional Budget Office publishes a report presenting its projections of what the federal budget and the economy would look like over the next 30years if current laws generally remained unchanged.The long-term

2、 budget projections typically follow CBOs 10-year baseline budget projections and then extend most of the concepts underlying them for an additional 20years.This year,the long-term projections are based on CBOs May2023baseline projections but also reflect the estimated budgetary effects of the Fisca

3、l Responsibility Act of 2023(Public Law118-5),which was enacted on June3,2023.Deficits.In CBOs projections,the deficit equals 5.8percent of gross domestic product(GDP)in 2023,declines to 5.0percent by 2027,and then grows in every year,reaching 10.0percent of GDP in 2053.Over the past century,that le

4、vel has been exceeded only during World War II and the coronavirus pandemic.The increase in the total deficit results from faster growth in spending than in revenues.The primary deficit,which excludes interest costs,equals 3.3percent of GDP in both 2023 and 2053,but the total deficit is boosted by r

5、ising interest costs.Debt.By the end of 2023,federal debt held by the public equals 98percent of GDP.Debt then rises in relation to GDP:It surpasses its historical high in 2029,when it reaches 107percent of GDP,and climbs to 181percent of GDP by 2053.Such high and rising debt would slow economic gro

6、wth,push up interest payments to foreign holders of U.S.debt,and pose significant risks to the fiscal and economic outlook;it could also cause lawmakers to feel more constrained in their policy choices.Spending.In 2023,outlays fall to 24.2percent of GDP as federal spending in response to the pandemi

7、c diminishes.Outlays continue to decline through 2026but increase thereafter,reaching 29.1percent of GDP in 2053.(By comparison,from 1993 to 2022,outlays averaged 21.0percent of GDP.)Rising interest rates and persistently large primary deficits cause interest costs to almost triple in relation to GD

8、P between 2023 and 2053.Spending on the major health care programs and Social Securitydriven by the aging of the population and growing health care costsalso boosts federal outlays significantly over the next 30years.Revenues.Revenues fall to 18.4percent of GDP in 2023 and continue to drop until 202

9、6,when the scheduled expiration of certain provisions of the 2017 tax act causes tax receipts to increase.Revenues generally rise thereafter,reaching 19.1percent of GDP in 2053,as an increasing share of income is pushed into higher tax brackets.(By comparison,from 1993 to 2022,revenues averaged 17.2

10、percent of GDP.)Changes From Previous Projections.Measured as a percentage of GDP,federal debt is now projected to be 2percentage points higher in 2023 and 9percentage points lower in 2052 than it was in last years report.Overall,CBOs projections of debt have increased through 2042 and decreased in

11、later years.www.cbo.gov/publication/59014By the NumbersLong-Term Budget Outlook,June 2023,by Fiscal YearPercentage of Gross Domestic ProductAverage,19932022Actual,20222023203320432053Revenues,Total17.219.618.418.118.619.1Individual income taxes8.010.59.69.710.110.7Payroll taxes6.15.96.05.95.85.8Corp

12、orate income taxes1.71.71.81.41.41.4Other1.41.41.01.11.21.3Outlays,Total21.024.824.224.426.729.1Mandatory,subtotal12.016.315.115.316.516.9Social Security4.54.85.16.06.26.2Major health care programs4.35.65.86.68.08.6Medicare,net of offsetting receipts2.62.83.14.05.15.5Medicaid,CHIP,and marketplace su

13、bsidies1.72.82.72.62.93.1Other3.35.84.22.62.42.1Discretionary7.16.66.55.65.45.4Net interest1.81.92.53.64.86.7Deficit,Total-3.7-5.2-5.8-6.4-8.1-10.0Deficit,Primary-1.9-3.3-3.3-2.8-3.4-3.3Debt Held by the Public579798115144181See Chapter 1 and Chapter 2.Deficits and outlays have been adjusted to exclu

14、de the effects of shifts in the timing of certain payments when October 1,the first day of the fiscal year,falls on a weekend.Long-Term Economic Outlook,June 2023,by Calendar Year PercentAverage,19932022Actual,20222023203320432053Growth of Real(Inflation-Adjusted)GDP2.42.10.31.71.51.5InflationPCE pr

15、ice index2.06.33.81.91.91.9Consumer price index2.58.04.82.32.22.3Labor Force Participation Rate65.062.262.261.360.760.3Unemployment Rate5.73.64.74.54.24.1Interest RatesOn 10-year Treasury notes3.93.03.93.84.14.5On all federal debt held by the public(By fiscal year)4.02.12.73.33.54.0See Chapter 3 and

16、 Appendix C.ContentsVisual Summary 1Chapter1:Deficits and Debt 5Overview 5Deficits and Debt Through 2053 5Consequences of High and Rising Federal Debt 8Uncertainty of CBOs Long-Term Projections 10Chapter 2:Spending and Revenues 13Overview 13Spending 13Revenues 20Chapter3:Long-Term Demographic and Ec

17、onomic Projections 25Overview 25Demographic Projections 25Economic Projections 25Appendix A:Assumptions Underlying CBOs Long-Term Budget Projections 33AppendixB:Changes in CBOs Long-Term Economic Projections Since July2022 37AppendixC:CBOs Projections of Additional Economic Factors 41AppendixD:Chang

18、es in CBOs Long-Term Budget Projections Since July2022 47List of Tables and Figures 55About This Document 56NotesThe Congressional Budget Offices long-term budget projections,referred to as the extended base-line,typically follow the agencys 10-year baseline budget projections and then extend most o

19、f the concepts underlying those projections for an additional 20years.This year,however,the long-term projections are based on the agencys May2023baseline projections but also reflect the estimated budgetary effects of the Fiscal Responsibility Act of 2023(FRA,Public Law 118-5),enacted on June3,2023

20、.Other legislation enacted between March 30,2023(when CBO finalized its May base-line),and June 3,2023,did not have significant budgetary effects.Those projections are consistent with the demographic projections that the agency published on January24,2023,and the economic forecast that it published

21、on February15,2023.They do not reflect the economic effects of administrative actions,regulatory changes,legislation,or economic developments after December 6,2022,when that forecast was finalized.Nor do they reflect the bud-getary effects of any developments after March30,2023,except for the enactm

22、ent of the FRA.In accordance with statutory requirements,CBOs projections reflect the assumptions that current laws generally remain unchanged,that some mandatory programs are extended after their authoriza-tions lapse,and that spending on Medicare and Social Security continues as scheduled even if

23、their trust funds are exhausted.Unless this report indicates otherwise,all years referred to in describing budget projections are federal fiscal years,which run from October1 to September30 and are designated by the calendar year in which they end.Years referred to in describing economic projections

24、 are calendar years.When October1(the first day of the fiscal year)falls on a weekend,certain payments that ordinarily would have been made on that day are instead made at the end of September and thus are shifted into the previous fiscal year.In this report,budget projections have been adjusted to

25、exclude the effects of those timing shifts.Unless this report notes otherwise,Medicare outlays are presented net of premiums paid by beneficia-ries and other offsetting receipts,which reduce outlays for the program.Numbers in the text,tables,and figures may not add up to totals because of rounding.S

26、upplemental information filesthe data underlying the tables and figures in this report,supple-mental budget projections,and the economic variables underlying those projectionsare posted on CBOs website at www.cbo.gov/publication/59014#data.Previous editions of this report are available at https:/go.

27、usa.gov/xmezZ.Visual SummaryThe United States faces a challenging fiscal outlook.If current laws generally remained unchanged,budget deficits and federal debt would grow in relation to gross domestic product(GDP)over the next three decades,according to the Congressional Budget Offices projections.Th

28、e figures below present highlights from those projections and the eco-nomic forecast underlying them.Deficits and DebtIn CBOs projections,federal deficits increase from 6 percent of GDP in 2023 to 10 percent in 2053.Such persistently large deficits cause federal debt,which is already high,to rise ev

29、en further:Debt held by the public reaches 181 percent of GDP in 2053.DeficitsPercentage of GDP302520151050510 Projected205320432033202320132003199319831973196319531943Net Interest OutlaysPrimary Deficit or SurplusTotal Deficit or SurplusSee Figure 1-1 on page 6.Primary deficits,which exclude intere

30、st costs,equal 3.3 percent of GDP in both 2023 and 2053.Combined with rising interest rates,those large and sustained primary deficits cause net outlays for interest to almost triple in relation to GDP.Federal Debt Held by the PublicPercentage of GDP02550751001251501752002053204320332023201320031993

31、19831973196319531943 ProjectedSee Figure 1-1 on page 6.Debt rises in relation to GDP over the next three decades,exceeding any previously recorded leveland it is on track to continue growing after 2053.2THE 2023 LONG-TERM BUDGET OUTLOOK JUNE 2023Spending and RevenuesFederal spending grows from 24 pe

32、rcent of GDP in 2023 to 29 percent of GDP in 2053.Federal revenues increase less over that periodfrom 18 percent to 19 percent of GDP.Total Outlays and RevenuesPercentage of GDP Projected0102030402053204820432038203320282023201820132008OutlaysRevenuesSee Figure 2-1 on page 14.Outlays increase faster

33、 than revenuesmainly because of rising interest costs and growth in spending on the major health care programs and Social Security.The result is ever-larger budget deficits over the long term.Outlays,by CategoryPercentage of GDP ProjectedSocial SecurityOther MandatoryDiscretionaryTotalNet InterestMa

34、jor Health Care Programs205320432033202320132053204320332023201320532043203320232013010203040010203040See Figure 2-2 on page 15.Rising interest rates and mounting debt cause net outlays for interest to increase from 2.5percent of GDP in 2023 to 6.7percent in 2053.Outlays for the major health care pr

35、ograms rise from 5.8percent of GDP to 8.6percent as the average age of the population increases and health care costs grow.The aging of the population also pushes up outlays for Social Security,which increase from 5.1percent of GDP to 6.2percent.3VISUAL SUMMARY THE 2023 LONG-TERM BUDGET OUTLOOKReven

36、ues,by SourcePercentage of GDPCorporate Income TaxesOtherTotalIndividual Income TaxesPayroll Taxes20532043203320232013205320432033202320132053204320332023201305101520250510152025 ProjectedSee Figure 2-6 on page 21.From 2023 to 2053,total revenues,measured as a percentage of GDP,grow by about 1 perce

37、ntage point.Individual income taxes account for nearly all of thatgrowth.Receipts from payroll and corporate taxes decline by small amounts in relation to GDP over the 30-year period.Key Factors Contributing to Changes in RevenuesPercentage of GDP2101221012210122053204820432038203320282023Changes in

38、 Total RevenuesReal Bracket CreepScheduled Changes toTax Provisions After 2025Other FactorsSee Figure 2-7 on page 22.Over the long term,the largest source of growth in revenues is real bracket creep:As income rises faster than prices,a larger proportion of income becomes subject to higher tax rates.

39、After 2025,another significant source of growth in revenues is the scheduled expiration of certain provisions of the 2017 tax act.Other factors partially offset those effects.In 2023 and 2024,for example,revenues fall in relation to GDP as a temporary boost to tax receipts observed in recent years a

40、bates.4THE 2023 LONG-TERM BUDGET OUTLOOK JUNE 2023The EconomyThe state of the U.S.economy in coming decades will affect the federal governments budget deficits and debt.Key components of CBOs long-term economic forecast are its projections of real potential GDPthe maximum sustainable output of the e

41、conomy,adjusted to remove the effects of inflationand interest rates.Average Annual Growth of Real Potential GDP and Its ComponentsPercentPotential Labor ForcePotential Labor Force ProductivityReal Potential GDP0.81.60.41.40.31.30.21.32.41.81.61.5 Projected19932022202320332034204320442053See Figure

42、3-3 on page 29.Real potential GDP grows more slowly throughout the 20232053 period than it has,on average,over the past 30 years.That slower growth is explained by slower growth in the potential labor force and in potential labor force productivity.Average Interest Rates on Federal Debt and on 10-Ye

43、ar Treasury NotesPercent Projected02468199319982003200820132018202320282033203820432048205310-Year Treasury Note RateAverage Rate onFederal DebtSee Figure 3-4 on page 32.Interest rateswhich,along with primary deficits,help determine net outlays for interestrise through 2053 but remain lower than the

44、y have been,on average,over the past three decades.Projected interest rates remain below that average for several reasons,including slower growth of the labor force,an increase in savings available for investment,and slower growth of total factor productivity.Chapter1:Deficits and DebtOverviewIf cur

45、rent laws governing taxes and spending generally remained unchanged,the federal budget deficit would increase significantly in relation to gross domestic product(GDP)over the next 30years,the Congressional Budget Office projects.Those growing deficits are projected to drive up federal debt held by t

46、he public.In 2053,such debt would exceed any previously recorded leveland would be on track to increase further(see Figure 1-1).Measured in relation to the size of the economy,this years budget deficit is comparable to last years defi-cit and smaller than the shortfalls recorded in 2020 and 2021,whe

47、n federal spending spiked in response to the coronavirus pandemic.Nevertheless,in CBOs projections,federal deficits are large by historical stan-dards:From 2023 to 2053,deficits average 7.3percent of GDP,more than double their average over the past half-century.And deficits are projected to grow alm

48、ost every year over the next three decades,reaching 10.0per-cent of GDP in 2053.1 In the past 100years,deficits have been that large only during World WarII and the pandemic.The growth in deficits over the next three decades occurs as increases in spendingespecially spending on interest,the major he

49、alth care programs,and Social Securityoutpace increases in revenues.Persistently large deficits would lead to substantial increases in federal debt.In CBOs projections,federal debt held by the public,measured in relation to GDP,surpasses its highest level in history in 2029,reaching 1.The long-term

50、budget projections in this report are based on CBOs May2023baseline projections but also reflect the estimated budgetary effects of the Fiscal Responsibility Act of 2023(Public Law118-5),enacted on June3,2023.See Congressional Budget Office,How the Fiscal Responsibility Act of2023Affects CBOs Projec

51、tions of Federal Debt(June2023),www.cbo.gov/publication/59235;letter to the Honorable Kevin McCarthy providing CBOs estimate of the budgetary effects of H.R.3746,the Fiscal Responsibility Act of 2023(May 30,2023),www.cbo.gov/publication/59225;and An Update to the Budget Outlook:2023 to 2033(May2023)

52、,www.cbo.gov/publication/59096.107percent.Debt continues to climb thereafter and reaches 181percent of GDP at the end of 2053.Such high and rising debt would have significant eco-nomic and financial consequences.It would,among other things,slow economic growth,drive up interest payments to foreign h

53、olders of U.S.debt,elevate the risk of a fiscal crisis,increase the likelihood of other adverse effects that could occur more gradually,and make the nations fiscal position more vulnerable to an increase in interest rates.In addition,it could cause lawmakers to feel more constrained in their policyc

54、hoices.Budgetary outcomes are hard to predict,particularly over the long run.Even if federal laws remained unchanged,CBOs budget projections would be subject to consider-able uncertainty.If developments in the economy,demo-graphics,or other factors that affect revenues and outlays diverged from the

55、agencys projections,budgetary out-comes would diverge as well.That uncertainty increases over time because changes in factors that affect the budget are difficult to anticipate over long time horizons.Deficits and Debt Through 2053In CBOs projections,deficits generally rise through 2053.As deficits

56、grow in relation to the size of the econ-omy,so does federal debt.Deficits The total deficitincluding net outlays for interestis estimated to be 5.8percent of GDP in 2023,comparable to what it was in 2022.In CBOs projections,the deficit declines through 2027before increasing steadily through 2053.At

57、 that point,the deficitequal to 10.0percent of GDPis significantly larger than the 3.6percent of GDP that deficits averaged over the past 50years(see Table 1-1).Moreover,in years in the past half-century when unemployment was relatively low,as it is in CBOs projections,the average deficit was even s

58、maller.Primary deficits exclude net outlays for interest,reflect-ing the difference between noninterest spending and rev-enuesthe main mechanisms through which lawmakers can directly influence the trajectory of the federal debt 6THE 2023 LONG-TERM BUDGET OUTLOOK JUNE 2023and interest costs.In CBOs p

59、rojections,primary deficits exceed their historical 50-year average of 1.5percent of GDP in every year.In both 2023 and 2053,the primary deficit equals 3.3percent of GDP,though such deficits vary in the interim;they generally decline through 2028,when the primary deficit drops to 2.1percent of GDP,b

60、efore increasing in most subsequent years.That later growth in primary deficits occurs because increases in noninterest spendingchiefly increases in spending on the major health care programs and Social Security attributable to the aging of the population and rising health care costsoutstrip increas

61、es in revenues.Combined with rising interest rates,large and sustained primary deficits cause net outlays for interest to increase significantly in relation to the size of the economy,from 2.5percent of GDP in 2023 to 6.7percent of GDP in 2053.On average,primary deficits account for about one-third

62、of the projected rise in net interest costs over the 20232053period;higher interest rates account for the rest.Figure 1-1.Deficits and DebtPercentage of GDP3025201510505100255075100125150175200Total Deficits,Primary Deficits,and Net Interest OutlaysFederal Debt Held by the Public Projected2053204320

63、33202320132003199319831973196319531943205320432033202320132003199319831973196319531943Net Interest OutlaysPrimary Deficit or SurplusTotal Deficit or SurplusWorld War IIGreatRecessionCoronavirus PandemicData source:Congressional Budget Office.See www.cbo.gov/publication/59014#data.Primary deficits ex

64、clude net outlays for interest.GDP=gross domestic product.In CBOs projections,primary deficits exceed their historical 50-year average of 1.5 percent of GDP throughout the projection period.In 2053,the primary deficit equals 3.3 percent of GDP.Driven up by large and sustained primary deficits and by

65、 rising interest rates,net interest outlays reach 6.7 percent of GDP in 2053.Growing deficits push federal debt held by the public,which is already high,further up throughout the 30-year period.Such debt reaches 181 percent of GDP in 2053and would continue to rise thereafter.7CHAPTER1:DEFICITS AND D

66、EBT THE 2023 LONG-TERM BUDGET OUTLOOKTable 1-1.Key Projections for Selected YearsPercentage of Gross Domestic Product2023203320432053RevenuesIndividual income taxes9.69.710.110.7Payroll taxes6.05.95.85.8Corporate income taxes1.81.41.41.4Other a1.01.11.21.3Total Revenues18.418.118.619.1OutlaysMandato

67、rySocial Security5.16.06.26.2Major health care programs b5.86.68.08.6Other4.22.62.42.1Subtotal15.115.316.516.9Discretionary6.55.65.45.4Net interest2.53.64.86.7Total Outlays24.224.426.729.1Deficit-5.8-6.4-8.1-10.0Debt Held by the Public at the End of the Period98115144181Memorandum:Social SecurityRev

68、enues c4.54.64.54.5Outlays d5.16.06.26.2Contribution to the Federal Deficite-0.6-1.4-1.6-1.7MedicareRevenues c1.61.71.71.8Outlays d3.85.06.47.0Offsetting receipts-0.7-1.0-1.4-1.6Contribution to the Federal Deficite-1.5-2.4-3.4-3.7Gross Domestic Product at the End of the Period(Trillions of dollars)2

69、6.239.356.179.5Data source:Congressional Budget Office.See www.cbo.gov/publication/59014#data.This table provides the information specified in section 3111 of S.Con.Res.11,the Concurrent Resolution on the Budget for Fiscal Year 2016.CBOs long-term budget projections,referred to as the extended basel

70、ine,typically follow the agencys 10-year baseline budget projections and then extend most of the concepts underlying those projections for an additional 20 years.This year,however,the long-term projections are based on the agencys May 2023 baseline projections but also reflect the estimated budgetar

71、y effects of the Fiscal Responsibility Act of 2023(Public Law 118-5),enacted on June 3,2023.When October 1(the first day of the fiscal year)falls on a weekend,certain payments that ordinarily would have been made on that day are instead made at the end of September and thus are shifted into the prev

72、ious fiscal year.All projections have been adjusted to exclude the effects of those timing shifts.a.Consists of excise taxes,remittances to the Treasury from the Federal Reserve System,customs duties,estate and gift taxes,and miscellaneous fees and fines.b.Consists of outlays for Medicare(net of pre

73、miums and other offsetting receipts),Medicaid,and the Childrens Health Insurance Program,as well as subsidies for health insurance purchased through the marketplaces established under the Affordable Care Act and related spending.c.Includes payroll taxes other than those paid by the federal governmen

74、t on behalf of its employees;those payments are intragovernmental transactions.Also includes income taxes paid on Social Security benefits,which are credited to the Social Security trust funds.d.Does not include outlays related to the administration of the program,which are discretionary.For Social

75、Security,outlays do not include intragovernmental offsetting receipts stemming from the employers share of payroll taxes paid to the Social Security trust funds by federal agencies on behalf of their employees.e.The net increase in the deficit shown here differs from the change in the trust fund bal

76、ance for the program.It does not include intragovernmental transactions,interest earned on balances,or outlays related to the administration of the program.8THE 2023 LONG-TERM BUDGET OUTLOOK JUNE 2023Federal Debt Held by the PublicDebt held by the public rises from 97percent of GDP at the end of 202

77、2 to 98percent of GDP in 2023in CBOs projections.2 By 2029,debt held by the public climbs to 107percent of GDP,exceeding the historical peak of 106percent reached in 1946,immediately after World War II.In 2053,debt reaches 181percent of GDP and is on track to rise higher still.Consequences of High a

78、nd Rising Federal DebtIf federal debt continued to rise in relation to GDP at the pace that CBO projects it would under current law,it would have far-reaching implications for the fiscal and economic outlook.3 The consequences of that high and rising debt would include the following:Borrowing costs

79、throughout the economy would rise,reducing private investment and slowing the growth of economic output.Rising interest costs associated with that debt would drive up interest payments to foreign holders of U.S.debt,decreasing the nations net international income.There would be an elevated risk of a

80、 fiscal crisisthat is,a situation in which investors lose confidence in the U.S.governments ability to service and repay its debt,causing interest rates to increase abruptly,inflation to spiral upward,or other disruptions to occur.The likelihood of other adverse effects would also increase.For examp

81、le,expectations of higher rates of inflation could become widespread,which could erode confidence in the U.S.dollar as the dominant international reserve currency.The United States fiscal position would be more vulnerable to an increase in interest rates,because the higher debt is,the more an increa

82、se in interest rates raises debt-service costs.Lawmakers might feel constrained in using fiscal policy to respond to unforeseen events or for other purposes,2.Debt held by the public is a measure that indicates the extent to which federal borrowing affects the availability of private funds for other

83、 borrowers.All else being equal,an increase in government borrowing reduces the amount of money available to other borrowers,putting upward pressure on interest rates and reducing private investment.It is the measure of debt that CBO uses most often in its reports on the budget.3.For more details on

84、 federal debt and the consequences of its growth,see Congressional Budget Office,Federal Debt:A Primer(March2020),www.cbo.gov/publication/56165.such as to promote economic activity or strengthen national defense.Nevertheless,policies that drive up debt by increas-ing spending or reducing revenues ca

85、n benefit people and provide support to the economy,especially during challenging times.And federal investmentincluding investment financed by deficitscan boost private-sector productivity and output(although that increased output would only partially mitigate the adverse fiscal conse-quences of inc

86、reased federal borrowing).Higher debt itself can also have beneficial consequences.Higher interest rates on Treasury securities can help workers save for retirement by increasing the return they can earn on those assets.Similarly,higher interest rates on Treasury securities can help businesses by in

87、creasing their return on a liquid asset that can be used to cover payroll and other expenses(though their borrowing costs would be higher,and an increase in the rate of return on newly issued Treasury securities would reduce the value of existing securities of the same maturity).Slower Economic Grow

88、th High and rising federal debt would,over time,push up the cost of borrowing,reduce private investment,and slow the growth of GDP,all else being equal.Higher debt tends to increase borrowing costs in both the public and private sectors by driving up interest rates.As a result,investment in producti

89、ve capital,such as housing and commercial structures,decreases.That reduction in private investment would slow economic growth:As investment in capital goods declined,workers would,on average,have fewer resources to do their jobs;as a result,they would be less productive,their compen-sation would be

90、 lower,and they would therefore be less inclined to work.Those effects would increase over time as federal borrowing grew.In CBOs projections,the reduction in private invest-ment stemming from higher debt is partially offset by at least three effects.First,additional government borrowing strengthens

91、 peoples incentive to save,partly by driving up interest rates.4 Second,higher interest rates tend to attract more foreign capital to the United 4.Some people might also expect policymakers to raise taxes or cut spending to cover the cost of the additional debt,and they might increase their saving t

92、o prepare for paying higher taxes or receiving less in benefits.See Jonathan Huntley,The Long-Run Effects of Federal Budget Deficits on National Saving and Private Domestic Investment,Working Paper 2014-02(Congressional Budget Office,February2014),www.cbo.gov/publication/45140.9CHAPTER1:DEFICITS AND

93、 DEBT THE 2023 LONG-TERM BUDGET OUTLOOKStates,and some of those funds become available for private investment.And third,federal borrowing that supports effective federal investment typically increases private-sector productivity and,therefore,private invest-ment.5(However,spending on such investment

94、 accounts for little of the increasing deficits and debt in CBOs projections.)In CBOs assessment,the increase in private investment stemming from those three factors would not be as large as the reduction in private investment result-ing from higher debt.Increased Interest Payments to Foreign Holder

95、s of U.S.Debt If federal debt held by the public continued to rise,the government would spend more on interest paymentsincluding payments to foreign investors,who currently hold roughly one-third of that debt overall(and 41per-cent of such debt not held by the Federal Reserve).Increases in interest

96、payments to foreign investors would,in turn,reduce the nations net international incomethe difference between the nations income(as measured by its gross national product,or GNP)and its total output(as measured by GDP)by reducing national income.6 When net international income declines,national inco

97、me also declines,all else being equal.7 Greater Risk of a Fiscal CrisisThe likelihood of a fiscal crisis would increase as federal debt continued to rise,because mounting debt could erode investors confidence in the U.S.governments fis-cal position.Such an erosion of confidence would under-mine the

98、value of Treasury securities and would drive up interest rates on federal debt as investors demanded higher yields to purchase those securities.Concerns about the governments fiscal position could lead to a sudden and potentially spiraling increase in peoples expectations for inflation,a large drop

99、in the value of the 5.See Congressional Budget Office,Effects of Physical Infrastructure Spending on the Economy and the Budget Under Two Illustrative Scenarios(August2021),www.cbo.gov/publication/57327,and The Macroeconomic and Budgetary Effects of Federal Investment(June2016),www.cbo.gov/publicati

100、on/51628.6.Whereas GDP is the value of all final goods and services produced within U.S.borders(whether the labor and capital used to produce them are supplied by residents or nonresidents),GNP is the value of all final goods and services produced with U.S.residents labor and capital(either domestic

101、ally or abroad).7.The net effect on national income of a reduction in purchases of federal debt by foreign investors is unclear.When foreign holdings of U.S.debt decline,interest payments to foreign investors decrease.That leads to an increase in net international income as national income rises.How

102、ever,that increase in net international income is offset by decreases resulting from higher interest rates.dollar,or a loss of confidence in the governments ability or commitment to repay its debt in full,all of which would make a fiscal crisis more likely.A fiscal crisis could lead to a financial c

103、risis.In a fiscal crisis,dramatic increases in Treasury rates would reduce the market value of outstanding government securities,and the resulting losses incurred by institutions and businesses that held those securitiesincluding mutual funds,pension funds,insurance companies,and bankscould be large

104、 enough to cause some financial institu-tions to fail.Because the United States plays a central role in the international financial system,such a crisis could spread globally.Risk Factors.The risk of a fiscal crisis depends on more than the amount of federal debt.Ultimately,it is the cost of servici

105、ng the debt and the ability to refinance it as needed that matter.Among the factors affecting those two things are investors expectationsabout the outlook for the budget and the economy and about domestic and international financial conditions,includ-ing interest rates and exchange rates.CBO does no

106、t have sufficient information to reliably quantify the probability of a fiscal crisis.In CBOs assess-ment,no tipping point can be identified at which the debt-to-GDP ratio would become so high that it made a crisis likely or imminent,nor is there a fixed point at which interest costs would become so

107、 high in relation to GDP that they were unsustainable.Risk of a Crisis in the Near Term.The risk of a fiscal crisis in the near term appears to be low despite the current large amount of federal debt.The near-term risk is mitigated by certain characteristics of the U.S.finan-cial system that tend to

108、 sustain demand for Treasury securities.For example,the Federal Reserve conducts independent monetary policy,government debt is issued in U.S.dollars,the dollar holds a central place in the global financial system,and few investments can provide returns comparable to those of Treasury securities at

109、similarly low levels of credit risk.In addition,concern about a fiscal crisis in the near term is not currently apparent in financial markets.However,financial markets do not always fully reflect risks on the horizon,and the risk of a fiscal crisis could change sud-denly in the wake of unexpected ev

110、ents.For example,a sudden rise in interest rates that persists for an extended period could cause investors to become concerned about the governments fiscal position over the long term.10THE 2023 LONG-TERM BUDGET OUTLOOK JUNE 2023Increased Likelihood of Other AdverseEffectsEven in the absence of an

111、abrupt fiscal crisis,high and rising debt could have adverse effects on the economy beyond those incorporated into CBOs projections,including a gradual decline in the value of Treasury secu-rities and other domestic assets,heightened expectations of inflation,and a loss of confidence in the U.S.doll

112、ar as the dominant international reserve currency.Such developments would,among other things,make it more difficult to finance public and private activity.Greater Vulnerability of U.S.Fiscal Position to an Increase in Interest RatesHigher debt makes the United States fiscal position more vulnerable

113、to an increase in interest rates.Debt of the amounts in CBOs projections increases the risk that interest costs would be substantially greater than projectedeven without a fiscal crisisif interest rates were higher than projected.(The average interest rate on federal debt in CBOs projections increas

114、es from 2.7per-cent in 2023 to 3.3percent in 2033 and to 4.0percent in 2053.If,for example,that average rate followed CBOs projections through 2052but was 1percentage point higher in 2053,net interest costs measured as a percentage of GDP would be 1.7percentage points higher in that year,all else be

115、ing equal.)Conversely,lower interest rates would result in lower-than-projected interest costs.Increased Perception of Fiscal Constraints Among Policymakers The size of budget deficits and debt could influence pol-icymakers choices.If debt was already high,policymak-ers might feel constrained from u

116、sing deficit-financed fiscal policy to respond to unforeseen events,promote economic activity,or further other goals.High debt could also undermine the international geopolitical role of the United States if policymakers were reluctant to increase spending to prepare for or respond to an internation

117、al crisis.Uncertainty of CBOs Long-Term ProjectionsCBOs long-term budget projections give lawmakers a point of comparison from which to measure the effects of policy options or proposed legislation;they are not predictions of budgetary outcomes.Moreover,the bud-get projections are uncertain because

118、they depend on the agencys economic and demographic projections,which are themselves uncertain.Developments that differ from the historical experiences on which the projections are based could significantly increase or decrease federal debt in relation to CBOs projections.Uncertainty About Budgetary

119、 OutcomesCBOs budget projections are intended to show what would happen to federal spending,revenues,deficits,and debt if current laws governing spending and taxes gener-ally remained the same.But even if federal laws remained unchanged over the next three decades,actual budgetary outcomes would dif

120、fer from CBOs projections because of unanticipated changes in economic conditions and in other factors that affect federal spending and revenues.Moreover,those outcomes will depend on future legislative action,which could increase or decrease budget deficits.The uncertainty in CBOs budget projection

121、s increases in later years of the projection period because changes in the economy,demographics,and a variety of other factors are more difficult to anticipate over longer time horizons.Uncertainty About the Economic OutlookCBOs economic projections are subject to a high degree of uncertainty.For in

122、stance,the possibility that growth in the labor force or in productivity could be faster or slower than expected makes CBOs projections of labor market conditions and economic output uncertain.Other key sources of uncertainty are future monetary policy and the path of interest rates.For example,unce

123、rtainty about the path of interest rates contributes to uncertainty about the impact that higher deficits and debt would have on the economy.And geopolitical events,such as the war in Ukraine,add to the uncer-tainty of the economic outlook.Uncertainty About the Demographic OutlookCBOs long-term demo

124、graphic projections are subject to significant uncertainty because,compounded over many years,even small changes in rates of fertility,mortality,or net immigration could greatly affect outcomes later in the projection period.8 For example,because many immigrants are of working age,higher-than-projec

125、ted net immigration would result in a larger-than-projected labor force,and lower-than-projected net immigration would have the opposite effect.Changes in fertility rates would have larger effects once members of the affected generations reached working age.Changes in mortality 8.For the agencys lat

126、est demographic projections,see Congressional Budget Office,The Demographic Outlook:2023 to 2053(January2023),www.cbo.gov/publication/58612.11CHAPTER1:DEFICITS AND DEBT THE 2023 LONG-TERM BUDGET OUTLOOKrates,which would probably most affect the size of the older population,would cause outlays for th

127、e major health care programs and Social Security to diverge from CBOs projections.Uncertainty About Other Potential DevelopmentsBecause CBOs projections are based on historical trends,developments that have few historical precedents or are otherwise difficult to predict constitute a significant sour

128、ce of uncertainty.Such developmentsfor example,a severe economic downturn,unexpectedly strong and sustained economic growth,the discovery or develop-ment of natural resources,or unanticipated effects of climate changecould lead to budgetary outcomes that are much better or worse than CBO projects.A

129、Severe Economic Downturn.CBOs long-term pro-jections of output and unemployment reflect trends from the end of World War II to the presenta period that included several economic downturns that were not fully offset by upturns of similar magnitude.But particularly severe and protracted economic downt

130、urns are rare.If such a downturn occurred,budgetary outcomes could significantly diverge from CBOs projections.Economic downturns can reduce revenues and raise outlays for unemployment insurance,nutrition assistance,or other programs that provide support to people and businesses.In addition,downturn

131、s have historically prompted policymakers to enact legislation that further reduces rev-enues and increases federal spendingto increase peo-ples incomes,bolster the financial position of state and local governments,and stimulate economic activity and employment.Such developments can lead to substant

132、ial increases in federal debt.For example,in the aftermath of the 20072008financial crisis,federal debt held by the public rose from 39percent of GDP at the end of fis-cal year 2008 to 70percent of GDP at the end of 2012.Unexpectedly Strong Economic Growth.Likewise,a source of uncertainty in CBOs pr

133、ojections is the pos-sibility that economic growth could be much stronger than the agency expects on the basis of historical trends.A substantial increase in productivityfor example,because of technological advancescould cause such a development.As a result,revenues could be higher than CBO projects

134、,and outlays,including those for support programs,could be lower.The Discovery and Development of Natural Resources.CBOs projections reflect the effects of previous advances in the development of natural resourcesfor example,increases in federal tax revenues that stemmed from an increase in the prod

135、uction of oil and natural gas from shale.However,it is impossible to predict the discovery of natural resources or new ways to extract them,and the effects of any such discovery on the federal budget would depend on private investment,government regulations,the infrastructure necessary to access and

136、 transport those resources,and other factors.Unanticipated Effects of Climate Change.On net,CBO expects climate change to reduce economic growth and increase budget deficits.The budgetary effects of climate change are expected to increase over time,but because climate change is an evolving phenomeno

137、n,the nature and extent of those changes are uncertain.(For a discussion of the effects of climate change on CBOs projections of economic growth,see AppendixC.)In CBOs projections,revenues fall as climate change reduces output.The effects on spending are more complex.For instance,spending on Medicar

138、e and other health programs is expected to rise amid an increase in climate-related health conditions,such as illnesses related to heat exposure or air pollution and injuries related to storms,floods,and wildfires.Conversely,spending on health care programs would decline to the extent that participa

139、nts died at younger ages than they oth-erwise would have or illnesses related to cold exposure decreased.9 Climate change could also prompt lawmakers to increase spending on discretionary programs,such as programs that provide disaster relief or repair and rebuild military facilities that would be d

140、amaged by increasingly frequent or severe storms.9.See Congressional Budget Office,Budgetary Effects of Climate Change and of Potential Legislative Responses to It(April2021),www.cbo.gov/publication/57019.Chapter 2:Spending and RevenuesOverviewUnder current law,federal spending is projected to rep-r

141、esent a larger percentage of the nations gross domestic product(GDP)in coming years than it did,on average,during the past 50years.From 1973 to 2022,total federal outlays averaged 21.0 percent of GDP;over the 20232053 period,projected outlays average 25.7 per-cent of GDP(see Figure 2-1).In the Congr

142、essional Budget Offices projections,outlays amount to 24.2 percent of GDP in 2023less than the 24.8 percent recorded in 2022as federal spend-ing in response to the coronavirus pandemic continues to wane.1 Outlays continue to decrease through 2026 but steadily increase thereafter for three reasons:Ri

143、sing interest rates and growing federal debt boost net interest costs;the growing cost of health care and the increase in the average age of the population boost spending on the major health care programs;and that same demographic trend increases spending on Social Security.Total spend-ing reaches 2

144、4.4 percent of GDP in 2033 and continues to rise to 29.1 percent in 2053.Spending in the United States has exceeded that level in only two periodsfor a three-year span during WorldWar II and for two years amid the coronavirus pandemic.From 1943 to 1945,when defense expenditures increased sharply,tot

145、al federal spending topped 40percent of GDP.In 2020 and 2021,pandemic-related spending boosted total outlays to roughly 31 percent of GDP.1.The long-term budget projections in this report are based on CBOs May 2023 baseline projections but also reflect the estimated budgetary effects of the Fiscal R

146、esponsibility Act of 2023(FRA,Public Law 118-5),enacted on June 3,2023.Other legislation enacted between March 30,2023(when CBO finalized its May baseline),and June 3,2023,did not have significant budgetary effects.The projections are consistent with the demographic projections that the agency publi

147、shed on January 24,2023,and the economic forecast that it published on February 15,2023.They do not reflect the economic effects of administrative actions,regulatory changes,legislation,or economic developments after December 6,2022,when that economic forecast was finalized.Nor do they reflect the b

148、udgetary effects of any developments after March 30,2023,except for the enactment of the FRA.Over the 20232053 period,revenues measured as a percentage of GDP are projected to be higher than they have been,on average,in recent decades.Revenues averaged 17.4percent of GDP over the past 50 years.Over

149、the next 30 years,projected revenues average 18.4 percent of GDP.CBO develops its extended baseline projections accord-ing to certain assumptions,some of which are specified in law.For a description of the assumptions underlying the projections,see Appendix A.Spending Total spending comprises mandat

150、ory and discretionary spending,as well as net outlays for interest.2 In CBOs projections:Mandatory spending measured in relation to the size of the economy initially decreases through 2026(to 14.0 percent of GDP)as pandemic-related mandatory outlays continue to decline.Mandatory spending then rises

151、steadily to 16.9 percent of GDP in 2053,largely driven by growth in outlays for the major health care programs.Discretionary outlays amount to 6.5 percent of GDP in 2023,decline to 5.4 percent by 2037,and then are assumed to remain constant(as a percentage of GDP)through 2053(see Figure 2-2).Net out

152、lays for interest increase significantly during that periodfrom 2.5 percent of GDP in 2023 to 2.Mandatory spending includes outlays for most federal benefit programs and for certain other payments to people,businesses,nonprofit institutions,and state and local governments.Such outlays are generally

153、governed by statutory criteria and are not normally constrained by the annual appropriation process.Discretionary spending encompasses an array of federal activities funded through or controlled by appropriations.That category includes most defense spending and spending for many nondefense activitie

154、s,such as elementary and secondary education,housing assistance,international affairs,the administration of justice,and highway programs.In the federal budget,net outlays for interest consist of the governments interest payments on federal debt,offset by interest income that the government receives.

155、14THE 2023 LONG-TERM BUDGET OUTLOOK JUNE 20236.7percent in 2053.If such outlays followed their projected path,they would exceed all mandatory spending other than that for the major health care programs and Social Security by 2027,all discretionary outlays by 2047,and all spending on Social Security

156、by 2051.CBO projects that by 2053,growth in outlays for the major health care programs and for interest would reshape the spending patterns of the U.S.govern-ment(see Figure 2-3).Net interest costs would account for a much greater portion of total federal spending in 2053 than in 2023,as would spend

157、ing on the major health care programs.Mandatory SpendingIn CBOs extended baseline projections,the growth in mandatory spending is driven by increased spending on the major health care programs and,especially in the first decade,on Social Security.Other mandatory spending declines in relation to GDP

158、over the next 30years,par-ticularly in the first decade of the period.3 Spending on the major health care programs climbs largely because,in 3.For a more detailed discussion of outlays from 2023 to 2033,see Congressional Budget Office,An Update to the Budget Outlook:2023 to 2033(May 2023),www.cbo.go

159、v/publication/59096,The Budget and Economic Outlook:2023 to 2033(February2023),www.cbo.gov/publication/58848,and How the Fiscal Responsibility Act of 2023 Affects CBOs Projections of Federal Debt(June 2023),www.cbo.gov/publication/59235.CBOs estimation,health care costs per person will con-tinue to

160、rise.The aging of the population also contrib-utes to growth in spending on health care programs and on Social Security.In 2023,outlays for Social Security,Medicare,and Medicaid,for people age 65 or older,amount to less than 30 percent of all federal noninterest spending;but in 2053,such outlays amo

161、unt to more than 40 percent of all noninterest spending.Major Health Care Programs.The major health care programs consist of Medicare,Medicaid,the Childrens Health Insurance Program(CHIP),and subsidies for health insurance purchased through the marketplaces established under the Affordable Care Act.

162、4 Spending on Medicare,which provides health insurance to roughly 65million people(86 percent of whom are at least 65years old),will account for over half of all spending on those programs in 2023 and over 60 percent of it in 2053,CBO projects.4.Federal subsidies for health insurance for low-and mod

163、erate-income households account for most of the outlays for subsidies for insurance purchased through the marketplaces and related spending.The related spending consists almost entirely of payments for risk adjustment(which are financed by funds collected from insurers with healthier enrollees and m

164、ade to health insurers whose enrollees are in poorer health)and spending for the Basic Health Program(an optional state program that covers low-income residents outside the health insurance marketplaces).Figure 2-1.Total Outlays and RevenuesPercentage of Gross Domestic Product Projected0102030402053

165、204820432038203320282023201820132008OutlaysRevenuesAverage Outlays,1973 to 2022(21.0)Average Revenues,1973 to 2022(17.4)Data source:Congressional Budget Office.See www.cbo.gov/publication/59014#data.In most years,growth in outlays is projected to outpace growth in revenues,resulting in widening budg

166、et deficits.15CHAPTER 2:SPENDING AND REVENUES THE 2023 LONG-TERM BUDGET OUTLOOKOver the past five decades,spending on the major health care programs has grown faster than the economya trend that persists in CBOs projections.Net federal spending on those programs amounts to 5.8percent of GDP in 2023

167、and increases to 8.6percent in 2053.The primary driver of that increase is spending on Medicare.Such spending(net of offsetting receipts,which are mostly premiums paid by enrollees)grows as a share of GDP by 2.4 percentage points during the period,reaching 5.5 percent of GDP in 2053(see Figure 2-4).

168、The growth in Medicare spending over the next three decades stems largely from rising health care costs per person and demographic trends.As a share of GDP,spending on the other major health care pro-gramsMedicaid and CHIP,combined with subsidies for health insurance purchased through the marketplac

169、es established under the Affordable Care Act and related spendinggrows by 0.4percentage points over the next three decades,reaching 3.1 percent of GDP in 2053.The Hospital Insurance(HI)Trust Fund is used to pay for benefits under Medicare Part A,which covers inpa-tient hospital services,care provide

170、d in skilled nursing facilities,home health care,and hospice care.5 The HI trust fund derives income from several sources but 5.Medicares second trust fund,the Supplementary Medical Insurance(SMI)Trust Fund,is used to pay for outpatient services(including physicians services)and prescription drugs u

171、nder Parts B and D of the program.The SMI Trust Fund differs from the HI Trust Fund in that most of its income does not come from a specified set of revenues collected from the public.Rather,most of the SMI funds income is in the form of transfers from the general fund of the Treasury,which are auto

172、matically adjusted to cover the differences between the programs spending and specified revenues.Thus,the balance in the SMI fund cannot be exhausted.Figure 2-2.Outlays,by CategoryPercentage of GDP ProjectedSocial SecurityOther MandatoryDiscretionaryTotalNet InterestMajor Health Care Programs2053204

173、32033202320132053204320332023201320532043203320232013010203040010203040saybData source:Congressional Budget Office.See www.cbo.gov/publication/59014#data.GDP=gross domestic product.a.Consists of spending on Medicare(net of premiums and other offsetting receipts),Medicaid,and the Childrens Health Ins

174、urance Program,as well as outlays to subsidize health insurance purchased through the marketplaces established under the Affordable Care Act and related spending.b.Consists of all mandatory spending other than that for Social Security and the major health care programs.“Other Mandatory”includes the

175、refundable portions of the earned income tax credit,the child tax credit,and the American Opportunity Tax Credit.Over the long term,net outlays for interest and spending on the major health care programs and Social Security are projected to rise in relation to GDP;other spending,in total,is projecte

176、d to decline.16THE 2023 LONG-TERM BUDGET OUTLOOK JUNE 2023mainly from the Medicare payroll tax.One measure of the sustainability of Part A is the projected timing of the HI trust funds exhaustion.In CBOs projections,the funds balance generally increases through 2029,after which time expenditures beg

177、in to outstrip income.As a result,the HI trust fund would be exhausted in 2035.Once the HI trust fund was exhausted,total payments to health plans and providers for services covered under Part A would be limited to the amount of revenues subsequently credited to the fund.It is unclear what changes t

178、he Centers for Medicare&Medicaid Services could make in order to operate the Part A program under those circumstances.6 Another measure of the sustainability of the HI trust fund is its actuarial balance,which summarizes the funds current balance and annual future streams of revenues and outlays as

179、a single number.7(A negative actuarial balance is called an actuarial deficit.)In CBOs projections,the HI trust funds 25-year actuarial deficit amounts to 0.6 percent of taxable payroll(or 0.3 percent of GDP).In other words,the government could pay for the services prescribed by current law and main

180、tain the necessary trust fund balance through 2047 if the HI payroll tax rate,which is currently 2.9 percent,was raised immediately and permanently by 0.6 percentage points.Other ways to maintain the necessary trust fund balance include reducing payments by an amount equivalent to 0.6 percent of tax

181、able payroll,combining tax increases with payment reductions,or transferring money to the trust fund.Social Security.In CBOs projections,spending on Social Security generally increases as a percentage of GDP over the next 30 years,continuing the trend of the past five decades.The number of Social Se

182、curity beneficiaries rises from 67million(or about 20 percent of the population)in 2023 to 79 million in 2033 and then to 97million(or over 25 percent of the projected population)in 2053.Spending on the program increases from 5.1percent of GDP in 2023 to 6.0 percent in 2033.That growth continues but

183、 slows along with the pace of the aging of the population,as members of the large baby-boom genera-tion die and people from younger and smaller generations 6.CBOs projections reflect the assumption that Medicare and Social Security will continue to pay benefits as scheduled under current law,regardl

184、ess of the status of the programs trust funds.That approach is consistent with a statutory requirement that CBOs 10-year baseline projections reflect the assumption that funding for such programs is adequate to make all payments required by law.See sec.257(b)(1)of the Balanced Budget and Emergency D

185、eficit Control Act of 1985,P.L.99-177(codified at 2U.S.C.907(b)(1)(2016).7.The actuarial balance is the sum of the present value of projected income and the current trust fund balance minus the sum of the present value of projected outlays and a years worth of benefits at the end of the period.(The

186、present value expresses a flow of current and future income or payments in terms of an equivalent lump sum received or paid today.)For the HI trust fund,that difference is presented in this report as a percentage of the present value of taxable payroll or of GDP over 25 years.Figure 2-3.Composition

187、of Outlays,2023 and 2053PercentNet InterestNoninterest DiscretionaryMajor Health Care ProgramsbSocial SecurityOther MandatoryaTotal Outlays302419924282738025507510020232053Noninterest Outlays23771090Under current law,net outlays for interest would account for a greater portion of total federal outla

188、ys in 2053 than they will in 2023,and spending on the major health care programs would account for a much larger share of all federal noninterest spending.Data source:Congressional Budget Office.See www.cbo.gov/publication/59014#data.a.Consists of all mandatory spending other than that for Social Se

189、curity and the major health care programs.“Other Mandatory”includes the refundable portions of the earned income tax credit,the child tax credit,and the American Opportunity Tax Credit.b.Consists of spending on Medicare(net of premiums and other offsetting receipts),Medicaid,and the Childrens Health

190、 Insurance Program,as well as outlays to subsidize health insurance purchased through the marketplaces established under the Affordable Care Act and relatedspending.17CHAPTER 2:SPENDING AND REVENUES THE 2023 LONG-TERM BUDGET OUTLOOKbecome eligible for Social Security;spending on Social Security reac

191、hes 6.2 percent of GDP in 2053.8 The Social Security program is funded by dedicated tax revenues from two sources.Currently,96percent of the funding comes from a payroll tax on earnings up to a certain limit;the rest is collected from an income tax on Social Security benefits.Revenues from the payro

192、ll tax and the income tax on benefits are credited to the Old-Age and Survivors Insurance(OASI)Trust Fund and the Disability Insurance(DI)TrustFund,which finance the programs benefits.In CBOs extended baseline projections,dedicated tax revenues for the combined trust funds decline from 4.6percent of

193、 GDP in 2023 to 4.4percent in 2053.The decline occurs in part because projected earnings grow faster for high earners than for low earners,so a larger share of earnings exceeds the maximum taxable amount for Social Security and a smaller share is taxable.8.In CBOs projections,spending on Social Secu

194、rity continues as scheduled regardless of the amounts in the programs trust funds.The baby-boom generation comprises people born between 1946 and 1964.A commonly used measure of Social Securitys financial position is the dates by which the trust funds would be exhausted.9 CBO projects that theOASI t

195、rust fund would be exhausted in fiscal year 2032 and the DI trust fund would be exhausted in calendar year 2052.If their balances were combined,the Old-Age,Survivors,and Disability Insurance(OASDI)trust funds would be exhausted in fiscal year 2033.CBO estimated the amounts by which annual benefits w

196、ould have to be reduced for the trust funds outlays to match their revenues in each year after the combined trust funds were exhausted.Benefits would need to be reduced(in relation to CBOs baseline projections)by 25 percent in 2034,an amount that would climb to 28 percent in 2053.Other Mandatory Pro

197、grams.Before the pandemic,mandatory spending excluding outlays for the major health care programs and Social Security had generally 9.Another commonly used measure of Social Securitys financial position is the programs actuarial balance,often measured over 75 years.See Congressional Budget Office,CB

198、Os 2023 Long-Term Projections for Social Security(forthcoming,June 2023),www.cbo.gov/publication/59184.Figure 2-4.Composition of Outlays for the Major Health Care ProgramsPercentage of Gross Domestic Product Projected02468102008201320182023202820332038204320482053Medicaid,CHIP,andMarketplace Subsidi

199、esbMedicareaData source:Congressional Budget Office.See www.cbo.gov/publication/59014#data.CHIP=Childrens Health Insurance Program.a.Net of premiums and other offsetting receipts.b.“Marketplace Subsidies”refers to outlays to subsidize health insurance purchased through the marketplaces established u

200、nder the Affordable Care Act and related spending.Spending on Medicare is projected to account for more than four-fifths of the increase in spending on the major health care programs over the next 30 years.18THE 2023 LONG-TERM BUDGET OUTLOOK JUNE 2023remained between 2percent and 4percent of GDP sin

201、ce the mid-1960s(it was 2.7percent of GDP in 2019,for example).Such spending includes outlays for the Supplemental Nutrition Assistance Program(SNAP),unemployment compensation,retirement programs for federal civilian and military employees,certain programs for veterans,Supplemental Security Income,a

202、nd cer-tain refundable tax credits.10 That spending increased significantly in 2020 and 2021to 10.4percent and 10.6 percent of GDP,respectivelymainly because of policies enacted in response to the pandemic and related economic downturn.As spending associated with those policies decreased,outlays for

203、 the category“other man-datory programs”fell to 5.8 percent of GDP in 2022.In CBOs projections,spending on other mandatory pro-grams totals 4.2percent of GDP in 2023.It then declines as a share of the economy,falling to 2.6percent of GDP in 2033 and 2.1 percent in 2053.11 The projected decline throu

204、gh 2033 occurs in part because the amounts of ben-efits for many of the programs are adjusted for inflation each yearand in CBOs economic forecast,inflation is projected to be less than the rate of growth in nominal GDP(that is,GDP measured in current-year dollars).The decline from 2033 to 2053 is p

205、artly attributable to rising income,which decreases the number of people who qualify for refundable tax credits(in turn decreasing the governments outlays for those credits).Over that period,outlays for the remainder of other mandatory programs are assumed to decline as a percentage of GDP at roughl

206、y the same annual rate at which they are projected to decline between 2030 and 2033.Causes of Growth in Mandatory Spending.Rising health care costs per person and the aging of the pop-ulation are the main reasons for the sharp increase in projected spending on the major health care programs over the

207、 next 30years.The aging of the population also leads to an increase in spending on Social Security.10.Refundable tax credits reduce a filers overall income tax liability;if the credit exceeds the filers income tax liability,the government pays all or some portion of that excess to the taxpayer(and t

208、he payment is treated as an outlay in the budget).For more information,see Congressional Budget Office,Refundable Tax Credits(January2013),www.cbo.gov/publication/43767.11.Sec.257(b)(2)of the Balanced Budget and Emergency Deficit Control Act of 1985,which governs CBOs baseline projections,makes exce

209、ptions regarding current law for some programs,such as SNAP,that have expiring authorizations but that are assumed to continue as currently authorized.CBO assessed the combined effects of those two factors by projecting what would occur over the 20232053 period if health care costs per person(adjust

210、ed for demo-graphic changes)grew at the rate of potential GDP per personwhich would mean that costs grew more slowly than the agency currently projectsand the average age of the population was not increasing.Under those scenar-ios,spending on the major health care programs would be 5.9 percent of GD

211、P in 2053,or 0.6 percentage points lower than the agency currently projects for 2023.12 And if the effects of the aging of the population alone were excluded,then spending on Social Security would be 4.9 percent of GDP in 2053,0.2 percentage points lower than the agency projects for 2023(see Figure

212、2-5).13 Rising Health Care Costs per Person.The average growth rate of federal health care spending per benefi-ciary has slowed in recent years,from 5.6 percent over the 19882005 period to 2.2 percent from 2007 to 2019.However,over the second and third decades of the projection period,such costs(adj

213、usted for demographic changes)continue to increase faster than the 3.3 percent growth rate of potential GDP per person1.0percent faster for Medicare and 1.1percent faster for Medicaid,on average.That growth in health care costs per person accounts for over two-thirds of the increase in spending,meas

214、ured as a percentage of GDP,on the major health care programs between 2023 and 2053.12.Potential GDP is the maximum sustainable output of the economy.The analysis of the causes of the growth in spending on the major health care programs encompasses gross spending on Medicare and does not reflect rec

215、eipts credited to the program from premiums and other sources.13.In this report,the term“additional cost growth”describes the amount by which the growth rate of nominal health care spending per person(adjusted to remove the effects of demographic changes)exceeds the growth rate of potential GDP per

216、person.To assess how additional cost growth would affect spending on the major health care programs and how the aging of the population would affect such spending as well as outlays for Social Security,CBO produced estimates using three scenarios:In the first scenario,the age distribution of the pop

217、ulation matched that in 2023 and additional cost growth was held at zero.In the second scenario,the agency projected the effect of the aging of the population while holding additional cost growth at zero.And in the third scenario,it projected the effects of the aging of the population and additional

218、 cost growth.To determine how the aging of the population would affect projected outlays for the major health care programs and Social Security,CBO then compared the result of the second scenario with that of the first scenario;and to determine how additional cost growth would affect projected spend

219、ing on the major health care programs,the agency compared the result of the third scenario with that of the second scenario.19CHAPTER 2:SPENDING AND REVENUES THE 2023 LONG-TERM BUDGET OUTLOOKAging of the Population.Over the 20232053period,about one-third of the projected increase in total spending o

220、n the major health care programs,measured as a percent-age of GDP,is attributable to the aging of the population.The lions share of the increase results from greater spend-ing on Medicare because Medicare is the largest of those programs and most beneficiaries qualify for it at age 65.(See Figure 3-

221、2 on page 27 for CBOs projections of the population by age group.)14 As the group of people who qualify for Medicare becomes larger and,on average,older,Medicare spending will grow,not only because of the greater number of beneficiaries but also because spending on health care tends to increase as p

222、eople age.14.In this report,population refers to the Social Security area population,which includes all residents of the 50states and of the District of Columbia,as well as civilian residents of U.S.territories.It also includes federal civilian employees and members of the U.S.armed forces living ab

223、road and their dependents,U.S.citizens living abroad,and noncitizens living abroad who are eligible for Social Security benefits on the basis of their earnings while in the United States.From 2023 to 2053,all of the projected increase in spending on Social Security,measured as a percentage of GDP,is

224、 attributable to the aging of the population.The effects of that aging,which push spending on Social Security up,are partially offset by scheduled increases in the full retirement age for Social Security,which reduce the lifetime benefits for affected beneficiaries and thus push spending down.15(In

225、fact,if the population was not aging,then outlays for Social Security over the 20232053 period would decrease as a percentage of GDP.)Discretionary SpendingIn CBOs long-term projections,discretionary outlays through 2033 follow the agencys 10-year baseline projec-tions adjusted to reflect the estima

226、ted budgetary effects of the Fiscal Responsibility Act of 2023(Public Law 118-5).15.For more details about the full retirement age for Social Security,see Zhe Li,The Social Security Retirement Age,Report R44670,version 14(Congressional Research Service,July6,2022),https:/ 2-5.Composition of Growth i

227、n Outlays for the Major Health Care Programs and Social Security,2023 to 2053Percentage of GDP6.55.91.23.06.510.15.14.91.35.16.2Major Health Care ProgramsSocial Security2023205320232053Outlays Without Effects From Additional Cost Growth or Aging of the PopulationAging of the PopulationAdditional Cos

228、t GrowthData source:Congressional Budget Office.See www.cbo.gov/publication/59014#data.The spending on the major health care programs examined here consists of gross spending on Medicare(which does not account for premiums or other offsetting receipts),Medicaid,and the Childrens Health Insurance Pro

229、gram,as well as outlays to subsidize health insurance purchased through the marketplaces established under the Affordable Care Act and related spending.Additional cost growth is the extent to which the growth rate of nominal health care spending per person(adjusted for demographic changes)exceeds th

230、e growth rate of potential GDP per person.Potential GDP is the maximum sustainable output of the economy.GDP=gross domestic product.Growth in spending on the major health care programs is largely driven by cost growth above and beyond that accounted for by demographic changes or the growth of potent

231、ial GDP per person.Spending on those programs,as well as spending on Social Security benefits,is also boosted by the aging of the population.20THE 2023 LONG-TERM BUDGET OUTLOOK JUNE 2023From 2023 to 2033,in CBOs projections,about 49per-cent of all discretionary outlays,on average,are dedi-cated to n

232、ational defense.The rest are for nondefense discretionary spending,which comprises outlays for an array of federally funded activities and programs.After 2033,discretionary outlays are assumed to transition(over a five-year period)to grow at the rate of nominal GDP.As a result,such outlays generally

233、 decrease as a percentage of GDPfalling from 6.5 percent in 2023 to 5.4 percent in 2037 and remaining at that level through 2053.Net Outlays for InterestOver the past 50years,the governments net interest costs have ranged from 1.2 percent of GDP to 3.2 per-cent,averaging 2.0percent of GDP.In CBOs pr

234、ojec-tions,such costs amount to 2.5 percent of GDP in 2023.By 2033,those costs increase to 3.6percent of GDP,as federal debt grows and interest rates rise.Net outlays for interest continue to increase thereafter,reaching 6.7percent of GDP in 2053.They would be higher(as a percentage of GDP)in that y

235、ear than spending on Social Security,discretionary outlays,or all mandatory spend-ing other than that for the major health care programs and Social Securityand more than twice the highest amount observed since at least 1940(the first year for which the Office of Management and Budget reports such da

236、ta).The projected increase in net outlays for interest is the result of escalating interest rates and the rising amount of debt.On average,in CBOs projections,increases in the average interest rate account for about two-thirds of the rise in net interest costs over the 20232053 period.1616.To determ

237、ine the change in net interest costs separately attributable to primary deficits(that is,deficits excluding net outlays for interest)and to changes in the average interest rate,CBO started with a benchmark scenario.In that scenario,after 2022,the average interest rate did not change and there were n

238、o primary deficits adding to the amount of debt.The agency then estimated the effect on net interest costs from primary deficits(by estimating those deficits without a change in the average interest rate)and from the change in the average interest rate(by estimating those rates without primary defic

239、its).The relative size of those estimates was then used to calculate the percentage of the total increase in net interest costs attributable to the increase in the average interest rate and to primary deficits by proportionally allocating the interaction between the average interest rate and the pri

240、mary deficit.RevenuesIn CBOs projections,revenues measured as a percent-age of GDP fluctuate over the next decade,declining through 2025 but increasing thereafter because of sched-uled changes to tax provisions.Revenues rise steadily from 2033 to 2053,mainly because growth in income boosts receipts

241、from the individual income tax.Measured in relation to the size of the economy,revenues are higher in each year of the next three decades than their average over the past 50 years.17Projected RevenuesIn CBOs projections,total revenues amount to 18.4 per-cent of GDP in 2023,down from 19.6 percent las

242、t year.Revenues continue to decline through 2025 as the effects of temporary factors that boosted tax receipts in 2021 and 2022(such as strong collections of taxes on capital gains realizations)subside.In 2026 and 2027,by con-trast,revenues rise in relation to GDP because of changes to provisions go

243、verning the individual income tax that are scheduled to occur at the end of calendar year 2025.From 2023 to 2053,total revenues measured as a per-centage of GDP grow by nearly one percentage point in CBOs projections,reaching 19.1 percent of GDP by the end of the period.That growth is mainly driven

244、by an increase in individual income tax receipts that is partially offset by decreases in other revenues.Although receipts of individual income taxes initially fall,they resume their growth after 2025 and amount to 10.7 percent of GDP in 2053one percentage point higher than their value in 2023(see F

245、igure 2-6).That growth in receipts from individual income taxes is partially offset by declining receipts from corporate income taxes and payroll taxes over the next three decades(by 0.4 percentage points and 0.2 percentage points,respectively).Factors Affecting RevenuesThe projected increase in tot

246、al revenues,measured as a percentage of GDP,over the next 30 years stems from several factors,including real bracket creep and scheduled 17.CBOs revenue projections are based on the assumption that the rules for all tax sources(individual income taxes,corporate income taxes,payroll taxes,and other t

247、axes)will change as scheduled under current law.The sole exception is expiring excise taxes dedicated to trust funds.The Balanced Budget and Emergency Deficit Control Act of 1985 requires that CBOs baseline reflect the assumption that those taxes would be extended at their current rates.That law doe

248、s not stipulate that the baseline include the extension of other expiring tax provisions,even if lawmakers have routinely extended them in the past.21CHAPTER 2:SPENDING AND REVENUES THE 2023 LONG-TERM BUDGET OUTLOOKchanges to tax provisions.Those factors are partially offset by others that cause rev

249、enues to decrease,including the end of a temporary boost to tax receipts,growing health care costs,and a decline in receipts from the corporate income tax(see Figure 2-7).Faster earnings growth for higher-earning people increases individual income taxes but decreases payroll taxes by nearly the same

250、 amount,affecting net revenues little over the long term.Real Bracket Creep.The income thresholds for the various tax rate brackets in the individual income tax are indexed to increase with inflation(as measured by the chained consumer price index for all urban consumers,published by the Bureau of L

251、abor Statistics).In CBOs projections,nominal income grows faster than prices,so more income is pushed into higher tax brackets even when the underlying distribution of income remains unchanged.That process is known as real bracket creep and is the largest source of growth in total projected revenues

252、 over the next three decades.If current laws generally remained unchanged,real bracket creep would continue to gradually boost taxes in relation to income through 2053,CBO projects,thereby increas-ing tax receipts.From 2033 to 2053,the share of income in the highest income bracket(taxed at the top r

253、ate of 39.6percent)would rise by 2percentage points,and the share of income excluded from taxation(mostly because of exemptions and deductions)would fall by 3percentage pointsbecause of real bracket creep(see Figure 2-8).18Scheduled Changes to Tax Provisions After 2025.Under current law,nearly all t

254、he provisions of the 2017 tax 18.For more details,see Congressional Budget Office,“How Income Growth Affects Tax Revenues in CBOs Long-Term Budget Projections”(June2019),www.cbo.gov/publication/55368.Figure 2-6.Revenues,by SourcePercentage of GDPCorporate Income TaxesOtheraTotalIndividual Income Tax

255、esPayroll Taxes20532043203320232013205320432033202320132053204320332023201305101520250510152025 ProjectedData source:Congressional Budget Office.See www.cbo.gov/publication/59014#data.GDP=gross domestic product.a.Consists of excise taxes,remittances to the Treasury from the Federal Reserve System,cu

256、stoms duties,estate and gift taxes,and miscellaneous fees andfines.Measured as a percentage of GDP,total revenues grow by about one percentage point from 2023 to 2053,in CBOs projections,mainly driven by an increase in individual income tax receipts.Receipts from payroll and corporate taxes,measured

257、 as a share of the economy,decline by a small amount over the 30-year period.22THE 2023 LONG-TERM BUDGET OUTLOOK JUNE 2023Figure 2-7.Key Factors Contributing to Changes in RevenuesPercentage of GDP2101221012210122053204820432038203320282023Changes in Total RevenuesReal Bracket CreepaScheduled Change

258、s toTax Provisions After 2025Other FactorsbData source:Congressional Budget Office.See www.cbo.gov/publication/59014#data.GDP=gross domestic product.a.Real bracket creep is the process in which,as income rises faster than inflation,a larger proportion of income becomes subject to higher tax rates,ev

259、en when the underlying distribution of income remains unchanged.b.Other factors include an end to the temporary boost to tax receipts as recent strength in collections dissipates,as well as factors that affect revenues over the longer term,such as changes in the distribution of wages and growth in n

260、ontaxable compensation resulting from rising health care costs.The largest source of growth in tax revenues over the long term is real bracket creepthe process in which,as income rises faster than prices,a larger proportion of income becomes subject to higher tax rates.After 2025,another significant

261、 source of growth in revenues is the scheduled expiration of certain provisions of the 2017 tax act.Several other factors affect projected revenues.In 2023,for example,revenues fall as a percentage of GDP as the temporary boost to tax receipts observed in 2021 and 2022 ends.23CHAPTER 2:SPENDING AND

262、REVENUES THE 2023 LONG-TERM BUDGET OUTLOOKact(P.L.115-97)affecting the individual income tax are scheduled to expire at the end of calendar year 2025.In CBOs projections,the resulting changes,taken together,boost tax revenues in relation to income.Once in effect,the scheduled changes would bring abo

263、ut higher statutory tax rates,a smaller standard deduction,the return of per-sonal exemptions,and a reduction in the child tax credit.Those changes would cause tax liabilities(the amounts taxpayers owe)to rise beginning in calendar year 2026,pushing up receipts in fiscal year 2026 and beyond.CBO pro

264、jects that after 2025,the scheduled changes would boost individual income tax revenues,measured as a share of GDP,by 0.8 percentage points,on average.Other Factors.Several other factors affect projected reve-nues.One is the end of a temporary boost to tax receipts observed in 2021 and 2022,which ref

265、lects CBOs expec-tation that the recent strength in tax collections from cap-ital gains realizations and other sources will not continue.In addition,payments of certain taxes deferred during the first two years of the pandemic will mostly have been collected by the end of 2023.Taken together,the end

266、 of the temporary boost to tax receipts and the windup of deferred tax payments produce a drop in revenues that persists throughout the projection period.The second factor is the growth in health care costs,which is projected to reduce revenues as a percentage of GDP over the next three decades.The

267、share of employees compensation that is paid in the form of spending on fringe benefits,such as employment-based health insur-ance,is projected to increase,and those benefits are gen-erally not taxable.Correspondingly,the share of employ-ees compensation that is paid in the form of wages and salarie

268、s,which are subject to income and payroll taxes,is projected to decline.That shift in compensation would decrease taxable incomeand thus revenues from both income and payroll taxesin relation to GDP.The third factor is the change in the distribution of earnings.Earnings are projected to continue to

269、grow faster for higher-earning people than for other people in the long term.That trend would cause a larger share of individual earnings to be taxed at higher rates.However,the resulting increase in individual income tax revenues would be largely offset by a decrease of nearly the same amount in pa

270、yroll tax receipts,CBO projects,because the share of earnings above the maximum amount sub-ject to Social Security payroll taxes would grow.19A final factor is a decline in corporate income tax receipts,which fall in relation to the size of the econ-omy between 2023 and 2033.That decline reflects th

271、e varying effects,over time,of provisions of the 2017 tax act and the 2022 reconciliation act(P.L.117-169).Those provisions include the end of payments for a onetime tax on certain foreign profits,changes to the treatment of certain expenditures for research and experimentation,and new credits that

272、can be used to reduce liability in excess of a new minimum tax on certain corporations.19.For additional information,see Brooks Pierce,How Changes in the Distribution of Earnings Affect the Federal Deficit,Working Paper 2021-12(Congressional Budget Office,October 2021),www.cbo.gov/publication/57217.

273、Figure 2-8.Shares of Income Taxed at Different Rates Under the Individual Income Tax SystemPercent26233633293491102550751002033205339.6 Percent20 to 35 Percent10 to 15 Percent0Income Tax Rate:The largest contributor to growth in projected revenues over the long term is real bracket creepthe process

274、in which,as income rises faster than prices,a larger proportion of income becomes subject to higher tax rates.As the share of income taxed at higher rates grows,the share exempt from taxation shrinks.Data source:Congressional Budget Office.See www.cbo.gov/publication/59014#data.In this figure,income

275、 refers to adjusted gross incomethat is,income from all sources not specifically excluded by the tax code,minus certain deductions.The income tax rate is the statutory rate specified under the individual income tax system.The lowest statutory tax rate is zero(because of deductions and exemptions).Ch

276、apter3:Long-Term Demographic and Economic ProjectionsOverviewDemographic and economic trends are key determinants of the long-term budget outlook.By the Congressional Budget Offices estimate,the population will grow more slowly over the next 30years than it did over the past 30years,and it will get

277、older,on average.In CBOs economic projections,over the next three decades,the nations output grows more slowly than it did over the past three,the labor force participation rate drops,inflation returns in a few years to a rate that is consistent with the Federal Reserves long-term objective,and inte

278、rest rates continue to rise.Those projections account for the effects on the economy of projected deficits and of changes in taxes and spending scheduled under current law.Demographic ProjectionsThe size and age profile of the U.S.population affects the nations economy and the federal budget.For exa

279、mple,those two factors help determine the number of people in the labor force and thus affect both gross domestic product(GDP)and federal tax receipts.Those factors also help determine the number of beneficiaries of Social Security and other federal programs and thus federaloutlays.To estimate the p

280、opulation in future years,CBO pro-jects rates of fertility,net immigration,and mortality.In the agencys projections,the population increases from 336million people at the beginning of 2023 to 373mil-lion people at the beginning of 2053an average expansion of 0.3percent per year.1 That rate is one-th

281、ird the average annual rate of growth over the past 30years(0.9percent).Moreover,as fertility rates remain below the rates necessary for a generation to replace itself,population growth is increasingly driven by immigration.Starting in 2042,immigration accounts for all popula-tion growth in CBOs pro

282、jections(see Figure 3-1).1.Congressional Budget Office,The Demographic Outlook:2023 to 2053(January2023),www.cbo.gov/publication/58612.The proportion of the population that is age 65or older expands over the coming decades in CBOs projec-tions,continuing a long-standing historical trend(see Figure 3

283、-2).From 2010 to 2019,the percentage of the population age 65or older rose from 13.0percent to 16.0percent,driven largely by the aging of members of the baby-boom generation(comprising people born between 1946 and 1964),who started to turn 65in the early 2010s.That percentage continues to increase i

284、n CBOs projections,rising from 17.5percent in 2023 to 20.6percent in 2033 and 22.5percent in 2053.Economic ProjectionsThe state of the U.S.economy in coming decades will affect the federal governments budget deficits and debt.Key to CBOs long-term budget projections are its long-term projections of

285、GDP,labor force participation,inflation,and interest rates.Among the factors incorpo-rated in the agencys long-term economic forecast are the effects of projected deficits on private investment and the effects of marginal tax rates on the supply of labor and private saving.2 Real Potential GDPIn CBO

286、s extended baseline projections,growth of real potential GDP(the maximum sustainable output of the economy,adjusted to remove the effects of inflation)slows,falling from an annual average of 1.8percent over the 20232033period to an average of 1.5percent over the 20442053period(see Table 3-1 on page

287、28).Over the entire 20232053period,real potential GDP increases at an average rate of 1.6percent per year.That projection represents a slowdown in the annual growth 2.The economic projections underlying this analysis are extended versions of the 10-year economic projections described in Congressiona

288、l Budget Office,The Budget and Economic Outlook:2023 to 2033(February2023),www.cbo.gov/publication/58848.For a discussion of changes to CBOs economic projections since July2022,when the agency last published its extended baseline projections,see AppendixB.For a discussion of projections of additiona

289、l economic factors,see AppendixC.26THE 2023 LONG-TERM BUDGET OUTLOOK JUNE 2023of real potential GDP relative to such growth from 1993 to 2022,when it averaged 2.4percent.That slowdown in the growth of real potential GDP is attributable to slowing growth in both the potential labor force(an estimate

290、of how big the labor force would be if GDP equaled potential GDP)and potential labor force pro-ductivity(that is,potential output per member of the potential labor force)over the period(see Figure 3-3 on page 29).Potential Labor Force.In CBOs projections,the expansion of the potential labor force sl

291、ows,averaging 0.4percent annually from 2023 to 2033 and 0.2percent from 2044 to 2053.Over the entire 20232053period,the potential labor force grows by an average of 0.3per-cent per year.That growth is slower than over the past 30years,when the potential labor force grew by an aver-age of 0.8percent

292、per year.Slowing population growth and the aging ofthe population account for most of that slowdown.Potential Labor Force Productivity.Like the growth of the potential labor force,the growth of potential labor force productivity is projected to slow over the next three decades.In CBOs projections,po

293、tential labor force productivity grows by an average of 1.4percent per year from 2023 to 2033 and by an average of 1.3percent per year from 2044 to 2053.Over the entire 30-year pro-jection period,potential labor force productivity grows at an average annual rate of 1.3percentslower than the 1.6perce

294、nt annual growth it averaged over the past 30years.Two key factors drive the slower growth in potential labor force productivity.First,measured per worker,the accu-mulation of capitalstructures and equipment,intellec-tual property products(such as computer software),and residential housing,for examp

295、leis projected to be slower over the next three decades than it has been in the past,in part because increased federal borrowing is projected to reduce private investment.(See Chapter1 for details.)Second,total factor productivity(TFP)that is,the real output per unit of combined labor and capital in

296、 the nonfarm business sectoris also expected to increase more slowly over the next 30years than it did over the past 30years(although the growth of TFP is projected to accelerate from its historically slow rate in recent years).Whereas TFP grew by an average of 1.2percent annually from 1993 to 2022,

297、CBO projects that it will grow at an Figure 3-1.Population Growth and the Demographic Factors That Contribute to ItPercent Projected0.50 0.5 1.0 1.52008201320182023202820332038204320482053PopulationGrowthBirths Minus DeathsNet ImmigrationFactors Contribution to Population Growth(Percentage points):D

298、ata source:Congressional Budget Office.See www.cbo.gov/publication/59014#data.The population referred to in this figure is the Social Security area population,which includes all residents of the 50 states and of the District of Columbia,as well as civilian residents of U.S.territories.It also includ

299、es federal civilian employees and members of the U.S.armed forces living abroad and their dependents,U.S.citizens living abroad,and noncitizens living abroad who are eligible for Social Security benefits on the basis of their earnings while in the United States.Deaths exceed births beginning in 2042

300、 in CBOs projections,largely because of the aging of the population.Thereafter,population growth is driven entirely by immigration.27CHAPTER3:LONG-TERM DEMOGRAPHIC AND ECONOMIC PROJECTIONS THE 2023 LONG-TERM BUDGET OUTLOOKaverage rate of 1.1percent over the next 30years.That slower growth in TFP is

301、attributable to several factors,including a slowdown in the growth of workers educa-tional attainment,declining federal investment measured in relation to the size of the economy,and the effects of climate change on production factors(such as crop yields and outdoor labor).3Real GDPIn CBOs projectio

302、ns,real GDP grows at an average rate of 1.7percent per year from 2023 to 2053slightly faster than real potential GDP grows over that period.The growth rates of real GDP and real potential GDP 3.Evan Herrnstadt and Terry Dinan,CBOs Projection of the Effect of Climate Change on U.S.Economic Output,Wor

303、king Paper 2020-06(Congressional Budget Office,September2020),www.cbo.gov/publication/56505.converge in the second half of the first decade of the projection period.At that point,the level of real GDP is about 0.5percent below that of real potential GDP.That output gap remains through the end of the

304、 projection period,reflecting CBOs assessment that during and after economic downturns,real GDP falls short of real potential GDP by a larger amount and for longer than it exceeds potential GDP by during economic expansions.44.One recent study explains the existence of an average negative output gap

305、 by examining asymmetric fluctuations in the noncyclical rate of unemployment(that is,the rate that results from all sources except fluctuations in aggregate demand).See Stphane Dupraz,Emi Nakamura,and Jn Steinsson,A Plucking Model of Business Cycles,Working Paper748(Banque de France,January2020),ht

306、tps:/ also Congressional Budget Office,Why CBO Projects That Actual Output Will Be Below Potential Output on Average(February2015),www.cbo.gov/publication/49890.Figure 3-2.Population,by Age GroupMillions of People Projected0501001502002503003504001983 1993 2003 2013 2023 2033 2043 2053 Projected1983

307、 1993 2003 2013 2023 2033 2043 2053 Projected0501001502002503003504001983 1993 2003 2013 2023 2033 2043 2053 Projected1983 1993 2003 2013 2023 2033 2043 2053Total65 or Older55 to 6425 to 5424 or YoungerData source:Congressional Budget Office.See www.cbo.gov/publication/59014#data.The population refe

308、rred to in this figure is the Social Security area population,which includes all residents of the 50 states and of the District of Columbia,as well as civilian residents of U.S.territories.It also includes federal civilian employees and members of the U.S.armed forces living abroad and their depende

309、nts,U.S.citizens living abroad,and noncitizens living abroad who are eligible for Social Security benefits on the basis of their earnings while in the United States.In CBOs projections,the number of people ages 25 to 54(the ages at which people are most likely to work)grows more slowly than the numb

310、er of people age 65 or older,who are less likely to work and who are generally eligible for Social Security and Medicare.28THE 2023 LONG-TERM BUDGET OUTLOOK JUNE 2023Real GDP per PersonReal GDP per person is expected to increase at an average annual rate of 1.3percent over the 20232053periodslower t

311、han the average annual growth of 1.6percent experienced over the past 30years.In the agencys projec-tions,the average annual growth of real GDP per person falls from 1.4percent in the first decade of the projection period to 1.2percent in the second decade as growth in real GDP slows more than does

312、growth in the population.In the third decade,average annual growth in real GDP per person remains at 1.2percent.Nominal GDPNominal GDP grows by 4.0percent this year in CBOs projections.From 2024 to 2026,the annual growth of nominal GDP rises to an average of 4.6percent because of stronger growth in

313、real GDP.As is the case with real GDP,the growth rate of nominal GDP converges with the growth rate of nominal potential GDP in the second half of the first decade of the projection period.Over the last two decades of the projection period,the pro-jected growth rate of nominal GDP reflects the proje

314、cted growth in real potential GDP and projected inflation as measured by the GDP price index.Table 3-1.Average Annual Values for Key Economic Variables That Underlie CBOs Extended Baseline ProjectionsPercent19932022202320332034204320442053 Overall,20232053Growth of GDP Real potential GDP2.41.81.61.5

315、1.6Potential labor force0.80.40.30.20.3Potential labor force productivity1.61.41.31.31.3Real GDP2.41.91.61.51.7Real GDP per person1.61.41.21.21.3Nominal GDP(Fiscal year)4.64.23.63.53.8Labor Force Participation Rate65.061.861.060.561.1Labor Force Growth0.80.50.30.20.3InflationGrowth of the PCE price

316、index2.02.31.91.92.0Growth of the CPI-U2.52.52.32.32.3Growth of the GDP price index 2.12.22.02.02.1Interest RatesOn 10-year Treasury notesNominal rate3.93.83.94.34.0Real rate1.41.31.72.01.7On all federal debt held by the public a4.03.03.43.73.4Data sources:Congressional Budget Office;Bureau of Econo

317、mic Analysis;Bureau of Labor Statistics;Federal Reserve.See www.cbo.gov/publication/59014#data.CBOs long-term budget projections,referred to as the extended baseline,typically follow the agencys 10-year baseline budget projections and then extend most of the concepts underlying those projections for

318、 an additional 20 years.This year,however,the long-term projections are based on the agencys May 2023 baseline projections but also reflect the estimated budgetary effects of the Fiscal Responsibility Act of 2023(Public Law 118-5),enacted on June 3,2023.Real values are nominal values that have been

319、adjusted to remove the effects of inflation.Potential GDP is the maximum sustainable output of the economy.The potential labor force is an estimate of how big the labor force(that is,the number of people in the civilian noninstitutionalized population who have jobs or who are available for work and

320、are either seeking work or expecting to be recalled from a temporary layoff)would be if GDP equaled potential GDP.(The civilian noninstitutionalized population excludes people who are younger than age 16,members of the armed forces on active duty,and people in penal or mental institutions or in home

321、s for the elderly or infirm.)Potential labor force productivity is the ratio of real potential GDP to the potential labor force.The sum of growth in the potential labor force and growth in potential labor force productivity is equal to growth in real potential GDP.The labor force participation rate

322、is the percentage of people in the civilian noninstitutionalized population who are in the labor force.CPI-U=consumer price index for all urban consumers;GDP=gross domestic product;PCE=personal consumption expenditures.a.The interest rate on all federal debt held by the public equals net interest pa

323、yments in the current fiscal year divided by debt held by the public at the end of the previous fiscal year.29CHAPTER3:LONG-TERM DEMOGRAPHIC AND ECONOMIC PROJECTIONS THE 2023 LONG-TERM BUDGET OUTLOOKLabor ForceCBOs projections of the labor force participation rate and the size of the labor force aff

324、ect the agencys other economic projections.5 For example,when the potential labor force grows faster,potential GDP rises faster than it otherwise would.As the labor force grows,investment rises to equip the new workers with capital,which causes private capital to accumulate more quickly than it othe

325、r-wise would,further boosting the growth of potential GDP.Labor Force Participation Rate.In CBOs projections,the labor force participation rate drops over the next 5.The labor force participation rate is the percentage of people in the civilian noninstitutionalized population who have jobs or who ar

326、e available for work and either seeking work or expecting to be recalled from a temporary layoff.The civilian noninstitutionalized population excludes people who are younger than age 16,members of the armed forces on active duty,and people in penal or mental institutions or in homes for the elderly

327、or infirm.three decades:It averages 61.8percent over the 20232033period,61.0percent over the 20342043period,and 60.5percent over the 20442053period.That decline continues the downward trend that began in the mid-2000sa trend that has been driven mostly by the aging of the population.The aging of the

328、 population continues to be the main driver of the decline in labor force participation in CBOs projections,but it is not the only factor affecting those projections.Some factors,such as increases in edu-cational attainment and life expectancy,tend to increase labor force participation and thus part

329、ially offset the effects of the aging of the population.But other factors,along with aging,push down CBOs projections of labor force participation.For instance,members(especially men)of the generations that have followed the baby-boom generation have generally participated in the labor force at lowe

330、r rates than their predecessors did at the Figure 3-3.Average Annual Growth of Real Potential GDP and Its ComponentsPercentPotential Labor ForcePotential Labor Force ProductivityReal Potential GDP0.81.60.41.40.31.30.21.32.41.81.61.5 Projected19932022202320332034204320442053Data source:Congressional

331、Budget Office.See www.cbo.gov/publication/59014#data.Real values are nominal values that have been adjusted to remove the effects of inflation.Potential GDP is the maximum sustainable output of the economy.The potential labor force is an estimate of how big the labor force(that is,the number of peop

332、le in the civilian noninstitutionalized population who have jobs or who are available for work and are either seeking work or expecting to be recalled from a temporary layoff)would be if GDP equaled potential GDP.(The civilian noninstitutionalized population excludes people who are younger than age

333、16,members of the armed forces on active duty,and people in penal or mental institutions or in homes for the elderly or infirm.)Potential labor force productivity is the ratio of real potential GDP to the potential labor force.The sum of growth in the potential labor force and growth in potential labor force productivity is equal to growth in real potential GDP.GDP=gross domestic product.In CBOs p