the country. >> and book tv is live at the annual "l.a. times" on the campus of ucla and west los once upon a time, the child will stop, pause, and listen. now you better cash the check. that phrase is still magical. >> every week afterwards. was press his job bulgaria. the nazis marched in around

night team 39. >> since 19 58, book tv has shown over 40,000 hours of programming. throughout the fall we are marking 15 years of book tv on c-span two. camc-span's video competition is underway. this year we are doubling the number of winners and prize money. create a 5-7 minute documentary on the most important issues you think congress should continue. entries should include c-span video, varying points of view and due by january 20. >> congressional budget office director says the federal budget is on a course that cannot be sustained indefinitely. his remarks came at a news conference as part of the budget outlook for the next 25 years.

this is just under an hour. >> good morning. thank you all for coming. i am the director of the congressional budget office. this morning, the cbo released its latest long-term budget outlook, showing what would have been to the budget over the next 25 years under a number of different policies. today's report differs from the book we published last year. it incorporates the effects of the tax legislation in january. it includes a wide range of recent data. it has some methodological improvements. the bottom line remains the same. the federal budget is on a course that cannot be sustained indefinitely. in our extended baseline, we

have projected federal debt would rise from 73% to 100% of gdp 25 years from now. even before incorporating the harmful economic effects of the rising debt. to be sure, the deficit has shrunk dramatically during the past few years from now he 10% of gdp to about 4% this year. we expect the deficit to decline further to about 2% of gdp. after that respite, however, we project that deficits would start growing again. federal spending would be pushed up by rising interest payments on the federal debt, and growing costs for social security and major health care programs -- medicare, medicaid, and subsidies to be provided to insurance companies. interest payments would rise. in particular, with debt so large, it would be a large effect on interest payments. projected spending for social security increases because of

the retirement of the baby boom generation. it would increased number of people by more than one third in just 10 years. spending for the major health care programs would increase for the retirement of the, baby boomers rising cost of health care per person, and the expansion for low income people. projected federal spending for all other programs taken together declined sharply relative to gdp. such spending has averaged 11% of gdp during the past 40 years.

thinking to do is to lookit is currently below its average i would fall to about 7.5% in 2023. and seven percent in 2038. by 2020, total federal spending apart from social security and interest on the debt, would be a smaller percentage of gdp at any time since the 1930's. the upward pressure on federal spending comes not from a general growth but from growth on a handful of the largest programs along with the rising cost of servicing the debt. federal revenues would increase over time but more gradually than federal spending. revenues have averaged 17.5% of gdp. they are now a little bit lower. they rise to 18.5% by 2023. nearly 20% by 2038. the gap would widen steadily after 2015. by 2038, the deficit would be 6.5% of gdp. that would be more than any year except 1945 and 1846.

federal debt would be growing, a path that could not be followed indefinitely. in our report, we separately project how the economic consequences of the policies

would affect the long-term budget outlook. the growth in debt would reduce the nation's output and raise interest rates relative to what would happen if the debt were more stable. that would lead to wider budget deficits. with those effects included, it debt under the extended baseline would rise to 108% of gdp in 2038. debt that is so large relative to our annual output would reduce output and income compared to what they would be if the debt were close to what they would be. it would require higher interest payments and increase the risk of a fiscal crisis. we also show the effects of some alternatives, some that would produce a larger deficits and someone that would produce smaller deficits. if certain policies might be difficult to maintain or modified, federal debt would be much greater than 108% of gdp.

we discussed a number of sources of uncertainty and present projections based on different outcomes. those are for productivity, interest rates, and federal spending for health care. any projection is very uncertain. nevertheless, our analysis shows that under a wide range of possible assumptions about some key factors, the budget is on an unsustainable path. as lawmakers consider changes that would put the budget on a more sustainable path, they will face choices about the magnitude of deficit reduction, the policies to be used, and the timing of deficit reduction. economic theory does not say what the optimal amount of debt is. nor what the right amounts of

federal spending and revenues are. but a significant reduction in debt would require substantial changes in spending policies or tax policies or both. as an illustration, if lawmakers wanted to bring debt down to 31%, they would need to enact a combination of cuts in spending's that would total about $4 trillion. lawmakers face difficult trade- offs. waiting to cut federal spending or taxes would lead to a greater accumulation of debt, and would increase the size of the policy adjustments needed to achieve any chosen debt target. however, implementing spending cuts quickly would weaken economic expansion and give people a little time to adjust to the policy changes.

the short-term effects on output and employment would be large now because output is so far below its maximum sustainable level that the federal reserve could not lower interest rates to offset spending and tax policies. thank you. we would be happy to try to answer your questions. yes, sir. >> your alternative fiscal scenario with the economic feedback puts the debt at 190% of gdp in 2038. the alternative fiscal scenario often seems plausible, but what are the key factors that go into that projection? >> the extended scenario differs from the extended baseline on the spending and revenue side.

on the spending side, the alternative fiscal scenario takes away the sequestration and the spending caps and goes back to the original spending caps. it also takes a broad other category of federal spending that i noted is so low relative to historical relationship to gdp, and pushes that back up toward a more standard relationship to gdp. on the revenue side, the alternative scenario keeps federal revenues around 18% of gdp and closer to the historical average. it does not allow them to ride to nearly 20% of gdp, as we think they would do under current law. the scenario can be viewed as taking a set of policies that might be difficult to sustain. a set of policies in current law that might be difficult to sustain. and seeing what would happen if

one reverted to a more standard experience. i would not say it is a more plausible scenario. a debt of 190% of gdp would be quite extraordinary, by the standards of this or almost any other country. i do not think you should do that as a realistic projection. it is meant to show what would happen under a different set of fiscal policies. i think i should be asking people to say who they are and where they are from. >> you look at the other fiscal scenario over the next 10 years to arrive at 31% of gdp. do you factor in what increased taxes would mean to economic growth? >> we look at three alternatives in the report. one is a particular alternative scenario which has differences

in tax and spending policy. we also look at reductions in deficits. once that we looked at earlier in the year, in terms of their effect within the 10 year budget window. there are $2 trillion worth of reductions, but not specified if they're on the tax or spending side. for the extended baseline, we look at the long-term effects of the economy and we take into account the amount of debt and the marginal tax rate. that is the tax rate on additional dollars are in, which affect the incentive to work and to save. for those policies where we have tax policies written down that we are following -- for these scenarios, we have not specified particular changes. we are not trying to lead the congress in particular direction. we do not have tax rates to use in that sort of analysis.

the economic effects of those scenarios are based on the different amounts of federal debt. >> so not accounting for the fiscal drag because you do not know how that fiscal drag would be made up. >> we do account, in the short term -- the deficits would be smaller under those policies. it would produce some drag on the economy. in contrast, we have had different sorts of responses to specific policies. we have picked an average response. we look at how rising debt crowds out investment and reduces output. >> could you assess the role of military spending on the long- term projections?

do we know what happens? >> a lot of questions in that. we show in the back of the report that federal health care spending 25 years from now would be a little more than half a percent of gdp lower in our current projections then it was a year ago. that downward revision comes largely from the revision we made to our spending for medicare and medicaid within the first 10 years of the projection. in the ten year outlook we released in the spring, we talked about having marked down our projections a fair bit from a month ago. and over the past three years, we have a reduced federal

spending in 2020 by about 15%, as a response to the incoming data we have seen. for the longer-term report, it matters a lot in terms of the cost of the programs. additionally to the downward version of the first 10 years, we have taken on more data. there has been a slowdown in health costs. our estimate of the underlying rate of growth of spending is now lower than it was. we have a lower level of health care spending to jump off from. and a slightly lower rate of growth beyond that. the combination is to reduce the health spending by about 6/10 of a percent of gdp, which is a significant difference. the affordable care act did a

number of things. we think of it in three large buckets. it expanded insurance coverage. it reduced spending for medicare and it raised revenues. taking all those pieces together, we estimated that the affordable care act would reduce budget deficits by a small amount. repealing the affordable care act would increase deficits by small amount. in these projections, we do not try to separate all the effect of the act. the effects on medicare in particular are now provisions of law that relate to other provisions of law. that set up provisions leads to projections we have here. there is no natural way to separate out the provisions. we do separate out the effect of the expansion of insurance coverage. we have a table that shows a decomposition of the growth in federal spending for the major health care programs over the next 25 years. that is in a box of page 25 of the report.

we decompose the growth for major health care programs. of the total growth in health- care spending, the aging of the population accounts for 35%. the fast growth per person accounts for 40%. the remaining 26% is accounted by the expansion of medicaid and the creation of subsidies. the insurance coverage provision explaining about one quarter of the increase in health spending relative to gdp over the next 25 years. i should mention that when we look at where federal health care spending is going, about 3/5 will be going to people age 65 or older.

about a fifth will be going to people blind or disabled under 65. another fifth will be going to able bodied people under the age of 65. even with the expansion of federal support for health care for lower income people, a great majority of federal health care spending is not related to the affordable care act. you are? >> jackie collins from "the new york times." do your latest numbers account for the states that have rejected the medicaid? >> in our projections from last winter that we released in the spring, we estimated that about 45% of people who would have

been eligible for medicaid expansion would in fact be eligible for the medicaid expansion. the total number of people who could have gone on to medicare, we expect 45% would live in states where they could -- where the expansion would occur. so far, about 20 to 25 states and the district of columbia are expanding their medicaid programs. the remaining states are still thinking about it or have decided against expanding. those 20 to 25 states account for about 42% of the people that would've been made eligible for medicaid if all states expanded medicare. so that figure looks to be running a little below what we had anticipated. our projection had a gradual expansion of medicaid eligibility enrollment and a gradual expansion of enrollment in the insurance exchanges. we expected from the beginning that it would take some time and

to sign up for these programs. we had a gradual expansion -- a gradual increase in the number of people enrolled and receiving subsidies through insurance exchanges. over the next few years, in our projection -- of course, with the new projections -- the spring projections, and there has been no change in that. we will do new projections early next year. we will take on board any information we can get our hands on at that point. johnson? >> two questions. totally unrelated, unfortunately. in the long-term, you mentioned that service at 4%.

the alternative baseline -- is that not paying for tax extensions? >> on your first question, we projected the budget deficit would be $642 billion. our latest sense is that tax revenues will be a little less than we expected. federal outlays will probably be close to what we expected. the deficit will be a little larger. probably under $700 billion. still about 4% of gdp. we are not sure yet. there are tax receipts coming in this week. that is our sense as of the moment. your second question is the extended alternative fiscal scenario. i mentioned some of the key

provisions that matter the most for those numbers. the scenario includes replacement of the sustainable growth rate mechanism. that is how medicare pays doctors and incorporates the extension of some provisions that are scheduled to expire. such as the higher depreciation allowances. those are scheduled to expire at the end of this year. i think the biggest difference comes from turning off these enforcement mechanisms and from pushing back up the other categories of federal spending and from holding tax revenue around 18% of gdp, rather than let tax revenue rise. primarily, under current law, it occurs under inflation-adjusted tactic bring -- bracket creep.

the we think there will be real income growth that will move people into higher tax brackets. we talked into reports about the effects of this real bracket creep on the marginal tax rates and the average tax rates. so taxes they pay as a share of their income. the tax system would be quite different with its impact on people. under current law. because of the way the law will interact over time. >> you are assuming the sgr growth? >> in the alternative fiscal scenario. the extended baseline follows the concept of our ten-year baseline, which follows current law. under current law, medicare payments to doctors will be cut by about 25% at the beginning of

next year. it was incorporated in the extended baseline projections. the alternative scenario is harder to sustain. it would capture what would happen to some policies that were turned off. we are showing the consequences of that. >> i am from npr. this is probably asking you to do apples and oranges math. there is a reduction in health care costs. that is subtracted from our long-term deficit and debt problem. but then there was a tax law change. that was locked into place. how did those compare to each other in terms of the effect on the long-term outcome? >> the change in the tax law has a larger effect down the road than our vision to health-care spending relative to last year's extended baseline.

the debt is a great deal larger. last year we thoughtf debt would come down from its current 70% of gdp to close to 50% of gdp. this year, we think it will go up to 100% of gdp over the next 25 years. most of that increase comes from the change -- i think the primary factor is the change in the tax receipts because of the change in law. in the other direction, the piece of good news was our down revision to health-care spending. >> but it is tiny in comparison. >> it is about 0.6% of gdp. that is a big deal, but not as big a deal as the change of tax law. the change in tax law extended a lower tax rate for everyone

except the highest income tax people. in raise the thresholds for the alternative minimum tax. previously, under current law, the thing that congress had kept not letting happen -- a year ago, many more americans would have been paying some alternative minimum tax right away, and indefinitely in the future. congress basically fixed that problem by raising the threshold. as we show in the report,the number of people affected by the alternative minimum tax rises but not very much over 25 years. those changes were large in the 10-year budget window. but they had even larger effects beyond that window. the other thing i should emphasize in this climate of debt and share of gdp, when there is a gap between spending and revenue, that adds to the debt. next year the interest payment on the debt is higher.

that adds more to the debt. these things can snowball. you see this in our projection of interest payments. these are a little over 1% of gdp today. they could be five percent of gdp by 2038. and big part comes as interest rates return to a more normal level. beyond that, as debt rises, the servicing costs rise as well. >> we embarked upon deficit reduction. we are talking about $4 trillion today. this is showing that whenever we have done, we still have $2 trillion to do. >> there is more work to do to stabilize the debt. i gave a talk last week that show a projection of debt -- the cbo made that in 2007. and there was a projection made in early 2011. and the predictions were made early this year. in 2007, debt was 35% of gdp and we thought it would decline.

we hit an economic downturn and policymakers would have pushed down revenues. that would also push up federal spending, leading to much larger debt will stoppolicymakers took deliberate action to help households, stabilize the financial system and the economy. those policies had cost. by early 2011, our projection was not for debt at 35% of gdp heading down. it was for debt at 65% of gdp, heading up. our 2013 projection is a little lower. in the talk last week, i break down the pieces of that. art of that is health cost changes will stop part of that is policy changes. still, we are at a high level of debt relative to gdp.

that is given our historical experience and the historical experience of most countries. under current law, debt will rise. one of our scenarios was this $2 trillion of deficit reduction phased in over the coming decade. for 10 years, there was a $2 trillion deficit reduction. we set the reduction outside that window at the same percentage of gdp that it reaches in 2023. that is an arbitrary decision. we are trying to look at orders of magnitude. that policy leads to debt in 2038 that is below the current share of gdp. as it turned out, this $4 trillion policy -- these are numbers we picked back in the spring. we are not trying to suggest a particular target that congress should have. it is a matter of judgment.

the $4 trillion policy pushes debt by 2038 down to just below historical average, 38%, a little bit below its mark in 2007 of 35%. $2 trillion would keep debt close to its current high share of gdp. $4 trillion would push debt down. it would be, by 25 years from now, a little bit below historical gdp. those are still very large numbers. remember that congress and the president have done in the past few years, raised taxes relative to an alternative scenario, but cut them a great deal relative to what is in current law, and to cut back on discretionary spending and some of the benefit programs, but not make fundamental changes in either social security or medicare or

medicaid, or a fundamental change to collect or tax revenue. that is the basic choice. we have a set of programs. given the surge of people who will be eligible for them over the next decade and the rising cost of health care per person, that set of programs will be much more expensive in the future than it has been in the past. we as a society have a fundamental choice of whether to cut programs or to raise taxes to pay for them. we have chosen to do very little of either. as long as that is the case, the cbo projections will keep looking like this. >> i am with reuters. a question about interest rates. you mentioned the returning to normal of rates. what does it look like under the scenario you are talking about? after the fed announced the signal of tapering programs -- i

think it changed the market. has that changed your view? >> when last i checked, the interest rate on the 10-year treasury note was about 80 basis points above what we projected it would be during the third quarter. that is a substantial difference. we had been projecting that 10- year treasury note rates would rise quite a bit over the next several years. we view this as an acceleration of something we thought was going to happen within a few years anyway. if we were to do new baseline budget projections today, we would project higher interest costs in the next few years. in our 10-year projections from the spring, we had rates coming up a lot anyway. i do not think what happened the last few months we change our

projections five years from now. 10 years from now, 20 years from now. in fact, the market read on interest rates five or 10 years from now is not much different than it was earlier in the year. we have seen an increase in rates that has come sooner than expected but not something that would change the contours of our economic forecast. but it is certainly true that as rates rise from their level close to zero to something closer to their historical average, that increase in rates applied to debt has a huge effect on the government's interest payments. i think those interest payments reach about 3% of gdp by the end of the decade. 5% of gdp by 2038. does that answer your question? >> with this window --

>> again, if you picture a projection of interest rates that had a steep upward slope and then leveling off, we started up sooner than we thought. that would raise projected interest costs in the next few years. we were expecting a large increase anyway. it increased early and that does not change the path further down the road. >> but you get to a situation where the deficits are bigger -- under your alternative fiscal scenario. that does then have an effect on the rate itself. >> in chapter six of the report where we look at the economic effects of different paths for fiscal policy, we look at the economic effects relative to the extended baseline. we think interest rates would be noticeably higher.

we also note that we do not have a great confidence in calibrating that increase. when we project the effects of debt on interest rates, we are drawing from historical experience. u.s. treasury debt has risen and fallen relative to gdp, but it has not just headed off indefinitely in some direction. if debt looked like it were on a permanent upward trajectory, that might well induce some reaction by financial market participants that would be out of line with what we have seen, given historical variation in debt to gdp. we do not think we have an analytic basis for quantifying that effect. the quantification we have relies on our standard models between interest rates and debt and gdp. interest rates are higher, and that matters for debt dynamics. but i would caution that we think we have and have tried to say we have greater uncertainty

about projecting the effects of paths of fiscal policy that are outside of our historical experience. >> that path you mentioned can only be cut in one direction. it is not going to be any lower. >> in that case we are on the high side. >> i assume your studies have supplemental tables on the website. that is how most people get the answers. >> there is extensive extra data that went up on the website 10:00 this morning. hopefully, that will help you. >> how do you deal with the evolution of the downward adjustment in the increase in per capita medical health care costs? could you give me a couple of numbers on health? that would address a concern of mine.

it appears that there is still the danger that the slowdown in health care costs -- it is coinciding with the recession. we still have a high unemployment rate. there is a danger, one would imagine, so what do you say? >> in revising our spending projections the passed few years, we have drawn on our own analysis of the data we have seen and the analysis of outside experts. a number of outside experts who looked at the causes in national health care spending and have

attributed part of the slowdown to the ways in which the loss of income has affected health care and attributed part of the slowdown to structural factors. two of my colleagues examined the slowdown in medicare spending and published a working paper in august. they were unable to link the slowdown in medicare spending growth to the business cycle conditions to the loss of wealth. they tried to do this not just by looking at the time series data, which in fact do not show, historically, a correlation between medicare spending growth and overall economic conditions. much more persuasively, they looked at microeconomic data, households that have suffered larger wealth loss. or experienced other bad effects of the economic conditions. those households did not seem to

have any reaction in their medicare spending. that leaves open the question of if it is not the recession, what is it? of course, this is an uncertain business. my colleagues went through and tried to quantify a number of other effects. changes in the age and health status of medicare beneficiaries. changes in the payment rates that medicare makes. change in prescription drugs. changes in whether people are enrolled in part a and part b. the whole set of quantify factors did not explain much of the slowdown. there is another part of the paper that goes through a number of possible factors that are difficult to quantify. they try to pull together the scraps of evidence to see what stories might've been more or less important. it does not lead to a clean, sharp "here is the effect." and now we know how persistent it will be.

we are trying to make projections in the middle of the distribution of possible outcomes. we want there to be equal chances that we are too high and too low. we have seen slow growth in medicare and medicaid over the past few years. and slower growth in premiums in the private insurance market and we had expected earlier. we try to construct projections for the future that balance risks. i think there are a set of reasons why we might take the recent experience very seriously, given a lot of weight. one of those is just the breadth of the slowdown. it affects medicare and medicaid and the private health insurance markets. within medicare, it is in part a, part b, and part d. it applies across regions and across beneficiaries with high and low health costs. it is a widespread phenomenon. that suggests it is not just a few factors.

that is one reason to give a lot of weight to recent experience in making our projections. a second reason is the slowdown has been going on for some time. it is not two or three years. it is half a dozen years or longer. a third reason is that we have not been able to link the medicare slowdown to the macro economic conditions. on the other hand, i think there are three reasons, as it turns out -- we did end up with lists of three. there are three reasons to put limited weight in the last few years. the health spending growth has varied a lot in the past. previous periods have been followed by a pickup in growth. some of the stories one has heard sound like some of the

stories that are told today. we cannot rule out that possibility. a second reason to put only limited weigh over the passed several years is there continues to be developments in the health care business. i am discussing a paper on thursday that looks at the cost slowdown. they talk about a number of areas where the practice of health care continues to push in new and expensive directions. we may have seen a lull. that does not mean it will not recur. a third reason to put less weight on the last several years is that medicare remains primarily a fee for service system. the incentive for providing more care are still there. there are some good reasons to put substantial weight on what

we have seen over the past few years and reasons to be cautious. we have projections that maintain slow growth of medicare and medicaid spending for several years. but a number of years from now, growth rates come back up in our projection. the level of spending in medicare and medicaid remains below what we have said a few years ago. we do not have a widening wedge in the long-term. >> you provide some kind of a graph that shows what you were projecting. i know it shows what you were projecting in -- what has been the magnitude of downward

revision? >> we provided pieces. it is not easy to pull this all together. our projections get revised for lots of reasons. we change economic forecast. legislation is enacted. it is complicated to do these historical comparisons. we have said a number of places that for 2020, our projections of growth is about 15% below where it was in the spring of 2010. that is below where it was in the spring of 2010. our projection in 2020 of medicaid spending is about 15% below where was a few years ago. that is a bigger difference than we have seen so far. medicare and medicaid spending was about 5% in 2012. that is below what we expected. we have seen some of the slowdown and are projecting it to continue. but as i said, the gap between our early projections and our current ones do not get that much wider later on. a little bit wider. we have taken some of the news into our projection of the underlying rate of health care cost growth. that matters for these long-term

projections. there is a chart that looks at last year's and this year's projections of health spending growth. this year's is lower. most of that difference comes in the next few years. beyond that, the lines are close to parallel. the current line has a little bit lower slope than the line from two years ago. >> at some point, a timeline. a news report talked about the possibility of prices brought on by the increase. what is your assessment about options the treasury may have if it decides to refinance its debt?

>> we plan to produce a volume of budget options this fall. i will not be more specific than that. that is a daunting task for us. the last time we had about 100 different options and a lot of writing to go with it. that work is underway. i do not know what else congress needs from us. as far as rollover risk, what we mean by fiscal crisis is a point at which investors lose confidence in the government's ability to manage its finances, and thereby will not lend the government money at affordable interest rates. we have been clear that it surpasses our ability and we

think anybody's ability to predict when such a point might be reached. the language from the report today is, how long the nation can sustain such growth and federal debt is impossible to predict with any confidence. every country that has had that problem has differed in some way. the united states is different from other countries in ways that matter. we do not have enough experience from this country or other countries for much we can untangle all of the other factors to produce some estimate of how much debt the country could have before it encounters that kind of problem. presumably, it depends -- the answer would depend critically not just on some amount of debt, but what people thought would happen to fiscal policy in the future. it is not a matter of today's borrowing. there is expected future

borrowing, and i think a matter of confidence in the government ability to make policy decisions. i do not think there is a number out there that is the number. and i do not think anybody knows how to find it. absolutely. jackie. >> for purposes of comparison with the $4 trillion alternative. pick your 10-year window. can you quantify how much congress has achieved in that window? >> we have not done that. in the talk i gave last week, i highlighted a revision to different categories of the budget. one can see there are categories

where there has or has not been we did not try to work out the numbers. >> there is a statement out of $2.5 trillion. >> we have not tried to do that kind of precise calculation. >> is that in the ballpark? >> i do not speak about other people's comments. if we had an estimate, i would happily share that with you. but i do not know of any estimate we have done of that sort. >> so $4 trillion is on top of that amount? >> it is a general matter. we are not trying to keep track of where we have been so much as we are giving congress a sense about where we are going. it is a benchmark for them to consider changes under current law. whatever they have done in the past has been accompanied by a collection of good and bad news out of the world. we are at a certain place now. we have projections about where

we are expecting to go into the future. that is what those numbers are based on. >> is there a reason you have not done that calculation? is it impossible to do? or not really? >> it is difficult to do. as i said, our projections get revised for a lot of reasons. to go back is a little challenging. not impossible, i think. but, again, our focus is not so much on the things they have done, but where we think the budget will go under the laws that are currently in place. whatever the goal was viewed to be three years ago, however much has been accomplished, what matters is the situation as it stands now and what deficit and debt objectives that congress has.

>> the economic feedback analysis -- i do not think we have seen this before. >> we have done this before. it is complicated to do. in our 10-year projection, the budget projections and economic projections are consistent with each other. the economic projections -- it is not quite true in most of this document. it is a more challenging task. the basic budget projections all hold the economy fixed. income grows as it has tended to over the past. it does not incorporate the effects of the budget policy. that is in the first several chapters. debt reaches 100% of gdp in 2038. then we go on and incorporate the effects of the economic feedbacks.

debt reaches 108% of gdp. that is the reason for the difference. we have done that extra analysis in the past. >> june 2012? >> yes, there is a version of that in the june report. the complexity of doing it when fiscal policy is on and unsustainable course. that create special challenges. >> -- can you shed any light on [indiscernible] >> there is still a good deal of uncertainty about when the treasury will run out of cash.

including how large the tax receipts will be this week. the treasury said it is expected to reach its borrowing limit in mid-october and to have about $50 billion in cash at the time. that seems plausible to us. we think the treasury will probably run out of cash sometime between the end of october and mid-november, without some change in the borrowing limit. we will be releasing a short report next week that will provide our latest view at that time, including on information we can glean this week. the date on which the treasury will run out of money is likely to be uncertain even at the very end because federal cash flows bounce around from day to day. >> what happens at the end of october, mid-

november, that is when a grown- up cash? >> yes. without some increase in the debt limit, the treasury will be unable to meet their obligations sometime between mid-october and the end of november. that is a good note to end on. well, i should emphasize we do not -- we are not engaged in the day to day tax management of the government. we watch what is happening to federal spending and revenues. the precise mechanics, the tools they would have, we just do not know. the projection i offered was based on the set of "extraordinary measures" that have now become fairly common.

what else treasury may do, i do not know. the ability to delay making certain payments is not something we can speak to. [indiscernible] i have to think about that more carefully. the projection -- if they end up not selling as much debt, maybe they could sell more on another date. i do not know how to think about your question. we're trying to offer a sense at the point in which we think they

would not have as much cash as they would need to make the payments they would normally make on that date. what else might happen are the jobs of other people in this town. ok. why don't we stop there? thank you all very much for coming. if you have further questions, we are happy to answer them. thank you very much. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2013] >> you can read the cbo's report online at our website, www.c- span.org. today, the house foreign services committee, military

cheese from all branches of the life cover starts at 10:00 a.m. eastern on c-span3. federal reserve chairman ben bernanke holds a conference today. following the quarterly federal open market committee meeting. live coverage at 2:30 p.m. eastern on c-span3. >> when helen taft became first lady in 1909, one of the their first things she did what to have cherry trees planted around the title basin potomac park. the japanese heard about her interest, and they decided to get 2000 trees to the united states in her honor. everyone was shocked that the trees were sent were older and very tall and bug infested. it was decided that they would have to be burned. and fact, president taft himself

made the decision that they would have to be burned. veryapanese were accommodating and understanding and decided to send 3000 trees, which arrived in 1912. it is those that we still have a few of around the tidal basin. >> watchtower program on helen taft on our website, www.c- span.org/firstladies. live nexte our series monday as we look at helen and edith wilson. >> on c-span today, "washington journal" is up with your phone calls. at noon eastern, the house returns for legislative business regarding mineral production. in 45 minutes, a look at bipartisanship in congress. representative , a republican, and representative and kirkpatrick,

a democrat. eastern,.m. representative aaron schock, republican of illinois, and bbard,entative tulsi ga democrat of hawaii. ♪ with they are dealing necessity of raising the debt ceiling by mid-october. good morning and welcome to "washington journal." we will look at bipartisanship in congress and distinct efforts on that. we will tell you about that in just a bit but we want to