This paper updates earlier calculations of generational accounts and fiscal and generational imbalance measures based on the Congressional Budget Offices’ March 2012 Budget Outlook Update. It finds (1) that the fiscal imbalance embedded in the federal government’s current law (Baseline) policies amount to 5.4 percent of the present value of future US GDP, or 11.7 percent of the present value of future payrolls. However, given past precedents, federal current‐law policies are unlikely to be implemented.
The CBO’s Alternative fiscal scenario, which eliminates several current‐law policies as is consistent with past Congressional practice would increase the fiscal imbalance to 9.0 percent of the present value of GDP or 19.7 percent of the present value of payrolls. Generational accounting calculations show that under both Baseline and Alternative policies today’s middle‐aged workers would receive large federal transfers by way of present valued Social Security and Medicare benefits that their lifetime net tax burdens are almost fully eliminated.