First page Back Continue Last page Overview Graphics
Current Fiscal
Policy Is Unsustainable
The “Status Quo” Is Not an Option
- We face large and growing structural deficits largely due to known demographic trends and rising health care costs.
- GAO’s simulations show that balancing the budget in 2040 could require actions as large as
- Cutting total federal spending by about 60 percent or
- Raising taxes to about 2.5 times today’s level
Faster Economic Growth Can Help, but It Cannot Solve the Problem
- Closing the current long-term fiscal gap based on responsible assumptions would require real average annual economic growth in the double digit range every year for the next 75 years.
- During the 1990s, the economy grew at an average 3.2 percent per year.
- As a result, we cannot simply grow our way out of this problem. Tough choices will be required.
The Sooner We Get Started, the Better
- Less change would be needed, and there would be more time to make adjustments.
- The miracle of compounding would work with us rather than against us.
- Our demographic changes will serve to make reform more difficult over time.