Optimism and uncertainties on the health care front color updated budget projections released by the Congressional Budget Office (CBO) Wednesday.
The CBO is forecasting a $1.3 trillion federal deficit for 2011, $116 billion lower than had been projected in a budget update issued in this past March. The cumulative deficit for 2012 to 2021 will be about $3.3 trillion lower than projected. Debt is expected to reach 67% of the gross domestic product (GDP) this year, rise to about 73% in 2013, and then fall to 61% by 2021.
According to the budget report, the CBO’s current projections assume no changes in current law, including planned reductions in Medicare payments to physicians. While such cuts have historically been avoided, the CBO notes that much larger deficits and much greater debt could result if planned cuts and other changes specified by current law do not occur.
The report also indicates that in the decade beyond its current projections, federal spending will increase significantly as a percentage of GDP in keeping with the country’s aging population and the continued rise in health care costs. This higher level of spending, coupled with revenues close to their average share of GDP, would spark deficits that would lead to a skyrocketing of federal debt, according to the report.
To read the report, click here: http://www.cbo.gov/doc.cfm?index=12316