The Nation's Long - Term Fiscal Challenge
GAO’s simulations lead to an overarching conclusion: current fiscal policy is unsustainable over the long term. Absent reform of federal retirement and health programs for the elderly--including Social Security, Medicare, and Medicaid--federal budgetary flexibility will become increasingly constrained. Assuming no changes to projected benefits or revenues, spending on these entitlements will drive increasingly large, persistent, and ultimately unsustainable federal deficits and debt as the baby boom generation retires.
Other federal programs and activities also bind the future by obligating the federal government to future spending or create an expectation for spending. These “fiscal exposures” range from explicit liabilities such as environmental cleanup requirements to more implicit obligations presented by lifecycle costs of capital acquisition or disaster assistance. More accurate and transparent measurement is needed so that today’s budget decisions can take into account these potential future costs.
Ultimately, addressing the challenges of the future will require looking at the entire range of federal activities. All types of federal spending—that is, for both discretionary and entitlement programs—and tax expenditures will need to be re-examined. As we move forward, the federal government will need to make tough choices in setting priorities and linking resources to results. GAO maintains a publicly available web site reflecting the results of its work on, and recommendations for addressing, the nation’s major issues, risks and challenges. The website was put together for the start of the 111th Congress and for the transition from the Bush to the Obama administrations.