The 2020 Long-Term Budget Outlook

CBO projects that if current laws governing the program’s taxes and benefits did not change, the DI trust fund would be exhausted in fiscal year 2026, and the OASI trust fund would be exhausted in calendar year 2031. If the DI and OASI trust funds were combined, the projected exhaustion date would be in calendar year 2031.18 Last year, the projected exhaustion date for the DI trust fund was two years later, and the projected exhaustion dates for the OASI trust fund and for the combined trust funds were one year later.19 The earlier exhaustion dates result mainly from the downward revisions to the funds’ projected income, which more than offset the reductions in projected expenditures from the funds.

Changes in Long-Term Budget Projections Since January 2020

CBO published updated long-term budget projections in January 2020 that were based on the economic and budget baseline projections for 2020 to 2030 released at that time. For years after 2030, those long-term projections incorporated updated long-term population, economic, and revenue projections developed in January. For its spending projections, CBO used a simplified approach that it regularly uses between full updates—it applied the growth rates from the most recent full update of the agency’s extended baseline projections (at the time, those from June 2019).20 The projections in the current report, by contrast, constitute a full update. To prepare them, CBO incorporated its most recent budget, economic, and population projections—which account for the effects of the pandemic, economic downturn, and related legislation—in its long-term model.

Whereas in January, CBO projected that federal debt held by the public would reach 180 percent of GDP in 2050, the agency now projects federal debt to reach 195 percent of GDP that year. An increase in the agency’s projections of total outlays and a decrease in its projections of total revenues at the beginning of the 30-year period—both of which result primarily from the economic downturn caused by the pandemic and the legislation enacted in response to it—contribute to that upward revision in the agency’s projections of federal debt. Those changes are partially offset by the reduction in the agency’s projections of net spending for interest on debt through 2031, but they are compounded by the increase in projected net spending for interest in later years as increased federal borrowing pushes interest costs up. In addition, the increase in the agency’s projections of debt as a share of GDP reflect the downward revisions that CBO has made to its projections of GDP since January.

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