The Official Projections

The official projections are presented in a document entitled "The Budget and Economic Outlook: Fiscal Years 2010 to 2020". Instead of using Total Public Debt Outstanding, it uses only Debt Held By the Public. The CBO's numbers are as follows. (The GDP was derived by dividing the debt by the %).

Year Debt GDP %
==== ===== ===== ====
2009 7544 14234 53%
2010 8797 14589 60.3%
2011 9785 14985 65.3%
2012 10479 15734 66.6%
2013 11056 16676 66.3%
2014 11556 17616 65.6%
2015 12055 18433 65.4%
2016 12595 19229 65.5%
2017 13133 20050 65.5%
2018 13678 20819 65.7%
2019 14329 21678 66.1%
2020 15027 22529 66.7%

These numbers don't look so bad. So what's the problem?

1. Using only Debt Held By the Public ignores the amounts held by the Social Security Trust Fund and other trust funds. Social Security can't be ignored by calling it an "intragovernmental holding". The balance in it isn't owned by the federal government, it is owned by social security recipients. Is the CBO claiming that the debt doesn't exist because it hasn't been paid yet? Why not just ignore the entire debt then?

2. It assumes that GDP will grow by 4-6%/year, after being adjusted for inflation. I think that the 2% growth rate is much more realistic.

3. It assumes that annual budget deficits will be reduced to 4% of GDP, and so conveniently, debt as a percentage of GDP stays the same. I suppose it is possible that the budget deficit could be reduced to $500B/year, but I think the US will be lucky if they can ever have a year in which the deficit is under $1 trillion.

Conclusion: The government's numbers are unrealistic.