This is the accessible text file for GAO report number GAO-09-405SP 
entitled 'The Nation's Long-Term Fiscal Outlook: March 2009 Update' 
which was released on April 30, 2009. 

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United States Government Accountability Office: 
GAO: 

The Nation's Long-Term Fiscal Outlook:
March 2009 Update: 

GAO-09-405SP: 

GAO's Long-Term Fiscal Simulations: 

Since 1992, GAO has published long-term fiscal simulations of what 
might happen to federal deficits and debt levels under varying policy 
assumptions. GAO developed its long-term model in response to a 
bipartisan request from Members of Congress who were concerned about 
the long-term effects of fiscal policy. 

GAO runs two simulations: 

* Baseline Extended follows the Congressional Budget Office's (CBO) 
baseline estimates for the first 10 years and then holds revenue and 
spending other than large entitlement programs constant as a share of 
gross domestic product (GDP). 

* The Alternative simulation is based on historical trends and 
preferences. Discretionary spending grows with GDP rather than 
inflation during the first 10 years, Medicare physician payment rates 
are not reduced as in CBO's baseline, and expiring tax provisions, 
except for those enacted in the American Recovery and Reinvestment Act 
(Recovery Act), are extended until 2019 and then revenue is brought 
back to about its historical level. 

Recovery Act provisions are included in both simulations but are 
assumed to be temporary. 

GAO updates its simulations as new estimates become available from CBO 
and the Social Security and Medicare Trustees. This update incorporates 
CBO's March 2009 baseline projections. Additional information can be 
found at: [hyperlink, http://www.gao.gov/special.pubs/longterm/]. 

For more information, contact Susan J. Irving at (202) 512-6806 or 
irvings@gao.gov. 

[End of section] 

The new President, the new Congress, and the American people have been 
understandably focused on addressing problems with financial markets 
and responding to the economic downturn. However, the nation will need 
to apply the same level of intensity to the nation's long-term fiscal 
challenge. As shown in the figure below and the attached charts, GAO's 
updated simulations continue to show escalating and persistent debt 
that illustrates the long-term fiscal outlook is unsustainable. By 
2025, debt held by the public under the Alternative simulation exceeds 
the historical high reached in the aftermath of World War II. 

Figure 1: Debt Held by the Public under Two Fiscal Policy Simulations 
(Percent of GDP): 

[Refer to PDF for image: multiple line graph] 

Historical high: 109% in 1946. 

Year: 2005; 
Baseline extended: 37.5; 	
Alternative: 37.5. 

Year: 2006; 
Baseline extended: 37; 	
Alternative: 37. 

Year: 2007; 
Baseline extended: 36.9; 
Alternative: 36.9. 

Year: 2008; 
Baseline extended: 40.8; 
Alternative: 40.8. 

Year: 2009; 
Baseline extended: 54.8; 
Alternative: 54.9. 

Year: 2010; 
Baseline extended: 60; 
Alternative: 60.6. 

Year: 2011; 
Baseline extended: 62; 
Alternative: 64. 

Year: 2012; 
Baseline extended: 61.6; 
Alternative: 66.2. 

Year: 2013; 
Baseline extended: 60.8; 
Alternative: 68.4. 

Year: 2014; 
Baseline extended: 60.1; 
Alternative: 71.1. 

Year: 2015; 
Baseline extended: 59.5; 
Alternative: 74. 

Year: 2016; 
Baseline extended: 59; 
Alternative: 77.3. 

Year: 2017; 
Baseline extended: 58.5; 
Alternative: 80.6. 

Year: 2018; 
Baseline extended: 56.1; 
Alternative: 82.3. 

Year: 2019; 
Baseline extended: 56.1; 
Alternative: 86.6. 

Year: 2020; 
Baseline extended: 56.2; 
Alternative: 91.2. 

Year: 2021; 
Baseline extended: 56.5; 
Alternative: 96. 

Year: 2022; 
Baseline extended: 57.1; 
Alternative: 101.2. 

Year: 2023; 
Baseline extended: 58; 
Alternative: 106.7. 

Year: 2024; 
Baseline extended: 59.2; 
Alternative: 112.5. 

Year: 2025; 
Baseline extended: 60.8; 
Alternative: 118.8. 

Year: 2026; 
Baseline extended: 62.6; 
Alternative: 125.3. 

Year: 2027; 
Baseline extended: 64.7; 
Alternative: 132.3. 

Year: 2028; 
Baseline extended: 67.2; 
Alternative: 139.7. 

Year: 2029; 
Baseline extended: 70.1. 
Alternative: 147.5. 

Year: 2030; 
Baseline extended: 73.1; 
Alternative: 155.6. 

Year: 2031; 
Baseline extended: 76.6; 
Alternative: 164.2. 

Year: 2032; 
Baseline extended: 80.4; 
Alternative: 173.2. 

Year: 2033; 
Baseline extended: 84.4; 
Alternative: 182.5. 

Year: 2034; 
Baseline extended: 88.7; 
Alternative: 192.1. 

Year: 2035; 
Baseline extended: 93.2; 
Alternative: 202. 

Year: 2036; 
Baseline extended: 98; 
Alternative: 212.4. 

Year: 2037; 
Baseline extended: 103.2; 
Alternative: 223.1. 

Year: 2038; 
Baseline extended: 108.5; 
Alternative: 234.1. 

Year: 2039; 
Baseline extended: 114.1; 
Alternative: 245.4. 

Year: 2040; 
Baseline extended: 119.9; 
Alternative: 257.1. 

Year: 2041; 
Baseline extended: 125.9; 
Alternative: 269.1. 

Year: 2042; 
Baseline extended: 132.2; 
Alternative: 281.4. 

Year: 2043; 
Baseline extended: 138.6; 
Alternative: 294.1. 

Year: 2044; 
Baseline extended: 145.3; 
Alternative: 306.9. 

Year: 2045; 
Baseline extended: 152.2; 
Alternative: 320.2. 

Year: 2046; 
Baseline extended: 159.3; 
Alternative: 333.8. 

Year: 2047; 
Baseline extended: 166.6; 
Alternative: 347.7. 

Year: 2048; 
Baseline extended: 174.2; 
Alternative: 362. 

Year: 2049; 
Baseline extended: 182.1; 
Alternative: 376.8. 

Year: 2050; 
Baseline extended: 190.2; 
Alternative: 391.9. 

Source: GAO. 

Note: Data from GAO's simulations based on the 2008 Trustees' 
assumptions for Social Security and Medicare. We also run simulations 
using CBO's Social Security and Medicare projections; the results are 
not materially different. 

[End of figure] 

GAO's updated simulations reflect the effects of policies undertaken to 
stabilize the financial markets and stimulate the economy through mid-
March 2009. According to CBO's March 2009 estimates, the actions taken 
to date and the weakened economy will produce a surge in debt held by 
the public in fiscal year 2009. 

While the factors driving the near-term outlook can be and have been 
quite volatile, the long-term fundamentals have not changed. Health 
care costs are still growing faster than the economy and the nation's 
population continues to age. GAO's long-term simulations show that 
absent policy actions aimed at reforming the key drivers of our 
structural deficits--health spending and Social Security--the federal 
government faces unsustainable growth in debt. The longer that action 
to deal with the federal government's long-term fiscal outlook is 
delayed, the greater the risk that the eventual changes will be 
disruptive and destabilizing. 

Alternative Fiscal Policy Simulations: 

* Baseline Extended follows CBOís March 2009 10-year baseline 
projections that assume discretionary spending authority, except that 
enacted in the Recovery Act, grows with inflation; Recovery Act 
provisions are included but assumed to be temporary. Tax provisions 
scheduled to expire will actually do so. After 2019, discretionary 
spending is assumed to grow with the economy and revenue is held 
constant as a share of GDP at the 2019 level of 20.3 percentóimplicitly 
assuming that action is taken to offset increased revenue from real 
bracket creep, the alternative minimum tax (AMT), and tax-deferred 
retirement accounts. Medicare spending is based on projections assuming 
the continuation of current law under which fees for physicians 
treating Medicare patients would be cut in future years. 

* The Alternative simulation follows Baseline Extended except for 
changes to the assumptions for three variables. Discretionary spending 
other than Recovery Act provisions grows with the economy after 2009; 
Recovery Act provisions are included but assumed to be temporary. 
Expiring tax provisions are extended, except for expiring provisions 
enacted in the Recovery Act.[Footnote 1] After 2019, revenue is brought 
back to its 40-year historical average level of 18.3 percent of GDP 
plus expected revenues from deferred taxes (i.e., taxes on withdrawals 
from retirement accounts). Throughout the simulation period, Medicare 
spending is based on projections assuming that physician payments are 
not reduced as specified under current law. 

Note: CBOís projections are from A Preliminary Analysis of the 
Presidentís Budget and an Update of CBOís Budget and Economic Outlook
(March 2009). 

Figure: Unified Deficits as a Share of GDP: Under the Two Fiscal Policy 
Simulations (Percent of GDP): 

[Refer to PDF for image: multiple line graph] 

Fiscal year: 2005; 
Baseline extended: -2.60; 
Alternative: -2.60.

Fiscal year: 2006; 
Baseline extended: -1.90; 
Alternative: -1.90. 

Fiscal year: 2007; 
Baseline extended: -1.19; 
Alternative: -1.19. 

Fiscal year: 2008; 
Baseline extended: -3.22; 
Alternative: -3.22. 

Fiscal year: 2009; 
Baseline extended: -11.85; 
Alternative: -11.93. 

Fiscal year: 2010; 
Baseline extended: -7.90; 
Alternative: -8.29. 

Fiscal year: 2011; 
Baseline extended: -4.60; 
Alternative: -6.21. 

Fiscal year: 2012; 
Baseline extended: -2.09; 
Alternative: -4.84. 

Fiscal year: 2013; 
Baseline extended: -1.81; 
Alternative: -5.01. 

Fiscal year: 2014; 
Baseline extended: -1.79; 
Alternative: -5.41. 

Fiscal year: 2015; 
Baseline extended: -1.57; 
Alternative: -5.52. 

Fiscal year: 2016; 
Baseline extended: -1.75; 
Alternative: -6.03. 

Fiscal year: 2017; 
Baseline extended: -1.60; 
Alternative: -6.19. 

Fiscal year: 2018; 
Baseline extended: -1.61; 
Alternative: -6.55.

Fiscal year: 2019; 
Baseline extended: -2.01; 
Alternative: -7.32. 

Fiscal year: 2020; 
Baseline extended: -2.19; 
Alternative: -7.83. 

Fiscal year: 2021; 
Baseline extended: -2.50; 
Alternative: -8.31. 

Fiscal year: 2022; 
Baseline extended: -2.72; 
Alternative: -8.72. 

Fiscal year: 2023; 
Baseline extended: -3.06; 
Alternative: -9.25. 

Fiscal year: 2024; 
Baseline extended: -3.31; 
Alternative: -9.72. 

Fiscal year: 2025; 
Baseline extended: -3.68; 
Alternative: -10.29. 

Fiscal year: 2026; 
Baseline extended: -3.99; 
Alternative: -10.81. 

Fiscal year: 2027; 
Baseline extended: -4.41; 
Alternative: -11.45. 

Fiscal year: 2028; 
Baseline extended: -4.74; 
Alternative: -12.00. 

Fiscal year: 2029; 
Baseline extended: -5.19; 
Alternative: -12.67. 

Fiscal year: 2030; 
Baseline extended: -5.53; 
Alternative: -13.25. 

Fiscal year: 2031; 
Baseline extended: -5.98; 
Alternative: -13.94. 

Fiscal year: 2032; 
Baseline extended: -6.42; 
Alternative: -14.64. 

Fiscal year: 2033; 
Baseline extended: -6.78; 
Alternative: -15.25. 

Fiscal year: 2034; 
Baseline extended: -7.23; 
Alternative: -15.96. 

Fiscal year: 2035; 
Baseline extended: -7.58; 
Alternative: -16.53. 

Fiscal year: 2036; 
Baseline extended: -8.04; 
Alternative: -17.25. 

Fiscal year: 2037; 
Baseline extended: -8.50; 
Alternative: -17.98. 

Fiscal year: 2038; 
Baseline extended: -8.86; 
Alternative: -18.62. 

Fiscal year: 2039; 
Baseline extended: -9.31; 
Alternative: -19.35. 

Fiscal year: 2040; 
Baseline extended: -9.67; 
Alternative: -20.00. 

Fiscal year: 2041; 
Baseline extended: -10.12; 
Alternative: -20.75. 

Fiscal year: 2042; 
Baseline extended: -10.49; 
Alternative: -21.41. 

Fiscal year: 2043; 
Baseline extended: -10.96; 
Alternative: -22.17. 

Fiscal year: 2044; 
Baseline extended: -11.34; 
Alternative: -22.85. 

Fiscal year: 2045; 
Baseline extended: -11.82; 
Alternative: -23.64. 

Fiscal year: 2046; 
Baseline extended: -12.22; 
Alternative: -24.35. 

Fiscal year: 2047; 
Baseline extended: -12.73; 
Alternative: -25.17. 

Fiscal year: 2048; 
Baseline extended: -13.15; 
Alternative: -25.91. 

Fiscal year: 2049; 
Baseline extended: -13.68; 
Alternative: -26.77. 

Fiscal year: 2050; 
Baseline extended: -14.13; 
Alternative: -27.54. 

Source: GAO. 

Notes: Based on simulations using the Trusteesí Assumptions for Social 
Security and Medicare. We also run simulations using CBOís projections 
for Social Security and Medicare; as shown on page 5, the results are 
not materially different. 

[End of figure] 

Budget Assumptions after the First 10 Years: 

GAO uses two different sources for long-term projections for Social 
Security, Medicare, and Medicaid: 

* In the first set of simulations, Social Security and Medicare are 
based on the Trusteesí 2008 estimates. Medicaid spending is based on 
CBOís projections but adjusted to reflect excess cost growth consistent 
with the Trustees. 

* In the second set of simulations, Social Security, Medicare, and 
Medicaid are based on CBOís most recent long-term projections. 

In both sets of simulations, we assume the following: 

* Social Security and Medicare benefits are paid in full after the 
trust funds are exhausted through borrowing from the general fund to 
meet any payroll tax shortfall. 

* Other mandatory spending is held constant as a share of GDP at the 
2019 level. 

Notes: The Trusteesí 2008 estimates are from The 2008 Annual Report of 
the Board of Trustees of the Federal Old-Age and Survivors Insurance 
and Federal Disability Insurance Trust Funds and 2008 Annual Report of 
the Boards of Trustees of the Federal Hospital Insurance and Federal 
Supplementary Medical Insurance Trust Funds that were both issued on 
March 25, 2008. CBOís estimates are from Updated Long-Term Projections 
for Social Security (August 2008) and The Long-Term Budget Outlook 
(December 2007). 

Figure: Unified Surpluses and Deficits as a Share of GDP: Under the Two 
Fiscal Policy Simulations Using Different Social Security, Medicare and 
Medicaid Assumptions (Percent of GDP): 

[Refer to PDF for image: multiple line graph] 

Fiscal year: 2000; 
Baseline Extended: 2.433; 
Alternative: 2.433; 
Baseline w/CBO:	2.433; 
Alternative w/CBO: 2.433. 

Fiscal year: 2001; 
Baseline Extended: 1.274; 
Alternative: 1.274; 
Baseline w/CBO:	1.274; 
Alternative w/CBO: 1.274. 

Fiscal year: 2002; 
Baseline Extended: -1.52; 
Alternative: -1.52; 
Baseline w/CBO:	-1.52; 
Alternative w/CBO: -1.52. 

Fiscal year: 2003; 
Baseline Extended: -3.495; 
Alternative: -3.495; 
Baseline w/CBO:	-3.495; 
Alternative w/CBO: -3.495. 

Fiscal year: 2004; 
Baseline Extended: -3.588; 
Alternative: -3.588; 
Baseline w/CBO:	-3.588; 
Alternative w/CBO: -3.588. 

Fiscal year: 2005; 
Baseline Extended: -2.602; 
Alternative: -2.602; 
Baseline w/CBO:	-2.602; 
Alternative w/CBO: -2.602. 

Fiscal year: 2006; 
Baseline Extended: -1.908; 
Alternative: -1.908; 
Baseline w/CBO:	-1.908; 
Alternative w/CBO: -1.908. 

Fiscal year: 2007; 
Baseline Extended: -1.193; 
Alternative: -1.193; 
Baseline w/CBO:	-1.193; 
Alternative w/CBO: -1.193. 

Fiscal year: 2008; 
Baseline Extended: -3.227; 
Alternative: -3.227; 
Baseline w/CBO:	-3.227; 
Alternative w/CBO: -3.227. 

Fiscal year: 2009; 
Baseline Extended: -11.859; 
Alternative: -11.936; 
Baseline w/CBO:	-11.859; 
Alternative w/CBO: -11.887. 

Fiscal year: 2010; 
Baseline Extended: -7.907; 
Alternative: -8.294; 
Baseline w/CBO:	-7.907; 
Alternative w/CBO: -8.298. 

Fiscal year: 2011; 
Baseline Extended: -4.601; 
Alternative: -6.218; 
Baseline w/CBO:	-4.601; 
Alternative w/CBO: -6.226. 

Fiscal year: 2012; 
Baseline Extended: -2.098; 
Alternative: -4.84; 
Baseline w/CBO:	-2.098; 
Alternative w/CBO: -4.83. 

Fiscal year: 2013; 
Baseline Extended: -1.819; 
Alternative: -5.01; 
Baseline w/CBO:	-1.819; 
Alternative w/CBO: -4.998. 

Fiscal year: 2014; 
Baseline Extended: -1.798; 
Alternative: -5.413; 
Baseline w/CBO:	-1.798; 
Alternative w/CBO: -5.352 

Fiscal year: 2015; 
Baseline Extended: -1.57; 
Alternative: -5.529; 
Baseline w/CBO:	-1.57; 
Alternative w/CBO: -5.519. 

Fiscal year: 2016; 
Baseline Extended: -1.75; 
Alternative: -6.031; 
Baseline w/CBO:	-1.75; 
Alternative w/CBO: -6.016. 

Fiscal year: 2017; 
Baseline Extended: -1.605; 
Alternative: -6.194; 
Baseline w/CBO:	-1.605; 
Alternative w/CBO: -6.111. 

Fiscal year: 2018; 
Baseline Extended: -1.61; 
Alternative: -6.551; 
Baseline w/CBO:	-1.61; 
Alternative w/CBO: -6.521. 

Fiscal year: 2019; 
Baseline Extended: -2.018; 
Alternative: -7.32; 
Baseline w/CBO:	-2.018; 
Alternative w/CBO: -7.314. 

Fiscal year: 2020; 
Baseline Extended: -2.194; 
Alternative: -7.836; 
Baseline w/CBO:	-2.355; 
Alternative w/CBO: -7.995. 

Fiscal year: 2021; 
Baseline Extended: -2.501; 
Alternative: -8.319; 
Baseline w/CBO:	-2.571; 
Alternative w/CBO: -8.467. 

Fiscal year: 2022; 
Baseline Extended: -2.726; 
Alternative: -8.725; 
Baseline w/CBO:	-2.923; 
Alternative w/CBO: -8.957. 

Fiscal year: 2023; 
Baseline Extended: -3.063; 
Alternative: -9.252; 
Baseline w/CBO:	-3.268; 
Alternative w/CBO: -9.472. 

Fiscal year: 2024; 
Baseline Extended: -3.316; 
Alternative: -9.728; 
Baseline w/CBO:	-3.559; 
Alternative w/CBO: -10.065. 

Fiscal year: 2025; 
Baseline Extended: -3.68; 
Alternative: -10.297; 
Baseline w/CBO:	-3.9; 
Alternative w/CBO: -10.645. 

Fiscal year: 2026; 
Baseline Extended: -3.99; 
Alternative: -10.817; 
Baseline w/CBO:	-4.267; 
Alternative w/CBO: -11.227. 

Fiscal year: 2027; 
Baseline Extended: -4.412; 
Alternative: -11.453; 
Baseline w/CBO:	-4.714; 
Alternative w/CBO: -11.894. 

Fiscal year: 2028; 
Baseline Extended: -4.749; 
Alternative: -12.009; 
Baseline w/CBO:	-5.119; 
Alternative w/CBO: -12.524. 

Fiscal year: 2029; 
Baseline Extended: -5.192; 
Alternative: -12.679; 
Baseline w/CBO:	-5.521; 
Alternative w/CBO: -13.157. 

Fiscal year: 2030; 
Baseline Extended: -5.535; 
Alternative: -13.257; 
Baseline w/CBO:	-5.994; 
Alternative w/CBO: -13.869. 

Fiscal year: 2031; 
Baseline Extended: -5.981; 
Alternative: -13.948; 
Baseline w/CBO:	-6.36; 
Alternative w/CBO: -14.557. 

Fiscal year: 2032; 
Baseline Extended: -6.428; 
Alternative: -14.645; 
Baseline w/CBO:	-6.819; 
Alternative w/CBO: -15.297. 

Fiscal year: 2033; 
Baseline Extended: -6.78; 
Alternative: -15.252; 
Baseline w/CBO:	-7.267; 
Alternative w/CBO: -15.932. 

Fiscal year: 2034; 
Baseline Extended: -7.231; 
Alternative: -15.966; 
Baseline w/CBO:	-7.708; 
Alternative w/CBO: -16.614. 

Fiscal year: 2035; 
Baseline Extended: -7.589; 
Alternative: -16.53; 
Baseline w/CBO:	-8.216; 
Alternative w/CBO: -17.33. 

Fiscal year: 2036; 
Baseline Extended: -8.048; 
Alternative: -17.255; 
Baseline w/CBO:	-8.661; 
Alternative w/CBO: -18.043. 

Fiscal year: 2037; 
Baseline Extended: -8.507; 
Alternative: -17.988; 
Baseline w/CBO:	-9.027; 
Alternative w/CBO: -18.761. 

Fiscal year: 2038; 
Baseline Extended: -8.863; 
Alternative: -18.623; 
Baseline w/CBO:	-9.525; 
Alternative w/CBO: -19.569. 

Fiscal year: 2039; 
Baseline Extended: -9.315; 
Alternative: -19.358; 
Baseline w/CBO:	-10.018; 
Alternative w/CBO: -20.352. 

Fiscal year: 2040; 
Baseline Extended: -9.672; 
Alternative: -20.003; 
Baseline w/CBO:	-10.406; 
Alternative w/CBO: -21.037. 

Fiscal year: 2041; 
Baseline Extended: -10.129; 
Alternative: -20.751; 
Baseline w/CBO:	-10.929; 
Alternative w/CBO: -21.858. 

Fiscal year: 2042; 
Baseline Extended: -10.495; 
Alternative: -21.411; 
Baseline w/CBO:	-11.368; 
Alternative w/CBO: -22.675. 

Fiscal year: 2043; 
Baseline Extended: -10.963; 
Alternative: -22.176; 
Baseline w/CBO:	-11.851; 
Alternative w/CBO: -23.417. 

Fiscal year: 2044; 
Baseline Extended: -11.343; 
Alternative: -22.855; 
Baseline w/CBO:	-12.434; 
Alternative w/CBO: -24.21. 

Fiscal year: 2045; 
Baseline Extended: -11.829; 
Alternative: -23.646; 
Baseline w/CBO:	-12.911; 
Alternative w/CBO: -25.046. 

Fiscal year: 2046; 
Baseline Extended: -12.229; 
Alternative: -24.355; 
Baseline w/CBO:	-13.442; 
Alternative w/CBO: -25.919. 

Fiscal year: 2047; 
Baseline Extended: -12.735; 
Alternative: -25.173; 
Baseline w/CBO:	-13.934; 
Alternative w/CBO: -26.806. 

Fiscal year: 2048; 
Baseline Extended: -13.157; 
Alternative: -25.916; 
Baseline w/CBO:	-14.57; 
Alternative w/CBO: -27.727. 

Fiscal year: 2049; 
Baseline Extended: -13.687; 
Alternative: -26.772; 
Baseline w/CBO:	-15.136; 
Alternative w/CBO: -28.678. 

Fiscal year: 2050; 
Baseline Extended: -14.133; 
Alternative: -27.547; 
Baseline w/CBO:	-15.75; 
Alternative w/CBO: -29.66. 

Fiscal year: 2051; 
Baseline Extended: -14.689; 
Alternative: -28.437; 
Baseline w/CBO:	-16.318; 
Alternative w/CBO: -30.575. 

Fiscal year: 2052; 
Baseline Extended: -15.159; 
Alternative: -29.247; 
Baseline w/CBO:	-17.01; 
Alternative w/CBO: -31.622. 

Fiscal year: 2053; 
Baseline Extended: -15.74; 
Alternative: -30.169; 
Baseline w/CBO:	-17.694; 
Alternative w/CBO: -32.661. 

Fiscal year: 2054; 
Baseline Extended: -16.239; 
Alternative: -31.015; 
Baseline w/CBO:	-18.332; 
Alternative w/CBO: -33.661. 

Fiscal year: 2055; 
Baseline Extended: -16.854; 
Alternative: -31.982; 
Baseline w/CBO:	-19.009; 
Alternative w/CBO: -34.705. 

Fiscal year: 2056; 
Baseline Extended: -17.388; 
Alternative: -32.874; 
Baseline w/CBO:	-19.752; 
Alternative w/CBO: -35.896. 

Fiscal year: 2057; 
Baseline Extended: -18.033; 
Alternative: -33.883; 
Baseline w/CBO:	-20.489; 
Alternative w/CBO: -37.038. 

Fiscal year: 2058; 
Baseline Extended: -18.592; 
Alternative: -34.809; 
Baseline w/CBO:	-21.253; 
Alternative w/CBO: -38.19. 

Fiscal year: 2059; 
Baseline Extended: -19.159; 
Alternative: -35.752; 
Baseline w/CBO:	-22.05; 
Alternative w/CBO: -39.382. 

Fiscal year: 2060; 
Baseline Extended: -19.836; 
Alternative: -36.808; 
Baseline w/CBO:	-22.853; 
Alternative w/CBO: -40.585. 

Fiscal year: 2061; 
Baseline Extended: -20.428; 
Alternative: -37.785; 
Baseline w/CBO:	-23.761; 
Alternative w/CBO: -41.822. 

Fiscal year: 2062; 
Baseline Extended: -21.131; 
Alternative: -38.877; 
Baseline w/CBO:	-24.556; 
Alternative w/CBO: -43.074. 

Fiscal year: 2063; 
Baseline Extended: -21.749; 
Alternative: -39.889; 
Baseline w/CBO:	-25.38; 
Alternative w/CBO: -44.338. 

Fiscal year: 2064; 
Baseline Extended: -22.479; 
Alternative: -41.021; 
Baseline w/CBO:	-26.252; 
Alternative w/CBO: -45.632. 

Fiscal year: 2065; 
Baseline Extended: -23.128; 
Alternative: -42.075; 
Baseline w/CBO:	-27.138; 
Alternative w/CBO: -46.945. 

Fiscal year: 2066; 
Baseline Extended: -23.888; 
Alternative: -43.246; 
Baseline w/CBO:	-28.116; 
Alternative w/CBO: -48.28. 

Fiscal year: 2067; 
Baseline Extended: -24.562; 
Alternative: -44.338; 
Baseline w/CBO:	-29.082; 
Alternative w/CBO: -49.731. 

Fiscal year: 2068; 
Baseline Extended: -25.245; 
Alternative: -45.445; 
Baseline w/CBO:	-30.041; 
Alternative w/CBO: -51.161. 

Fiscal year: 2069; 
Baseline Extended: -26.04; 
Alternative: -46.669; 
Baseline w/CBO:	-31.019; 
Alternative w/CBO: -52.59;. 

Fiscal year: 2070; 
Baseline Extended: -26.752; 
Alternative: -47.816; 
Baseline w/CBO:	-32.032; 
Alternative w/CBO: -54.06. 

Fiscal year: 2071; 
Baseline Extended: -27.574; 
Alternative: -49.076; 
Baseline w/CBO:	-32.989; 
Alternative w/CBO: -55.554. 

Fiscal year: 2072; 
Baseline Extended: -28.31; 
Alternative: -50.257; 
Baseline w/CBO:	-34.094; 
Alternative w/CBO: -57.156. 

Fiscal year: 2073; 
Baseline Extended: -29.155; 
Alternative: -51.553; 
Baseline w/CBO:	-35.209; 
Alternative w/CBO: -58.75. 

Fiscal year: 2074; 
Baseline Extended: -29.917; 
Alternative: -52.771; 
Baseline w/CBO:	-36.288; 
Alternative w/CBO: -60.388. 

Fiscal year: 2075; 
Baseline Extended: -30.79; 
Alternative: -54.106; 
Baseline w/CBO:	-37.398; 
Alternative w/CBO: -62.018. 

Fiscal year: 2076; 
Baseline Extended: -31.579; 
Alternative: -55.362; 
Baseline w/CBO:	-38.537; 
Alternative w/CBO: -63.659. 

Fiscal year: 2077; 
Baseline Extended: -32.379; 
Alternative: -56.637; 
Baseline w/CBO:	-39.789; 
Alternative w/CBO: -65.422. 

Fiscal year: 2078; 
Baseline Extended: -33.289; 
Alternative: -58.028; 
Baseline w/CBO:	-40.994; 
Alternative w/CBO: -67.143. 

Fiscal year: 2079; 
Baseline Extended: -34.116; 
Alternative: -59.342; 
Baseline w/CBO:	-42.203; 
Alternative w/CBO: -68.874. 

Fiscal year: 2080; 
Baseline Extended: -35.056; 
Alternative: -60.774; 
Baseline w/CBO:	-43.439; 
Alternative w/CBO: -70.64. 

Fiscal year: 2081; 
Baseline Extended: -35.91; 
Alternative: -62.128; 
Baseline w/CBO:	-44.73; 
Alternative w/CBO: -72.466. 

Fiscal year: 2082; 
Baseline Extended: -36.877; 
Alternative: -63.599; 
Baseline w/CBO:	-46.004; 
Alternative w/CBO: -74.282. 

Fiscal year: 2083; 
Baseline Extended: -37.864; 
Alternative: -65.039; 
Baseline w/CBO:	-47.304; 
Alternative w/CBO: -76.131. 

Source: GAO. 

[End of figure] 

Figure: Debt Held by the Public as a Share of GDP: Under the Two Fiscal 
Policy Simulations Using Different Social Security, Medicare and 
Medicaid Assumptions: 

[Refer to PDF for image: multiple line graph] 

Fiscal year: 2000; 
Baseline extended: 35; 
Alternative simulation: 35; 
Baseline w/CBO: 35; 
Alternative w/CBO: 35. 

Fiscal year: 2001; 
Baseline extended: 33; 
Alternative simulation: 33; 
Baseline w/CBO: 33; 	
Alternative w/CBO: 33. 

Fiscal year: 2002; 
Baseline extended: 34; 
Alternative simulation: 34; 
Baseline w/CBO: 34; 
Alternative w/CBO: 34. 

Fiscal year: 2003; 
Baseline extended: 36; 
Alternative simulation: 36; 
Baseline w/CBO: 36; 
Alternative w/CBO: 36. 

Fiscal year: 2004; 
Baseline extended: 37; 
Alternative simulation: 37; 
Baseline w/CBO: 37; 
Alternative w/CBO: 37. 

Fiscal year: 2005; 
Baseline extended: 37;
Alternative simulation: 37;
Baseline w/CBO: 37;
Alternative w/CBO: 37. 

Fiscal year: 2006; 
Baseline extended: 37;
Alternative simulation: 37; 
Baseline w/CBO: 37; 
Alternative w/CBO: 37. 

Fiscal year: 2007; 
Baseline extended: 36; 
Alternative simulation: 36; 
Baseline w/CBO: 36; 
Alternative w/CBO: 36. 

Fiscal year: 2008; 
Baseline extended: 40; 
Alternative simulation: 40; 
Baseline w/CBO: 40; 
Alternative w/CBO: 40. 

Fiscal year: 2009; 
Baseline extended: 54; 
Alternative simulation: 54; 
Baseline w/CBO: 54; 
Alternative w/CBO: 54. 

Fiscal year: 2010; 
Baseline extended: 60; 
Alternative simulation: 60; 
Baseline w/CBO: 60; 
Alternative w/CBO: 60. 

Fiscal year: 2011; 
Baseline extended: 62; 
Alternative simulation: 64; 
Baseline w/CBO: 62; 
Alternative w/CBO: 64. 

Fiscal year: 2012; 
Baseline extended: 61; 
Alternative simulation: 66; 
Baseline w/CBO: 61; 
Alternative w/CBO: 66. 

Fiscal year: 2013; 
Baseline extended: 60; 
Alternative simulation: 68; 
Baseline w/CBO: 60; 
Alternative w/CBO: 68. 

Fiscal year: 2014; 
Baseline extended: 60; 
Alternative simulation: 71; 
Baseline w/CBO: 60; 
Alternative w/CBO: 71. 

Fiscal year: 2015; 
Baseline extended: 59; 
Alternative simulation: 73; 
Baseline w/CBO: 59; 
Alternative w/CBO: 73. 

Fiscal year: 2016; 
Baseline extended: 59; 
Alternative simulation: 77; 
Baseline w/CBO: 59; 
Alternative w/CBO: 77. 

Fiscal year: 2017; 
Baseline extended: 58; 
Alternative simulation: 80; 
Baseline w/CBO: 58; 
Alternative w/CBO: 80. 

Fiscal year: 2018; 
Baseline extended: 56; 
Alternative simulation: 82; 
Baseline w/CBO: 56; 
Alternative w/CBO: 82. 

Fiscal year: 2019; 
Baseline extended: 56; 
Alternative simulation: 86; 
Baseline w/CBO: 56; 
Alternative w/CBO: 86. 

Fiscal year: 2020; 
Baseline extended: 56; 
Alternative simulation: 91; 
Baseline w/CBO: 56; 
Alternative w/CBO: 91. 

Fiscal year: 2021; 
Baseline extended: 56; 
Alternative simulation: 96; 
Baseline w/CBO: 56; 
Alternative w/CBO: 96. 

Fiscal year: 2022; 
Baseline extended: 57; 
Alternative simulation: 101; 
Baseline w/CBO: 57;  
Alternative w/CBO: 101. 

Fiscal year: 2023; 
Baseline extended: 58; 
Alternative simulation: 106; 
Baseline w/CBO: 58; 
Alternative w/CBO: 107. 

Fiscal year: 2024; 
Baseline extended: 59; 
Alternative simulation: 112; 
Baseline w/CBO: 60; 
Alternative w/CBO: 113. 

Fiscal year: 2025; 
Baseline extended: 60; 
Alternative simulation: 118; 
Baseline w/CBO: 61; 
Alternative w/CBO: 119. 

Fiscal year: 2026; 
Baseline extended: 62; 
Alternative simulation: 125; 
Baseline w/CBO: 63; 
Alternative w/CBO: 126. 

Fiscal year: 2027; 
Baseline extended: 64; 
Alternative simulation: 132; 
Baseline w/CBO: 66; 
Alternative w/CBO: 134. 

Fiscal year: 2028; 
Baseline extended: 67; 
Alternative simulation: 139; 
Baseline w/CBO: 69; 
Alternative w/CBO: 142. 

Fiscal year: 2029; 
Baseline extended: 70; 
Alternative simulation: 147; 
Baseline w/CBO: 72; 
Alternative w/CBO: 150. 

Fiscal year: 2030; 
Baseline extended: 73; 
Alternative simulation: 155; 
Baseline w/CBO: 75; 
Alternative w/CBO: 158. 

Fiscal year: 2031; 
Baseline extended: 76; 
Alternative simulation: 164; 
Baseline w/CBO: 79; 
Alternative w/CBO: 167. 

Fiscal year: 2032; 
Baseline extended: 80; 
Alternative simulation: 173; 
Baseline w/CBO: 83; 
Alternative w/CBO: 177. 

Fiscal year: 2033; 
Baseline extended: 84; 
Alternative simulation: 182; 
Baseline w/CBO: 87; 
Alternative w/CBO: 187. 

Fiscal year: 2034; 
Baseline extended: 88; 
Alternative simulation: 192; 
Baseline w/CBO: 92; 
Alternative w/CBO: 197. 

Fiscal year: 2035; 
Baseline extended: 93; 
Alternative simulation: 202; 
Baseline w/CBO: 97; 
Alternative w/CBO: 207. 

Fiscal year: 2036; 
Baseline extended: 98; 
Alternative simulation: 212; 
Baseline w/CBO: 102; 
Alternative w/CBO: 218. 

Fiscal year: 2037; 
Baseline extended: 103; 
Alternative simulation: 223; 
Baseline w/CBO: 108; 
Alternative w/CBO: 230. 

Fiscal year: 2038; 
Baseline extended: 108; 
Alternative simulation: 234; 
Baseline w/CBO: 114; 
Alternative w/CBO: 241. 

Fiscal year: 2039; 
Baseline extended: 114; 
Alternative simulation: 245; 
Baseline w/CBO: 120; 
Alternative w/CBO: 253. 

Fiscal year: 2040; 
Baseline extended: 119; 
Alternative simulation: 257; 
Baseline w/CBO: 126; 
Alternative w/CBO: 266. 

Fiscal year: 2041; 
Baseline extended: 125; 
Alternative simulation: 269; 
Baseline w/CBO: 133; 
Alternative w/CBO: 279. 

Fiscal year: 2042; 
Baseline extended: 132; 
Alternative simulation: 281; 
Baseline w/CBO: 140; 
Alternative w/CBO: 292. 

Fiscal year: 2043; 
Baseline extended: 138; 
Alternative simulation: 294; 
Baseline w/CBO: 147; 
Alternative w/CBO: 305. 

Fiscal year: 2044; 
Baseline extended: 145; 
Alternative simulation: 306; 
Baseline w/CBO: 154; 
Alternative w/CBO: 319. 

Fiscal year: 2045; 
Baseline extended: 152; 
Alternative simulation: 320; 
Baseline w/CBO: 162; 
Alternative w/CBO: 334. 

Fiscal year: 2046; 
Baseline extended: 159; 
Alternative simulation: 333; 
Baseline w/CBO: 170; 
Alternative w/CBO: 348. 

Fiscal year: 2047; 
Baseline extended: 166; 
Alternative simulation: 347; 
Baseline w/CBO: 178; 
Alternative w/CBO: 363. 

Fiscal year: 2048; 
Baseline extended: 174; 
Alternative simulation: 362; 
Baseline w/CBO: 187; 
Alternative w/CBO: 379. 

Fiscal year: 2049; 
Baseline extended: 182; 
Alternative simulation: 376; 
Baseline w/CBO: 195; 
Alternative w/CBO: 395. 

Fiscal year: 2050; 
Baseline extended: 190; 
Alternative simulation: 391; 
Baseline w/CBO: 205; 
Alternative w/CBO: 412. 

Fiscal year: 2051; 
Baseline extended: 198; 
Alternative simulation: 407; 
Baseline w/CBO: 214; 
Alternative w/CBO: 428. 

Fiscal year: 2052; 
Baseline extended: 207; 
Alternative simulation: 423; 
Baseline w/CBO: 224; 
Alternative w/CBO: 446. 

Fiscal year: 2053; 
Baseline extended: 216; 
Alternative simulation: 439; 
Baseline w/CBO: 234; 
Alternative w/CBO: 464. 

Fiscal year: 2054; 
Baseline extended: 225; 
Alternative simulation: 455; 
Baseline w/CBO: 245; 
Alternative w/CBO: 482. 

Fiscal year: 2055; 
Baseline extended: 234; 
Alternative simulation: 472; 
Baseline w/CBO: 256; 
Alternative w/CBO: 501. 

Fiscal year: 2056; 
Baseline extended: 244; 
Alternative simulation: 490; 
Baseline w/CBO: 267; 
Alternative w/CBO: 520. 

Fiscal year: 2057; 
Baseline extended: 254; 
Alternative simulation: 507; 
Baseline w/CBO: 279; 
Alternative w/CBO: 540. 

Fiscal year: 2058; 
Baseline extended: 264; 
Alternative simulation: 525; 
Baseline w/CBO: 291; 
Alternative w/CBO: 560. 

Fiscal year: 2059; 
Baseline extended: 274; 
Alternative simulation: 544; 
Baseline w/CBO: 303; 
Alternative w/CBO: 581. 

Fiscal year: 2060; 
Baseline extended: 285; 
Alternative simulation: 562; 
Baseline w/CBO: 316; 
Alternative w/CBO: 603. 

Fiscal year: 2061; 
Baseline extended: 296; 
Alternative simulation: 582; 
Baseline w/CBO: 329; 
Alternative w/CBO: 624. 

Fiscal year: 2062; 
Baseline extended: 307; 
Alternative simulation: 601; 
Baseline w/CBO: 343; 
Alternative w/CBO: 647. 

Fiscal year: 2063; 
Baseline extended: 319; 
Alternative simulation: 621; 
Baseline w/CBO: 357; 
Alternative w/CBO: 670. 

Fiscal year: 2064; 
Baseline extended: 331; 
Alternative simulation: 641; 
Baseline w/CBO: 371; 
Alternative w/CBO: 693. 

Fiscal year: 2065; 
Baseline extended: 343; 
Alternative simulation: 662; 
Baseline w/CBO: 386; 
Alternative w/CBO: 717. 

Fiscal year: 2066; 
Baseline extended: 355; 
Alternative simulation: 683; 
Baseline w/CBO: 401; 
Alternative w/CBO: 741. 

Fiscal year: 2067; 
Baseline extended: 368; 
Alternative simulation: 705; 
Baseline w/CBO: 417; 
Alternative w/CBO: 766. 

Fiscal year: 2068; 
Baseline extended: 381; 
Alternative simulation: 727; 
Baseline w/CBO: 433; 
Alternative w/CBO: 792. 

Fiscal year: 2069; 
Baseline extended: 394; 
Alternative simulation: 749; 
Baseline w/CBO: 450; 
Alternative w/CBO: 818. 

Fiscal year: 2070; 
Baseline extended: 408; 
Alternative simulation: 772; 
Baseline w/CBO: 467; 
Alternative w/CBO: 845. 

Fiscal year: 2071; 
Baseline extended: 422; 
Alternative simulation: 795; 
Baseline w/CBO: 484; 
Alternative w/CBO: 872. 

Fiscal year: 2072; 
Baseline extended: 436; 
Alternative simulation: 819; 
Baseline w/CBO: 502; 
Alternative w/CBO: 900. 

Fiscal year: 2073; 
Baseline extended: 450; 
Alternative simulation: 843; 
Baseline w/CBO: 520; 
Alternative w/CBO: 929. 

Fiscal year: 2074; 
Baseline extended: 465; 
Alternative simulation: 868; 
Baseline w/CBO: 539; 
Alternative w/CBO: 958. 

Fiscal year: 2075; 
Baseline extended: 480; 
Alternative simulation: 892; 
Baseline w/CBO: 558; 
Alternative w/CBO: 988. 

Fiscal year: 2076; 
Baseline extended: 496; 
Alternative simulation: 918; 
Baseline w/CBO: 578; 
Alternative w/CBO: 1018. 

Fiscal year: 2077; 
Baseline extended: 511; 
Alternative simulation: 944; 
Baseline w/CBO: 598; 
Alternative w/CBO: 1049. 

Fiscal year: 2078; 
Baseline extended: 527; 
Alternative simulation: 970; 
Baseline w/CBO: 619; 
Alternative w/CBO: 1081. 

Fiscal year: 2079; 
Baseline extended: 544; 
Alternative simulation: 996; 
Baseline w/CBO: 641; 
Alternative w/CBO: 1114. 

Fiscal year: 2080; 
Baseline extended: 560; 
Alternative simulation: 1024; 
Baseline w/CBO: 662; 
Alternative w/CBO: 1147. 

Fiscal year: 2081; 
Baseline extended: 577; 
Alternative simulation: 1051; 
Baseline w/CBO: 685; 
Alternative w/CBO: 1180. 

Fiscal year: 2082; 
Baseline extended: 595; 
Alternative simulation: 1079; 
Baseline w/CBO: 707; 
Alternative w/CBO: 1215. 

Fiscal year: 2083; 
Baseline extended: 612; 
Alternative simulation: 1108; 	
Baseline w/CBO: 731; 
Alternative w/CBO: 1250. 

Source: GAO. 

[End of figure] 

Figure: Revenues and Composition of Spending as a Share of GDP: Under 
Baseline Extended Simulation Based on the Trusteesí Assumptions for 
Social Security and Medicare (Percent of GDP): 

[Refer to PDF for image: combined stacked vertical bar and line graph] 

Fiscal year: 2008; 
Net interest: 1.8; 
Social Security: 4.3; 
Medicare & Medicaid: 4.1; 
All other spending: 10.8; 
Revenue: 17.7. 

Fiscal year: 2019; 
Net interest: 2.7; 
Social Security: 5.2; 
Medicare & Medicaid: 5.8; 
All other spending: 8.5; 
Revenue: 20.3. 

Fiscal year: 2030; 
Net interest: 3.4; 
Social Security: 6; 
Medicare & Medicaid: 7.9; 
All other spending: 8.5; 
Revenue: 20.3. 

Fiscal year: 2040; 
Net interest: 5.5; 
Social Security: 6.2; 
Medicare & Medicaid: 9.6; 
All other spending: 8.5; 
Revenue: 20.3. 

Source: GAO. 

Notes: Simulation results using CBOís projections for Social Security 
and Medicare are not materially different. 

[End of figure] 

Figure: Revenues and Composition of Spending as a Share of GDP: Under 
Alternative Simulation Based on the Trusteesí Assumptions for Social 
Security and Medicare (Percent of GDP): 

[Refer to PDF for image: combined stacked vertical bar and line graph] 

Fiscal year: 2008; 
Net interest: 1.8; 
Social Security: 4.3; 
Medicare & Medicaid: 4.2; 
All other spending: 10.7; 
Revenue: 17.7. 

Fiscal year: 2019; 
Net interest: 4; 
Social Security: 5.2; 
Medicare & Medicaid: 6; 
All other spending: 10.7; 
Revenue: 18.5. 

Fiscal year: 2030; 
Net interest: 7.1; 
Social Security: 6; 
Medicare & Medicaid: 8.1; 
All other spending: 10.7; 
Revenue: 18.6. 

Fiscal year: 2040; 
Net interest: 11.8; 
Social Security: 6.2; 
Medicare & Medicaid: 9.9; 
All other spending: 10.7; 
Revenue: 18.6. 

Source: GAO. 

Notes: Simulation results using CBOís projections for Social Security 
and Medicare are not materially different. 

[End of figure] 

Table: Federal Fiscal Gap (2009-2083): Under GAOís Simulations Based on 
the Trusteesí Assumptions for Social Security and Medicare: 

Baseline Extended: 
Fiscal gap: Trillions of present value 2009 dollars: $33.7; 
Fiscal gap: Percent of GDP: 4.3%; 
Change required to close gap: Percent increase in revenue: 21.5%; 
Change required to close gap: Percent decrease in noninterest
spending: 18.0%. 

Alternative: 
Fiscal gap: Trillions of present value 2009 dollars: $62.9; 
Fiscal gap: Percent of GDP: 8.1%; 
Change required to close gap: Percent increase in revenue: 43.6%; 
Change required to close gap: Percent decrease in noninterest
spending: 30.9%. 

Source: GAO. 

Notes: The fiscal gap is the amount of spending reduction or tax 
increases that would be needed to keep debt as a share of GDP at or 
below todayís ratio over a certain time period, such as 75 years as 
shown above. Results from simulations using CBOís projections for 
Social Security and Medicare are not materially different. 

[End of table] 

Table: Key Budget Assumptions: For Simulations Based on the Trusteesí 
Assumptions for Social Security and Medicare: 

Model Inputs: Revenue; 
Baseline Extended: CBOís March 2009 baseline through 2019; thereafter 
remains constant at 20.3 percent of GDP (CBOís projection in 2019); 
Alternative: CBOís estimates assuming expiring tax provisions other 
than those enacted in the Recovery Act are extended through 2019; 
thereafter equal to 40-year historical average of 18.3 percent of GDP 
plus revenue from tax-deferred retirement plans. 

Model Inputs: Social Security spending; 
Baseline Extended: CBOís March 2009 baseline through 2019; thereafter 
based on 2008 Social Security Trusteesí intermediate projections; 
Alternative: Same as Baseline Extended. 

Model Inputs: Medicare spending; 
Baseline Extended: CBOís March 2009 baseline through 2019; thereafter 
2008 Medicare Trusteesí intermediate projections that assume per 
enrollee Medicare spending grows on average 1 percent faster than GDP 
per capita over the long term; 
Alternative: 2008 Trustees intermediate projections adjusted for the 
Centers for Medicare & Medicaid Servicesí alternative assumption of 0 
percent physician payment updates in the first 10 years. 

Model Inputs: Medicaid spending; 
Baseline Extended: CBOís March 2009 baseline through 2019; thereafter 
CBOís December 2007 long-term projections adjusted to reflect excess 
cost growth consistent with the 2008 Medicare Trusteesí intermediate 
projections; 
Alternative: Same as Baseline Extended. 

Model Inputs: Other mandatory spending; 
Baseline Extended: CBOís March 2009 baseline through 2019; thereafter 
remains constant as a share of GDP at 2.1 percent of GDP; 
Alternative: Baseline Extended adjusted for extension of certain tax 
credits through 2019; thereafter remains constant at 2.2 percent of 
GDP. 

Model Inputs: Discretionary spending; 
Baseline Extended: CBOís March 2009 baseline through 2019; thereafter 
remains constant at 6.4 percent of GDP; 
Alternative: Discretionary spending other than Recovery Act provisions 
increases at the rate of economic growth after 2009 (i.e., remains 
constant at 8.5 percent of GDP); Recovery Act provisions are included 
but assumed to be temporary. 

Source: GAO. 

Note: CBOís March 2009 projections are from A Preliminary Analysis of 
the Presidentís Budget and an Update of CBOís Budget and Economic 
Outlook and the Trusteesí projections are from The 2008 Annual Report 
of the Board of Trustees of the Federal Old-Age and Survivors Insurance 
and Federal Disability Insurance Trust Funds and 2008 Annual Report of 
the Boards of Trustees of the Federal Hospital Insurance and Federal 
Supplementary Medical Insurance Trust Funds, which were both issued on 
March 25, 2008. 

[End of table] 

Table: Key Budget Assumptions That Change in Simulations Using CBOís 
Entitlement Spending Projections: 

Model Inputs: Social Security spending; 
Baseline Extended: CBOís March 2009 baseline through 2019; thereafter 
CBOís August 2008 projections that assume full benefits as calculated 
under current law are paid regardless of the amounts available in the 
trust funds. These projections are based on the 2008 Social Security
Trusteesí demographic projections and CBOís own economic assumptions. 
Alternative: Same as Baseline Extended. 

Model Inputs: Medicare spending; 
Baseline Extended: CBOís March 2009 baseline through 2019; thereafter 
CBOís December 2007 projections based on current law. Per enrollee 
Medicare spending grows on average 1.7 percentage points faster than 
GDP per capita over the long term. 
Alternative: Based on CBOís projections that assume physician payment 
rates grow with inflation (using the Medicare Economic Index)[A]. 

Model Inputs: Medicaid spending; 
Baseline Extended: CBOís March 2009 baseline through 2019; thereafter 
CBOís December 2007 long-term projections based on current law. Per 
enrollee Medicaid spending grows on average 0.9 percentage points 
faster than GDP per capita over the long term. 
Alternative: Same as Baseline Extended. 

Source: GAO. 

Notes: CBOís projections are from Updated Long-Term Projections for 
Social Security (August 2008) and The Long-Term Budget Outlook 
(December 2007). 

[A] This is slightly higher than the assumption used in GAOís 
alternative using the 2008 Trusteesí assumptions. In the Trusteesí 
analysis, expenditures under the Medicare Economic Index are 22.5 
percent higher than current law by 2017, whereas expenditures under the 
0 percent update are only 16.8 percent higher. 

[End of table] 

Table: Federal Revenue and Discretionary Spending as Shares of GDP: 
Historical Averages and Assumptions after 2019 in Both Sets of GAOís 
Simulations (Percent of GDP): 

Total revenue: 
20-year historical average: 18.4%; 
40-year historical average: 18.3%; 
Baseline Extended: 20.3%; 
Alternative: 18.7%[A]. 

Discretionary spending: 
20-year historical average: 7.6%; 
40-year historical average: 8.9%; 
Baseline Extended: 6.4%; 
Alternative: 8.5%. 

[A] Average over the period from 2020 to 2083 represents a return to 
the 40-year historical revenue average of 18.3 percent of GDP plus 
expected revenues from deferred taxes (i.e., taxes on withdrawals from 
retirement accounts). 

Sources: CBO and GAO. 

Note: Simulation values represent GAOís assumptions for year 10 and 
beyond and are the same regardless of whether we use the Trusteesí or
CBOís projections for Social Security and Medicare. 

[End of table] 

Table: Key Economic Assumptions Used in Both Sets of Simulations: 

Model inputs: Labor: growth in hours worked; 
All simulations: 2008 Social Security Trusteesí intermediate 
projections. 

Model inputs: Nonfederal saving: gross saving of the private sector and 
state and local government sector; 
All simulations: Increases gradually over the first 10 years to 18.5 
percent of GDP (the average nonfederal saving rate from 1950 to 2008). 

Model inputs: Current account balance (percent of GDP); 
All simulations: From 2009 to 2019, 2008 share of GDP plus one-third of 
any change in gross national saving from 2008; thereafter equal to 2019 
nominal level plus one-third of any change in gross national saving 
from 2008. 

Model inputs: Total factor productivity growth; 
All simulations: 1.4 percent through 2019 (CBOís March 2009 short-term 
assumption); 1.4 percent thereafter (long-term average from 1950 to 
2008). 

Model inputs: Inflation (percent change in GDP price index): 
All simulations: CBO March 2009 baseline through 2019; 1.6 percent 
thereafter (CBOís projection in 2019). 

Model inputs: Interest rate (on publicly held debt); 
All simulations: Rate implied by CBOís March 2009 baseline net interest 
payment projections through 2019; 5.0 percent thereafter (the rate 
implied in 2019). 

Source: GAO. 

Note: GDP in GAOís simulations does not incorporate the negative effect 
of long-term deficits on the economy. GDP is derived using a textbook 
growth model in which national saving remains stable over the long 
term. The same GDP is used in each budget simulation. 

[End of table] 

We conducted this work from January to April 2009 in accordance with 
generally accepted government auditing standards. Those standards 
require that we plan and perform the audit to obtain sufficient, 
appropriate evidence to provide a reasonable basis for our findings and 
conclusions based on our audit objectives. We believe that the evidence 
obtained provides a reasonable basis for our findings and conclusions 
based on our audit objectives. 

This product is part of a body of work on the long-term fiscal 
challenge. Related products and additional information about the GAO 
model and data can be found at: [hyperlink, 
http://www.gao.gov/special.pubs/longterm/]. 

[End of section] 

Footnote: 

[1] The 1-year extension of the increased exemption amount for the AMT 
that is part of the Recovery Act was not extended because updated
estimates were not available. While extending the AMT could reduce 
revenue by over $600 billion over the first 10 years, it would not 
affect the long-term outlook in our simulation because we assume that 
revenue/GDP returns to its historical average over the long term. 

[End of section] 

GAO's Mission: 

The Government Accountability Office, the audit, evaluation and 
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