ASSUMPTIONS UNDERLYING CBO'S LONG-TERM BUDGET SCENARIOS

             Spending      Revenues
             ------------  --------
Scenario 1:  Higher        Lower
Scenario 2:  Intermediate  Lower
Scenario 3:  Lower         Lower
Scenario 4:  Higher        Higher
Scenario 5:  Intermediate  Higher
Scenario 6:  Lower         Higher

                                          Intermediate 
Program          Higher Spending            Spending         Lower Spending
---------------  -------------------  -------------------  -------------------
Social Security  Benefits paid as     Benefits paid as     Benefits paid as
                 scheduled under      scheduled under      scheduled under
                 current law          current law          current law

Medicare         Excess cost growth   Excess cost growth   No excess cost
                 of 2.5 percentage    of 1.0 percentage    growth
                 points               point

Medicaid         Excess cost growth   Excess cost growth   No excess cost
                 of 2.5 percentage    of 1.0 percentage    growth
                 points               point
 
Other Mandatory  Stabilize at the     Stabilize at the     Decline by 1 percent
Programs*        2005 level as a      2005 level as a      annually as a
                 percentage of GDP    percentage of GDP    percentage of GDP

Defense          Follow FYDP through  Phase down to $406   Phase down to $406
Programs         2024, then grow at   billion (in 2005     billion (in 2005 
                 rate of CPI          dollars) in 2024     dollars) in 2024 
                                      and then grow at     and then grow at 
                                      rate of CPI          rate of CPI
                                                             
Nondefense       Phase down to        Phase down to        Grow at rate of CPI
 Discretionary   historical share of  historical share of  after 2007
 Programs        GDP (3.6 percent)    GDP (3.6 percent)
                 by 2007 and remain   by 2007 and remain
                 there                there


Revenue Source     Lower Revenues                  Higher Revenues
-----------------  ------------------------------  --------------------------
Individual Income  Gradually rise as a percentage  Follow current law
Tax                of GDP until 2014, then
                   adjusted so total federal
                   revenues equal 18.3 percent
                   of GDP

Social Insurance   Follow current law              Follow current law
(Payroll) Taxes

Other Taxes        Remain fixed at 2014 level      Remain fixed at 2014 level
                   as a percentage of GDP          as a percentage of GDP

* excludes premiums paid by Medicare beneficiaries

Note: FYDP = Future Years Defense Program
Source: The Long-Term Budget Outlook, December 2005, Figure 1-2 on page 11,
        Table A-1 on page 48, Congressional Budget Office