In the debt-ceiling negotiations, politicians are debating how to reduce the federal deficit by $2 trillion to $4 trillion over the next 10 years.
One number that hasn't been mentioned much: $13 trillion. That's size of the federal deficit over the next 10 years, according to a recent projection from the nonpartisan Congressional Budget Office.
Of course, this is just a projection. And there's always a lot of uncertainty in any economic prediction, particularly one that tries to look a decade into the future.
Still, given that the deficit-reduction plans being hashed out in Washington are supposed to play out over the next decade, $13 trillion seems like a useful bit of context. It suggests the current fight over the deficit is just the beginning.
A few notes on the numbers:
That $13 trillion figure is based on CBO's "alternative fiscal scenario," which CBO says "incorporates several changes to current law that are widely expected to occur... ."
For example, under current law, marginal tax rates on middle-class families will rise in in the next few years, and Medicare payments to doctors will fall sharply. The alternative fiscal scenario assumes that Congress will intervene — as it has in the past — to prevent those things from happening.
As the CBO says, "Many budget analysts believe that the alternative fiscal scenario presents a more realistic picture of the nation's underlying fiscal policies" than estimates based solely on current law.
The CBO reports its budget estimates as a percentage of GDP. But the deficit-reduction plans being debated in Washington are discussed in nominal dollars. So we used CBO's projections for nominal GDP to calculate the projected 10-year deficit in nominal dollars.
The deficit projections are listed in this spreadsheet, and described in detail in the CBO's most recent long-term budget outlook (PDF), which was published last month.
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