Exploring the Tough Choices for a Sustainable Fiscal Path
Because federal spending and revenue remain imbalanced, the federal government is on an unsustainable fiscal path. GAO regularly analyzes the nation’s fiscal outlook to monitor the situation. Specifically, we project the debt and the fiscal gap to give a sense of the government’s ability to meet future spending needs and absorb potential fiscal shocks.
Debt held by the public is the total amount of money that the federal government owes to its investors. We project the debt (what is owed) in relation to the size of the economy (what is earned—the gross domestic product, or GDP) to gauge the nation’s ability to repay the debt.
The fiscal gap measures the policy change needed for the government to reach a target ratio of debt to GDP from the start to the end of a specified period.
We also run a sensitivity analysis to give policymakers a more complete picture of how potential economic and fiscal changes to our assumptions about the variables can affect the fiscal outlook. You can explore the effects of different variables on the debt in the graphs below. We’ve also included a fiscal gap calculator to simulate sample policy scenarios for making the nation’s fiscal path more sustainable.
For more information about our data and the assumptions we used in the simulation, please see Appendix I of our related report, GAO-21-211.
Part one: Debt Sensitivity Analysis
The blue line below indicates how we project the debt will grow if no variables are adjusted. To see how our simulations change if variables are adjusted as compared to our standard assumptions, select one:
Part two: Fiscal Gap Sensitivity Calculator
|What debt target would you like to achieve in 30 years?
|What variable do you want to adjust?
|Do you want to raise or lower the variable?