About the Long-Term Federal Fiscal Model

Source: GAO
Note: Data are from GAO’s Spring 2012 simulations based on the Trustees’ assumptions for Social Security and the Trustees’ and CMS Actuary’s assumptions for Medicare. The category Medicare and Medicaid also includes spending for insurance exchange subsidies and CHIP.

Alternative simulation data: txt pdf

A simulation is a hypothetical—a “what if?” GAO runs two simulations of the federal budget that illustrate the potential implications of different policy choices. Each simulation represents a bundle of budgetary and policy assumptions carried far out into the future. The simulations are not intended as predictions about the future. Rather, they can facilitate comparisons of the potential long-term budgetary consequences of alternative fiscal policy paths.

Our "Baseline Extended" simulation follows the Congressional Budget Office's (CBO) baseline estimates for the first 10 years and then simply holds revenue and spending other than large entitlement programs constant as a share of gross domestic product (GDP). Under the "Alternative" simulation, changes are made to the assumptions to reflect historical trends and preferences.

The chart above shows revenue and the composition of spending under the Alternative simulation moving forward. Assuming historic revenue and spending trends continue, spending for Medicare, Medicaid, Social Security, and net interest costs exceeds revenues by 2030 and, by 2040, 73 cents of every federal dollar spent would go to these categories.

For more information on the assumptions used in each of the simulations, see:

Overview of the Spring 2012 Model (PDF)