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New Report, Familiar Conclusions
May 13, 2014
"A fundamental imbalance..."
"...continuous growth in debt..."
The Government Accountability Office (GAO) uses all of these phrases to describe its most recent long-term budgetary projections, underscoring a less-than-ideal outlook for federal debt and deficits. GAO ran two simulations in its latest report: a "Baseline Extended" forecast, which uses the Congressional Budget Office's (CBO) legislative assumptions, and an "Alternative Scenario" that assumes revenue and discretionary spending will grow at rates closer to historical averages. Either way, GAO predicts spending will rapidly outpace revenues in the coming years:
As the graphs above show, net interest and mandatory spending programs will continue to grow as a percentage of GDP under both models, even in the "Extended Baseline" scenario which assumes tax extenders will not be renewed and discretionary spending caps will be upheld. The report also mentions looming demographic shifts that will continue to affect the nature of federal spending for years to come: by 2029, nearly 11,000 baby boomers will reach the retirement age of 65 every single day, which means much higher spending on retirement and health benefits.
The Committee for a Responsible Federal Budget has some helpful context on the GAO's assumptions, and how their projections compare to others.
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