NCPA - National Center for Policy Analysis

CBO Projections: Entitlements Will Consume Federal Budget

February 5, 2002

Although the Congressional Budget Office projects sizeable surpluses towards the end of its 10-year budget outlook, CBO Director Dan Crippen warns that in the years following spending on entitlement programs will "fairly soon strangle the rest of the federal budget," according to the White House Bulletin.

At a news conference formally releasing the CBO's budget projections, already detailed in testimony before House and Senate budget committees, Crippen said that:

  • We currently spend about 7 percent of gross domestic product (GDP) on three programs -- Social Security, Medicare and Medicaid.
  • According to midrange estimates, by 2030, when most of the Baby Boomers have retired, combined spending on these three programs (as a proportion of a much larger GDP than today) will nearly double to almost 15 percent of GDP.
  • Currently, the federal government collects about 19 percent of GDP in taxes, although the historical average in taxes since World War II has been about 18 percent of GDP.

Although the federal budget will be roughly in balance following small budget deficits this year and next, the projected costs of these programs, which mostly benefit the elderly or retirees, "obviously doesn't leave much room for anything else," said Crippen.

Source: "Crippen Says Entitlements Will Soon Starve Rest Of Federal Budget," White House Bulletin, January 31, 2002; Dan L. Crippen, "The Budget and Economic Outlook: Fiscal Years 2003-2012," Testimony, January 23, 2002.


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