Chart of the Day

On Thursday, the Congressional Budget Office revised its projections of the budget deficit under two scenarios (the lower of the two, called the "extended baseline," is the more realistic):


source: CBO "Long-Term Budget Outlook"

As CBO director Douglas Elmendorf explains:

Under current law, the federal budget is on an unsustainable path--meaning that federal debt will continue to grow much faster than the economy over the long run. Although great uncertainty surrounds long-term fiscal projections, rising costs for health care and the aging of the U.S. population will cause federal spending to increase rapidly under any plausible scenario. . .

For decades, spending on the federal government’s major health care programs, Medicare and Medicaid, has been growing faster than the economy (as has health care spending in the private sector). CBO projects that if current laws do not change, federal spending on Medicare and Medicaid combined will grow from almost 5 percent of GDP today to almost 10 percent by calendar year 2035 and to more than 17 percent of GDP by 2080. That projection means that in 2080, if there are no changes in policy, the federal government would be spending almost as much, as a share of the economy, on just its two major health care programs as it has spent on all of its programs and services in recent years. Constraining the costs of those health care programs will be a key to developing a sustainable fiscal policy.

Indeed, even without the prescription drug benefit, Medicare's costs-per-patient have risen faster than private sector health costs.

Further reasons to "fix Medicare first."

(via Pajamas Media's Jeffrey Anderson)