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Alternative Fiscal Policy Simulations
Baseline extended follows CBO’s August 2003 10-year baseline projections, which assume that discretionary spending grows with inflation and tax provisions scheduled to expire will actually do so. After 2013, discretionary spending is assumed to grow with the economy, and revenue is held constant as a share of GDP at the 2013 level of 20.5 percent.
Discretionary spending grows with GDP after 2003 and all expiring tax provisions are extended follows CBO’s August 2003 10-year baseline projections except that discretionary spending grows with the economy after 2003 and all expiring tax provisions are extended. After 2013, revenue is held constant as a share of GDP at the 2013 level of 18.0 percent.
In both simulations:
- Social Security and Medicare spending is based on the March 2003 Trustees’ intermediate projections.
- Medicaid spending is based on CBO’s August 2003 baseline for the first 10 years and on CBO’s March 2003 long-term projections thereafter.
- Social Security and Medicare benefits are paid in full after the trust funds are exhausted through borrowing from the general fund to meet any payroll tax shortfall.