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Forecasts of Future Spending



Several government agencies publish regular forecasts of future government spending, including the Congressional Budget Office and the Medicare and Social Security Trustees.

CBO: Long-term Outlook for Federal Spending

Health care costs will increase from 6 percent to 13 percent of GDP

Chart 2.91: CBO Estimate - Federal Spending

The Congressional Budget Office Long-term Budget Outlook released in July 2014 projects the trends in the major federal spending programs, based on current program rules, and projects the likely spending out to 2088.

The outlook is fairly clear. Social Security will expand from a spending level of 5 percent of GDP today to about 6 percent by 2028.

But Medicare and Medicaid, the two big federal health care programs, will expand from 5 percent at present to breach 10 percent of GDP by 2053.

The CBO assumes that other programs, except interest on the national debt, will decrease due to the pressure of health care spending from the current 9.4 percent of GDP to 6.5 percent of GDP by 2050. Interest expense will increase from 1.3 percent of GDP to 5.6 percent of GDP by 2050.


Medicare Trustees Report

Medicare will cost about 6 percent of GDP by the middle of the 21st century.

Chart 2.92: Medicare Trustees Report

Every year the Center for Medicare & Medicaid Services publishes a Medicare Trustees Report. The latest report was published on July 28, 2014.

The 2014 trustees report shows that Medicare cost in 2013 about 1.56 percent of GDP for the Part A Hospital Insurance, 1.47 percent of GDP for the Part B Supplementary Medical Insurance and 0.44 percent of GDP for the Part D drug benefit.

Over the last couple of years Medicare costs have declined as a percent of GDP and are expected to bottom out at 3.36 percent of GDP in FY 2015. But then costs are expected to increase, breaching 4 percent of GDP by 2023 and 5 percent of GDP by 2031. Medicare is expected to cost over 6 percent of GDP by 2053. By 2088 Medicare is expected to cost nearly 7 percent of GDP each year.

Social Security OASDI Trustees Report

Social Security will cost over 6 percent of GDP by 2030.

Chart 2.93: OASDI Trustees Report

Every year the Social Security Administration publishes an OASDI Trustees Report. The latest report was published on July 28, 2014.

The 2014 trustees report shows that Social Security’s two main programs, the Old Age and Survivor Insurance (OASI) program and the Disability Insurance (DI) program cost 4.9 percent of GDP between them in 2013. The OASI program cost 4.04 percent of GDP and the DI program cost 0.85 percent of GDP.

Over the years since the Crash of 2008 Social Security costs have increased sharply as a percent of GDP. OASI has gone from 3.38 percent of GDP in 2005 to 4.08 percent of GDP in 2014; DI has gone from 0.67 percent of GDP in 2005 to a peak of 0.86 percent of GDP in 2012.

In the medium term Social Security costs are forecast to increase to 6 percent of GDP by 2030 and peak at nearly 6.2 percent of GDP by 2035. But then it will start to decline down to just below 6 percent of GDP by 2050. OASI will be the main driver, hitting 5 percent of GDP in 2027 and peaking at 5.41 percent of GDP in 2035. DI costs are expected to decline slowly from 0.84 percent of GDP in 2014 to 0.75 percent of GDP in the mid 2030s.

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Spending Data Sources

Spending data is from official government sources.
  Federal data since 1962 comes from the president’s budget.
  All other spending data comes from the US Census Bureau.

Gross Domestic Product data comes from US Bureau of Economic Analysis and measuringworth.com.

Detailed table of spending data sources here.

Federal spending data begins in 1792.

State and local spending data begins in 1890.

State and local spending data for individual states begins in 1957.

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Data Source

Source: CBO Long-Term Budget Outlook .

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State Finances for FY 2013

On February 3, 2015 the US Census Bureau released data on state finances for FY 2013 here, including spending and revenue for each individual state and for all states combined.

On February 3, 2015 we updated state and local spending and revenue data for FY2013 through FY2020 as follows:
  1. We replaced "guesstimatedstate spending and revenue data for FY2013 using the new FY2013 data from the Census Bureau.
  2. We replaced "guesstimatedlocal spending and revenue data for FY 2013 with estimates for each spending and revenue category using the trends in state finances between FY 2012 and FY 2013.
  3. We replaced "guesstimatedstate revenue data for FY 2014 with data from the Census Bureau's quarterly state tax summary here.
  4. We replaced "guesstimatedlocal revenue data for FY 2014 with estimates for each category using trends for each category of state revenue between FY 2013 and FY 2014.
  5. We replaced "guesstimated" state and local spending and revenue for FY 2014 thru FY2020 with new guesstimates based on the latest Census Bureau data for FY 2013 state finances and FY 2014 quarterly tax data.
We expect the Census Bureau to release local spending and revenue data for FY 2013 not earlier than Summer 2015.

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