Deficit Calculator Demonstrates Effect of Several Policy Options on Future U.S. Debt-to-GDP Ratio

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Deficit Calculator Demonstrates Effect of Several Policy Options on Future U.S. Debt-to-GDP Ratio

WASHINGTON - A new interactive
calculator
from the Center for Economic and Policy Research
illustrates the effects of several different policy options on the debt
burden that the United States will face in 2020. The calculator shows
that even in the baseline case (President Obama’s proposed budget), the
U.S. debt-to-GDP ratio in 2020 will be less than the current debt-to-GDP
ratio for many countries.

The CEPR
Deficit Calculator
provides users with an easy way to see the
effects of various policies on the future U.S. debt burden. The 29
policy options available on the calculator do not represent all possible
options but are among the policies that would have the greatest and
most meaningful effect on the debt-to-GDP ratio in 2020.

The budget options in the calculator include ending the wars in Iraq
and Afghanistan, adopting a carbon tax, reduction in the size of the
health care subsidies created by the health care reform bill,
progressive price indexing of Social Security, adopting a financial
speculation tax and others. By choosing different options or
combinations of options, a user can raise or lower the projected
debt-to-GDP ratio to gain a better understanding of the effects of these
policies and to see how the U.S. deficit will compare to that of other
nations.

Changes in the debt burden are presented in both dollar amounts and
debt-to-GDP percentages. The measure of debt in this analysis is
publicly held debt minus debt held by the Federal Reserve Board. This is
a figure that better represents the interest burden the debt imposes on
taxpayers. The interest on debt held by the Fed is refunded to the
Treasury and therefore is not a net expense to the government.

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The Center for Economic and Policy Research (CEPR) was established in 1999 to promote democratic debate on the most important economic and social issues that affect people's lives. In order for citizens to effectively exercise their voices in a democracy, they should be informed about the problems and choices that they face. CEPR is committed to presenting issues in an accurate and understandable manner, so that the public is better prepared to choose among the various policy options.

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