The Hill News

It will be the end of the world as we know it if the federal government does not reform its fiscal ways, according to the Congressional Budget Office’s recent Long-Term Budget Outlook. The results from this year’s report, particularly the extended alternative fiscal scenario, are even worse than last year’s.  The alternative fiscal scenario projects non-interest expenditures to reach 26.1% of GDP in 2037. This surpasses last year’s gloomy outlook in which CBO projected expenditures to reach 25.0% of GDP in 2035. Historically, non-interest expenditures have averaged about 19%. Alarmingly, CBO projects debt held by the public, which excludes trust fund debt like Social Security, will be 199% of GDP in 2037, up from 69% in 2011.

The explosive increase in spending is driven primarily by growth in the Big Three entitlements: Social Security, Medicare, and Medicaid. In 2012, these three entitlement programs cost 10.4% of GDP. CBO projects these costs to incr! ease to 12.9% of GDP in 2022 and 16.6% of GDP in 2037. CBO is actually projecting “other” spending â€" which is everything but these three programs --to decrease from 11.6% of GDP in 2012 to 9.6% of GDP in 2037. In the alternative fiscal scenario, CBO assumes that budget caps from last year’s Budget Control Act, which largely exempted entitlements, will be enforced but sequestration will not.

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