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Tax Policy Center: Tempting Fate: The Federal Budget Outlook

Authors: William Gale, and Alan J. Auerbach
February 8, 2011

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Alan J. Auerbach and William G. Gale provide new estimates of the Federal budget outlook.

We present new estimates of the budget outlook, based on the latest projections from the Congressional Budget Office and the Medicare and Social Security Trustee reports. The medium-term and long-term budget outlook have not changed appreciably since last year. Under reasonable assumptions, the federal government is likely to face deficits in excess of 6 percent of GDP by late in the decade, even with a strong economy, with the debt-GDP ratio reaching 98 percent by 2021. The long-term budget outlook is sensitive to assumptions about how health care spending will respond to recent legislation.

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