Today, CBO released its latest budget projections for the next ten years, again showing the appearance of a declining debt trajectory. These projections based on current law, however, do not incorporate the costs of current policies that lawmakers have extended many times in the past and are likely to do so again, such as the annual “patch” of the Alternative Minimum Tax.
Current law would put the debt on a downward path through automatic changes, including the $1.2 trillion sequester and the expiration of the 2001/2003/2010 tax cuts. These blunt and abrupt policies are not the optimal way to generate the needed savings. However, the worst scenario would be for lawmakers to waive the sequester or extend the expiring tax provisions without making up the savings elsewhere—a dangerous scenario that would dramatically increase the debt.
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