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Federal Spending – Fast Facts

All fast facts for Health Care are from the non-partisan Congressional Budget Office (CBO) and the Chief Actuary of the Center for Medicare and Medicaid Services (CMS). Although they represent many of their most recent reports on this subject, they do not represent all of their reports on this subject. Occasionally minor word adjustments may have been made for clarity or to reflect the updated nature of the statement. As always, verify and view statements in their full context as often as possible.

Just as there are two main categories of debt, there are two categories of interest in the budget:

  • Gross interest essentially represents interest on all outstanding federal debt – both debt held by the public and debt held by government accounts.
  • Net interest is primarily interest paid on debt held by the public. This interest is part of current outlays by the government and represents the burden of servicing the debt.   Click here to verify

As specified in law, and to provide a benchmark against which potential policy changes can be measured, CBO constructs its baseline estimates of federal revenues and spending under the assumption that current laws generally remain unchanged.  On that basis, the federal budget will show a deficit of nearly $1.1 trillion in fiscal year 2012.  Measured as a share of gross domestic product (GDP), that shortfall will be 7.0 percent, which is nearly 2 percentage points below the deficit recorded last year but still higher than any deficit between 1947 and 2008.   Click here to verify at Page xi

If laws remain unchanged, over the next few years, projected deficits in CBO’s baseline drop markedly, averaging 1.5 percent of GDP over the 2013–2022 period.  With deficits small relative to the size of the economy, debt held by the public drops—from about 75 percent of GDP in 2013 to 62 percent in 2022, which is still higher than in any year between 1952 and 2009.   Click here to verify at Page xi
Although the projected deficits under current law are much smaller than those of the past few years, in CBO’s baseline the federal budget remains out of balance throughout the decade.  The resulting accumulation of debt, along with rising interest rates, drives up the cost of financing that debt; in CBO’s projections, net interest costs grow significantly from 1.4 percent of GDP this year to 2.5 percent in 2022.  CBO’s baseline projections are heavily influenced by changes in tax and spending policies that are embodied in current law—changes that in some cases represent a significant departure from recent policies.  As a result, those projections show much higher revenues and lower outlays than would occur if the lower tax rates now in effect were extended and if provisions constraining future spending were not implemented.   Click here to verify at xiii
Of the $10.1 trillion in federal debt held by the public at the end of 2011, 55 percent ($5.5 trillion) was held by domestic investors and 45 percent ($4.6 trillion) was held by foreign investors.Debt held by the public increased by $1.1 trillion in 2011, reaching 68 percent of GDP, the highest level since 1950.  Click here to verify at Pages 11-13
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