The CBO Will Need A Bigger Chart To Forecast Exponentially-Rising US Debt

Tyler Durden's picture

Courtesy of previous Zero Hedge disclosures, namely that the CBO has been in the past both perpetually and grossly overoptimstic (their 2001 forecast of 2011 public debt was negative $2.4 trillion; instead the real number was positive $10.4 trillion, a delta of only $12.8 trillion) as well as explicitly biased by political and financial interests as exposed by whistleblowers, are two things most of our readers are well aware of. What they however may not know, is that when it comes to the most recent forecast of US public debt as released hours ago, the CBO has officially run out of charting space. As can be seen on the graphc below, sometime in 2042 the CBO will need a bigger chart to represent US public debt as per the Extended Alternative Fiscal Scenario, which the CBO itself admits "
is more representative of the fiscal policies that are now (or have recently been) in effect than is the extended baseline scenario.
" And it is to this off-the-chart line that Keynesian lunatics want to add MORE debt? Actually why not, it is not as if the US will ever repay any of these exponentially-rising obligations.

Here is how the CBO presents the only somewhat realistic outlook:

The Extended Alternative Fiscal Scenario


The budget outlook is much bleaker under the extended alternative fiscal scenario because of the changes in law that are assumed to take place. The changes under this scenario would result in much lower revenues and higher outlays than would occur under the extended baseline scenario.


In particular:

  • Almost all expiring tax provisions are assumed to be extended through 2022. Specifically, for this scenario, CBO assumed that the cuts in individual income taxes enacted since 2001 and most recently extended in 2010, which are now scheduled to expire at the end of calendar year 2012, would be extended; relief from the AMT for many taxpayers, which expired at the end of 2011, would be extended; the 2012 parameters of the estate tax (adjusted for inflation) would continue to apply, preventing increases in rates and in the share of assets that is taxable; and all other expiring tax provisions (with the exception of the current reduction in the payroll tax rate for Social Security) would be extended.
  • After 2022, revenues under this scenario are assumed to remain at their 2022 level of 18.5 percent of GDP, just above the average of the past 40 years.
  • This scenario also incorporates assumptions that through 2022, lawmakers will act to prevent Medicare’s payment rates for physicians from declining; that after 2022, lawmakers will not allow various restraints on the growth of Medicare costs and health insurance subsidies to exert their full effect; that the automatic reductions in spending required by the Budget Control Act will not occur (although the original caps on discretionary appropriations in that law are assumed to remain in place); and that, as a percentage of GDP, federal spending for activities other than Social Security, the major health care programs, and interest payments will return to its average level during the past two decades (rather  than fall significantly below that level, as it does under the extended baseline scenario).

Under those policies, federal debt would grow rapidly from its already high level, exceeding 90 percent of GDP in 2022. After that, the growing imbalance between revenues and spending, combined with spiraling interest payments, would swiftly push debt to higher and higher levels. Debt as a share of GDP would exceed its historical peak of 109 percent by 2026, and it would approach 200 percent in 2037.


Many budget analysts believe that the extended alternative fiscal scenario is more representative of the fiscal policies that are now (or have recently been) in effect than is the extended baseline scenario. The explosive path of federal debt under the alternative scenario underscores the need for large and timely policy changes to put the federal government on a sustainable fiscal course.

Luckily, even the CBO is now hedging its bets:

Catastrophic Events or Major Wars


Natural and manmade disasters occur fairly often, and even though they may have significant short-term effects on the national economy or long-term effects on certain regions or economic sectors, they rarely have a lasting impact on the national economy. However, an increased frequency of disasters or the occurrence of a catastrophic event could affect budgetary outcomes by reducing economic growth over a number of years or requiring massive additional federal spending, or both. For example, the country could experience more-frequent severe floods, hurricanes, tornadoes, and fires—as some models of climate change predict—or a single massive earthquake, a nuclear meltdown that rendered a large area of the country uninhabitable, or an asteroid strike. Other possibilities include an epidemic (whether on the scale of the 1918 pandemic flu, which killed roughly one out of every 150 people in the United States, or on the scale of the current AIDS epidemic in parts of Africa), a series of major terrorist attacks, a large war, or a number of smaller but sustained wars. Because estimates of future risk are generally based on experience and catastrophic events are extremely rare, estimating the probability of their future occurrence is very difficult.

Let's see here: "It was all World War III's fault".... wink wink.

Source: CBO

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RationalPrepper's picture

Accurate to within +/- 250%?  Not bad...not bad at all, CBO.

AssFire's picture
The CBO Will Need A Nigger Chart To Forecast Exponentially-Rising US Debt

Oh, my bad...damn subliminal shit.

Muppet Pimp's picture

The degree of change that BO has brought to us is becoming awfully difficult to believe in. 

Harbanger's picture

Life sucks, but there's hope.  Walker wins AGAIN! No thanks to the babbling bitchez that stand on the sidelines complaining..

Harbanger's picture

Any babbling bitch that needs a reaming is welcome to respond.

tarsubil's picture

Sorry, I don't swing that way. Perhaps you're at the wrong site?

Harbanger's picture

That's silly, please don't waste my time, it's limited.  Ask or challenge me and I'll give you a thruthful answer.

max2205's picture

Problem is one can't believe their baseline OR historical data.


reTARD's picture

Somehow the words Congress and Budget do not mesh.

CrashisOptimistic's picture

I would like to direct ZHer attention to the phrasing used.  

Debt is always worded as a % of GDP.  This is to attempt to define government size to be appropriate to GDP rather than population.  Population is NOT baselined to grow at 3-4%, and GDP is.  This subtle little manifestation of verbal bullshit then can be tossed into arguments as JUSTIFYING bigger government until you have two civil servants per non government employee citizen.

And that's to say nothing of the possibility that oil scarcity will define negative growth on GDP for most of the outyears in question.  Toss that in and watch those %s flap their wings upward.

The Grip's picture

Correct again CIO, the nanny state exited the barn some time ago. Are you familiar with the term "benefits navigator?" It's like a personal assistant, or a life coach, but helps those with a substantial portfolio of "workers" keep track who is in charge of which benefit. These positions exist today.

Muppet Pimp's picture

That is precisely how the US dems and EU socialists are trying to frame the debate.  They are creating the false dichtomy that you can either have growth (funded by more .gov debt) or you can have lower taxes and no growth.  They completely leave out that with this "Growth" comes EU taxation rates stateside which kill private sector growth which they plan to make up with even more .gov debt, until such time that .gov snuffs out private industry.  No doubt as .gov taxes and regulates industry right out of business, the inevtitable nationalizations will occur.  You don't have to know much about Obama to realize he would be delighted with such a plan.

FreedomGuy's picture

Good point. I would say the same thing about Social Security and Medicare. Increases in benefits are not tied to tax revenues. Social Security can get inflation or statutory increases that have no relationship whatever to the revenue stream. Wouldn't we all love private plans and pay raises that are not tied to company revenues? Government and elected officials are never restrained by reality, mathematics or fiduciary responsibility.

eclectic syncretist's picture

Another point is that debt should be properly graphed as negative numbers on all these graphs.  No one, not even ZH, thinks to question that the gov always graphs debt as if it's an asset.

stocktivity's picture

OK...I'll admit this has nothing to do with the coming depression BUT...if you want to see something totally amazing -

evolutionx's picture


We now live in a world where governments print worthless pieces of paper to buy other worthless pieces of paper that combined with worthless derivatives, finance assets whose values are totally dependent on all these worthless debt instruments. Thus most of these assets are also worth-less.


CrashisOptimistic's picture

Yeah, that's what ZH needs.  More bold font hype of gold.

FreedomGuy's picture

I agree in principle but there are two great forces at work. The inflationary monetizing and leveraging of ever more debt. This is combined with the excellent ability of governments to crash an economy making money more valuable in the short term. It is the classic inflation vs. deflation argument. I think in the long run inflation wins because it does all the things governments want, like defaulting on debt and creating hidden tax increases. In the short term, however, the economies of the world are anemic and frail. Money is in demand at these times of deleveraging in the private sector.

Debugas's picture

those worthless pieces of paper are not worthless - they are backed up by indebted citizens' labour

The trend is your friend's picture

"we're gonna need a bigger boat"


"we're gonna need a bigger chart"


CompassionateFascist's picture

By 2042 the "CBO" and all other alphabet agencies of the ZOG will be long gone. Budgets will be local only. Very, very local.

mossme89's picture

My stack just got a little shinier...

donsluck's picture

Um, if it's shiny, it's actually brass. Gold is rather dull. Better xray those bars.

q99x2's picture

Can computers handle those numbers or is this going to be another Y2K event.

NotApplicable's picture

Perhaps they can define a new unit of measure that automatically increases over time to compensate?

Irwin Fletcher's picture

Yes, most likely, but the CBO statisticians will probably need an extra few mil to rescale the y-axis on that chart.

Rynak's picture

Don't worry, 64bit will fix that...... reaches up to 18.446.744.073.709.551.616
 mucha room for zeroes. Now, if the CBO has 64bit software.... that is another question.

And if this isn't enough - a lot of financial software uses a so called "bignum" system, in which numbers in theory can be as large as the entire memory of the computer.......

....unfortunatelly, to use this to the full extend for QE66666666666666^666, we'll have to build a screen as large as the solar system. On the other hand, we also would need to extend life expectancy to a few million years for someone having enough time to read that number.

Muppet Pimp's picture


excellent back o the napkin analysis Rynak

Irwin Fletcher's picture

The use of big numbers in financial software arises less from large amounts of money and more from looking for patterns in multi-dimensional financial data.

drink or die's picture

This will stimulate the economy by forcing people to buy larger monitors to view the graphs.

John Wilmot's picture

I'll take the asteroid please..

kraschenbern's picture

Logarithmic scaling on the vertical axis will, at least in the near term, solve the chart space overrun problem.

NotApplicable's picture

While flattening the chart, to boot. A true win-win!

Also, this is bullish for the chart-making software industry.

Normalcy Bias's picture

Anyone that believes this country will exist under it's current form of Govt in 2042 is seriously mentally deficient and/or acutely psychotic.

NotApplicable's picture

"This is the dawning of the Age of Aquarius..."

John Wilmot's picture

I wonder what the population of the N. American continent will be in 2042, and how much of it will have been "rewilded" already. Let's see, they can fit quite a few Rio + douches conferences in between now and 2042, so my guess would be "far less than now" and "most of it."

junkyardjack's picture

All we know for sure is that their projection is 100% wrong

Bunga Bunga's picture

They forgot the zombie attack in the safe harbor statement.



NeedleDickTheBugFucker's picture

It's comforting to know that debt held by the public will be reduced to zero in only 57 years (2069) under the CBO's Extended Baseline Scenario.  Stay the course!

LetThemEatRand's picture

I'll take Things That Make Me Puke Blood for One Quadrillion, Alex.

Burticus's picture

TTMMPB fer one quad, an' you got...the daaaaaiiily derivative!!! 

That means you can leverage your quadrillion FeRNs 100 to 1, even if you don't have that many to bet, and if you lose more than the audience's re-re-re-hypothecated collateral, we'll baaaaaaaiiiilll your @$$ out!

michaelsam9's picture

wwiii is the bridge between running out of justifications for qe and creating enough money to easily pay off the trade deficit in gold by 2015 (as Jim Sinclair predicts)