Study: U.S. budget deficit could average $1.4 trillion a year for a decade
Change a few assumptions and those government budget forecasts start to look scary. The Concord Coalition makes a few tweaks to the Congressional Budget Office model:
1) The Concord Coalition takes the CBO baseline and adjusts it to assume appropriations increase at the same rate as the economy (GDP growth). This increase is closer to the historical average rate of increase.
2) We also assume that supplemental appropriations do not continue indefinitely. For recent appropriations for the wars in Iraq and Afghanistan, we include realistic estimates from CBO about how much will be spent under a scenario where troop levels slowly decrease to about one-third of their level at the time of the estimate.
3) For taxes, we assume that all of the major tax cuts will be extended beyond 2010.
4) We also assume the one-year patches to the Alternative Minimum Tax will continue to be enacted, holding the level of taxpayers hit by the tax roughly constant throughout the baseline period.
5) Finally, we include a calculation for the increased debt service (interest payments) that these policies would cause by their increasing the deficit. We do not make any changes to CBO’s economic assumptions.
And here is what all that looks like as a pretty picture: