Federal Budget Control Runs Through Health Care

June 26th, 2011
in econ_news

Econintersect:  Rhetoric on the USA Federal Budget is reaching a fever pitch while lawmakers approach various deadlines in raising the debt ceiling.  Depending on the news source and method of calculation, the deadline for raising the debt ceiling could be as early as the 4th of July.

The Congressional Budget Office has produced a timely report on their budget outlook.   Here are the simple definitions:

  • The Extended-Baseline Scenario adheres closely to current law - when a law (such as the Bush tax cuts) expires, it is not renewed.
  • The Alternative Fiscal Scenario extends our current tax and revenue provisions when they expire.


Follow up:

Since 2000 to date, there has been a significant reduction in revenue to the government expressed as a percent of GDP.

The USA economy has had 2 recessions in this period between 2000 and 2010.  Yet Federal spending has been trending up since 2000 - but still below the peaks of the Reagan era.

The 600# gorilla in the budget going forward is health care as the non-health care portion of the budget contracts as a percentage of GDP.

Econintersect has published many articles on health care costs including a series from Elliott Morss which are worth a read when listening to the current debates.

source: CBO

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