The Nation's Long-Term Fiscal Outlook:
January 2007 Update
GAO-07-510R: Published: Feb 23, 2007. Publicly Released: Feb 23, 2007.
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. In 1992 GAO said: "The federal budget is structurally unbalanced. This will do increasing damage to the economy and is unsustainable in the long term. Regardless of the approach chosen, prompt and meaningful action is essential. The longer it is delayed, the more painful it will be." These words are as relevant today as when GAO first published them. GAO updates its simulations three times a year as new estimates become available from the Congressional Budget Office's (CBO) Budget and Economic Outlook (January), Social Security and Medicare Trustees Reports (early spring), and CBO's Budget and Economic Outlook: An Update (late summer).
GAO's current long-term simulations continue to show ever-larger deficits resulting in a federal debt burden that ultimately spirals out of control. Although the timing of deficits and the resulting debt build up varies depending on the assumptions used, both simulations GAO produced show that we are on an unsustainable fiscal path.