America's Fiscal Future
This big-picture look at the nation’s fiscal condition covers the federal government’s financial statements; the federal debt; federal, state, and local fiscal projections; and budget trends.
Action Is Needed to Address the Federal Government’s Fiscal Health
Congress and the administration face serious economic, security, and social challenges that will require difficult policy choices in the short term in setting national priorities and charting a path forward for economic growth. This will influence the level and composition of federal spending and how the government obtains needed resources. Decisions over the short term to enhance economic growth and address national policies need to be accompanied by a broader fiscal plan to put the government on a path that is sustainable over the long term.
So, what’s new this year? Read our April 2019 press release on our report on the nation’s fiscal health and listen to our podcast to find out more.
Tough Choices and Opportunities Ahead
To change the long-term fiscal path, policymakers will need to consider policy changes to the entire range of federal activities, both revenue and spending (entitlement programs, other mandatory spending, and discretionary spending). One way to quantify the magnitude of the needed policy changes is by calculating the fiscal gap—the difference between revenue and program spending (aside from spending on interest payments)—that would need to be closed immediately and permanently to hold debt as a share of GDP constant over the next 75 years. If action is delayed, the necessary changes will be more significant.
While long-term changes in spending and revenue require legislation, executive agencies have other opportunities to contribute to a sustainable fiscal future.
- Federal agencies made an estimated $151 billion in fiscal year 2018 in improper payments — payments that should not have been made or that were made in an incorrect amount.
- There is an estimated average net tax gap of $406 billion/year — which is the difference between taxes owed to the government and total taxes paid (on time or after IRS enforcement actions). We have made recommendations to improve tax enforcement efforts.
- Federal agencies could also save tens of billions of dollars by taking our recommended actions — specifically the ones for addressing duplication, overlap, and fragmentation, and achieving potential cost savings.
Senior Advisor, Debt & Fiscal Issues