One of the ways in which we try to meet that responsibility is to provide regular projections of the economy and the budget under current law. Yesterday, we released our summer update, the projections we released earlier this year. What we found in reviewing the evidence about the economy and the budget is that it is not much different than projections earlier in the year. The economy, we think, is on a path of recovery, but it has been of disappointingly slow recovery. We do think now it will pick up over the next few years. The labor market will strengthen where people find jobs, but even with that pick up any improvement to the budget that will bring because of underlying trends the federal budget is still on an unsustainable path because deficits have come down in the last few years, but a few years from now they will start increasing in size again, and the outstanding debt of the federal government is very high relative to the size of the economy in our history. And by the end of the coming decade and beyond, it will increase even more relative to the size of the economy. And that high rising debt has negative and serious consequences and ultimately, cannot be sustained. Can you tell us about you know, really strong Growth Numbers for the second quarter. Creating jobs in the past few months. But there does seem to be a disconnect and Americans Still feel like we are in a recession. What are the what is the disconnect . We still have 50 Million People on food stamps. What is going on right now . Flex the the economy contracted so much in 2008 and especially in the first half of 2009 that the actual output of the economy fell way below what we could produce if all the people who wanted to work for back at work, if all of the equipment was being used and so on. It has been growing for the last five euros years, but has fallen to level that is below what we had before the downturn. And that is not fast enough to put everyone back to work that wants a job. That is seen partly in the Unemployment Rate, which has come down, but still higher than in 2007 any years before that. You can also see this in the Labor Participation rate. This is just the sheer of the working age population that is actually employed or looking for a job. That Participation Rate has fallen sharply in 2010, 2012, and 2013 and leveled out since late last year. Part of that is underlying demographic trends, but part of that is people who became discouraged because they could not find a job. As the demand for firms products increases in the next few years, Unemployment Rate will come down further. But also, some people will be drawn back into the labor force. And we think ultimately, faster increases in wages. Wages can catch up in places like this . The recovery is so deep and long, it is not so clear. That is part of the channel challenge that we face. We tend to recover only when firms are trying to hire workers and cannot get workers at the existing wages, and we have not really come to that point yet. What are the particular trends youre looking for . What if they dont play out . And the wages just stay stagnant, and people are coming back to the workforce, but taking parttime jobs . Well, if wages dont pick up, then there will be fewer people who will come back into the labor force. Some people will decide that given the other costs they have of working, they wont actually find their way back to work. Also, for many people who would be working, they will have lower incomes than otherwise. For a long time in this country, the sheer of total the share of total income going to workers and the share going to owners, those have been pretty stable. And we have really deviated from that in the past few decades. The gradual downtrend turned into a sharp fall and we have not seen a recovery from that. In our projections, we think there will be a recovery. Not back to the previous average level, but a recovery from where we are now. There is every reason to think that it will happen, but it will take businesses feeling enough demand for the goods and services they are selling that they need to hire more workers to produce those goods and services, and in order to hire them, they will feel the need to pay higher wages. It is coming, but not yet. Growth in wages remains quite subdued relative to what it was before the recession. Economic road productions, almost every single year, it seems, the cbo says the year after this it will be a sharp uptick in growth. Why should investors to leave cbo when you say, next year we will see a higher rate of growth . Everyone who deals with forecasts should recognize there is a tremendous amount of uncertainty. We find that our forecast is no worse in general than the forecast of outside forecasters. But that is a pretty low bar, just because Economic Forecasting is so difficult. We have been disappointed a number of years in a row. And in retrospect, we think we misjudged how long the damage from the financial crisis and the housing bust would last. Theres plenty of evidence across Different Countries and over long time frames that the economic downturn that follows housing bubbles and real problems in the Financial System tend to lead to very slow recoveries. In the United States, think a number of people, including we, felt that because of Monetary Policy and fiscal policy responding initially very powerfully to the downturn that the United States on this occasion would not have as long and protracted a recovery as has happened in other countries. It is still true that we have done better in this country than many of the other countries in europe have done. Relative to other countries in this particular cycle, the u. S. Has done a little better. But it has still been a much slower recovery than we expected. And what we expected was lower than the average u. S. Recovery. If i could just go into a question about the deficit for a second, the way i read your report is that congressman past year or so has pivoted away from the deficit. It is not the number congress in the past year or so has pivoted away from the deficit. It is not the number one thing being talked about. You talk about debt increasing over time. Would it be fair to report it as saying that it is a mistake for congress to turn away from concerns about the deficit . We certainly think the fiscal challenges the country faces remain very large. We had expected all along that as the economy improved, deficits would fall. For while. But the real challenge always lay in the medium run and the long run. And the challenge comes, as you know, primarily from Underlying Forces like the aging of the population and the movement of the baby boom generation into retirement and providing Health Care Costs. And those challenges basically remain. We have made adjustments to our projections over the last several years, partly in response to Action Congress has taken. But nevertheless, deficits in the last decade are large enough, more than seven dollars trillion more than seven chilean dollars in the past more than seven trillion dollars in the past decade. And this year, debt is larger now relative to the u. S. Gdp than it has been since 1950. And over the next decade, we think it will be larger relative to gdp under current laws, and then increasing beyond that. Those high levels of debt have in the long run significant consequences. And unless Congress Acts to address them, those are costs that we will bear and something will have to be done. I know you dont endorse specific legislation, but what are the types of things that congress should be looking at doing . I mean, you have said generally in the past. One of the things that we provide to Congress Every few years is a thick report of many, many options for addressing the budget. Some on the spending side, some on the revenue side. As you say, we do not take positions about which are good or bad. We try to lay out the pros and cons of all of them. But when you think about the budget, over the spending side, they are sending for a few programs, a few very large programs that are growing quite rapidly. We are thinking here of Social Security and Major Health Care programs, which will be medicare and medicaid, and the subsidies through the charlotte the insurance exchanges. Social security will grow at 80 in the coming decade. Sending for Major Health Care programs will also grow in the coming decade. In sharp contrast to that, all of the other programs, defense spending, highways, Veterans Health care, a whole slew of activities, all of those activities put together, manning is growing much more slowly than it is for those few spending is growing much more slowly than it is for those few large programs. And it is partly because congress put in place in the past appropriations through 2021. Many analysts see those caps that restrict spending are focused on the other sorts of spending, primarily Social Security and the other healthcare programs. And the other side of the budget is on the revenue side. And we have analyzed a whole range of options for increasing revenues that could be done in a broadbased way or in a way that is more targeted. You were not the cbo director when a mate Social Security order medicare, so gnome was burdened with trying to search the numbers are for that. But you had to figure out the aca, and there is obviously National Tension over the job that you guys did. Do you think that in retrospect, you got that right mostly, your estimates on that . Has it surprise you with being too extensive for less expensive . And what impact has the aca had on Health Care Costs . That is a big debate right now as well. Yes. On the question of whether we were right or not, we dont know. And in some important ways, we will never know. For some provisions of the Affordable Care act, they established new streams of money that one can identify separately. The Affordable Care act has established credit, tax credits, to help people buy insurance through exchanges. And those credits did not this before aca was put in place. We can ultimately assess how much money is being spent on those credits and compare that to what our production was. But still very early for that, of course. This is the first year and we still have quite a bit available. The enrollment in the insurance it changes this year is very close to the projections we made earlier this year. And projections from a number of years ago. But this is just the first year. We dont know when enrollment will be in the exchanges and we dont know what the costs those credits will turn out to be. And in other provisions of the Affordable Care act, we made changes to preexisting programs like medicare. In some ways, we will never really know the effect those provisions had, because medicare spending would have happened otherwise. The aca change the payment rates and the payment mechanisms and so on. We will know in the end whether medicare costs more or less than we predicted it would cost after the aca was passed, but if it turns out to be different than we expected, whether that difference comes from the effect of the aca itself, or just a misunderstanding of what would have happened under the lobby for the aca is not something that you can readily under the law before the aca is not the minute you can readily understand. Would you say that the aca in its entirety would reduce the deficit over the next two decades or two if it did not exist . We have no reason to change that assessment, but neither can we do an estimate a new estimate of that again today because the aca has only been in place for four years and its provisions are intertwined with other provisions of the preexisting law in ways that we cannot readily separate out. But we have no reason to change those up nothing has happened that invalidates but we have no reason to change will stop we have no reason to invalidate the numbers that we have. What are you seeing in terms of Medicare Health care spending . Healthcare spending as a whole has flowed very sharply over the past several years. Slowed very sharply over the past several years. There has been research to understand why that has occurred. We have focused on medicare. In the work that we published last year, we found that Business Cycle problems, slowing income growth, the loss of wealth, does not seem to have been a factor in the medicare cost slowdown will stop slowdown. The medicare slowdown has come in the way that providers of medicare and beneficiaries of medicare are behaving. In the healthcare sector as a whole, there is a dispute about how important the cyclical slowdown has been. Theres little doubt that there are important changes going on in the Health Care System and that they have an important in slowing the growth of medicare costs to the point where medicare spending this year is rising more slowly than the number of beneficiaries. Not only the cost per beneficiary in medicare this year, that is actually going to be less than the cost per beneficiary last year. Is that good news . We think it is. There are a number of factors going on in medicare. There are changes in the way the providers of medicare are acting. There are also restraint on the rates that medicare is paying to providers for the services they deliver. There were some before the afford care act, and the Affordable Care act added to that. And the third feature, as baby boomers move over 65 and into medicare, they raise a number of people to benefits. But 65yearolds are much less expensive than 75 or 80yearolds. It is holding down the cost per person over the coming decade, although pushing up the total cost. All of those factors are at work. Our projections try to sort them out and we are pretty good at knowing how many 65 and 75yearolds and 80yearolds that will be on medicare or 10 years from now, but it is harder to know what the behavior of those beneficiaries and providers will be. We think the slowdown we have seen them of the Slower Growth rate per person, will persist for a while. And the last four years, we have brought down our projections of medicare spending, lets say, by 2020, by about 15 . That is a very sizable reduction. And it produces federal spending by more than 1 trillion in the coming decade. It reduces federal spending by more than 1 trillion in the coming decade. I want to emphasize that notwithstanding that slowdown, there will be more people are seating medicare benefits, more than one third more people on medicare 10 years from now than today. Even though each individual cost is not going up very fast, it still means a big increase in the overall cost of the program. In addition, there is this expansion of federal subsidies for Health Insurance under the afford the care act through the subsidies and tax credits and insurance exchanges, and also through medicaid. In the beneficiaries in a program are going up as well. The slowing cost per person is a very good thing for the federal budget. But notwithstanding that, total federal spending on health care is the fastestgrowing part of the federal budget. But i have a personal interest. As someone contemplating my my first home, what can you tell me about Interest Rates and what they will mean for the economy echo i cannot give you any personal financial advice. You dont necessarily want mine. Interest rates have been very low, obviously, in the last several years, because theres been a week private demand for credit and the Federal Reserve has been trying to simply the economy by holding shortterm Interest Rates down. We think with the economy healing and the recovery we expect in the labor market in the next few years, that the Federal Reserve will raise rates. The increase in Interest Rates will have very important effects on the federal budget. The federal government owes a lot of money and any increase in the rate that it pays means larger federal Interest Payments. Between now and 10 years from now, we think the outstanding federal debt will increase by a lot. We also think that the average or Interest Rate that the government pays will more than double. And because of that, the total Interest Payments the government makes will more than triple over the next decade from more than 200 billion today to essentially 800 billion in 2024. How will we know we are in a debt crisis that some people talk about . A way that we use the term the School Crisis goes quote fiscal crisis is the way that investors are worried about the abilities to pay bills. They start to raise Interest Rates. In other countries, that shift in perception tends to happen very rapidly, partly because if somebody starts to worry, then other people start to worry as well. And Interest Rates rise and it becomes harder for a government to pay it builds. Pay its bills. It can be a self fulfilling thing in that way. What we might end up in that situation, we just dont know. And by we im referring to analysts in general. There is not sufficient ability on the part of analysts to predict when that shift in confidence would occur. But certainly, higher debt raises that risk relative to lower debt. In 2007, the federal debt held by the public was about 30 5 of gdp. This year, it will be about 74 of gdp. And higher by the end of the decade, an