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

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


For Immediate Release: June 29, 2010
Contact: Alan Barber, (202) 293-5380 x115

Washington, DC - 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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