In January 2015, the Congressional Budget Office (CBO) issued a report estimating that the federal budget def icit for 2015 was expected to fall slightly to $468 billion, or 2.6 percent of GDP. Working under the assumption that current laws affecting the budget will not change (i.e., no revisions in planned tax changes or f iscal stimulus spending), the CBO also estimated that the def icit as a percentage of GDP would hold steady at 2.6 percent through 2018 but rise thereafter, with a projected def icit of 4.0 percent of GDP in 2025.
Go to www.cbo.gov and look up the current and estimated def icit-to-GDP ratios. Were the CBO’s estimates accurate, and have its projections changed? Explain whether any policy changes enacted since January 2015 might have been responsible for changes in the CBO’s projections.