Today the Congressional Budget Office released its latest forecast for the government debt, and not surprisingly it’s pretty grim. You know the drill by now.
But it doesn’t have to be.
This chart shows two lines: The Extended Baseline Scenario and the Alternative Fiscal Scenario.
In the baseline scenario, politicians literally sit on their hands. They let the Bush tax cuts expire, they keep indexing the Alternative Minimum Tax higher, and they don’t raise Medicare payments to doctors. All of that will happen automatically if politicians do nothing.
Unfortunately from a debt perspective, it’s the alternative scenario that’s more likely. The Bush tax cuts probably won’t be killed, and Medicare payments will be raised to satisfy doctors.
Still, the key is: if there were no legislative changes whatsoever, this would be our debt future.
Back in April, Ezra Klein posted a version of this chart and said it was the chart that all debt discussions should start with.
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