GAO: Federal Government is on Unsustainable Fiscal Path

By on December 7, 2012 in News

The Government Accountability Office said in a recent report that the federal government is on an unsustainable long term fiscal path.

GAO looked at two different scenarios in doing its analysis, and neither one produced a sustainable outcome.

One scenario was the Baseline Extended simulation which reflects a number of fiscal policy changes contained in current law that are projected to sharply reduce spending and raise revenue from their current levels beginning in 2013.

The second scenario was the Alternative simulation under which historical trends and past policy preferences are assumed to continue and in which revenue is lower and spending is higher than in the Baseline Extended simulation.

In both GAO simulations spending for the major health and retirement programs will increase in coming decades, putting greater pressure on the rest of the federal budget. For the first few decades this spending is driven largely by the aging of the population. The oldest members of the baby-boom generation are already eligible for Social Security retirement benefits and for Medicare, and the number of baby boomers turning 65 is projected to grow in coming years from an average of about 7,600 per day in 2011 to more than 11,000 per day in 2029.

According to GAO, if the federal government continues on the current path and borrows from the public to finance the growing imbalance between revenue and spending, by 2040 more than half of all federal revenue will go to net interest payments. An individual or business operating under such circumstances would be in bankruptcy; GAO is sending a clear warning to the government that it’s heading in that direction.

The full report is available on the GAO web site.

© 2016 Ian Smith. All rights reserved. This article may not be reproduced without express written consent from Ian Smith.

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Ian Smith is one of the co-founders of FedSmith.com. He enjoys writing about current topics that affect the federal workforce. Ian also has a background in web development and does the technical work for the FedSmith.com web site and its sibling sites.

26 Replies

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  1. Just Sad says:

    It’s so easy to get emotional on such an issue.  Have any of the commentators acutally read the report that was the subject of the article?  Lost in the comment chain is an acknowledgment of our Consititution.  Article I gives the power of the purse to the Legislature.  The Executive proposes a budget and whatever is enacted or not depends on what Congress decides to pass and present to the Executive.  If there is a deficit, blame Congress.  If there is a surplus, praise Congress.  The real shame is the poisonous air in DC and the apparent hard feelings among the politicos that prevents them from trusting/respecting/compromising with each other.  The pubic statements and grandstanding for sound bites makes it worse.  The President has the advantage of the bully pulpit but he does not seem to be using it to bring the parties together.  United we stand.  Divided we fall.  I plan to read the GAO Report and am sure I’ll learn something. 

  2. Super_Babysitter says:

    Politicians don’t care…..

    It’s not their money. As I have said before they just want to stay in office and to hell with us.

  3. Rebeccajeffers says:

    The next pandemic will fix the problem including medicare/medicaid, social security, pensions, over crowded nursing homes, housing shortages and unemployment… the estate taxes will lift up the budget and those few of us left will be saved. 

  4. Dbow says:

    I would blame this on both parties.  A huge debt is Social Security.  If our beloved politicians had invested the money we’ve all paid in, in even a low interest bond fund, we wouldn’t have that debt now.  Social Security would be solvent.  But they didn’t.  They all spent it and have let us with a bunch of IOUs.v  How many other examples can you think of.

  5. msgrowan says:

    GAO has said the same thing over many years and has essentially replicated the Trojan princess Cassandra’s fate of having the gift of prophecy, but is also similarly condemned to being ignored when they, like she,  issued warnings of imminent disaster.  The previous GAO Comptroller General, David Walker, began the agency’s series of increasingly sharp admonitions to policy makers regarding the fiscal implications of our nonsustainable spending, and has also continued doing so since his departure.  The reality is that at bottom there are consequences for poor fiscal policy choices (anyone heard of Europe?), and we are mortgaging our children’s future by our profligate spending ways.  Upon coming to office, President Obama inherited a nation with a staggering $9 trillion national debt.  Now, almost four years later he has overseen the addition of another $7 trillion plus to it, and his administration’s budgetary projections covering the next decade foresee no substantial reining in of our spending spree.  The Federal government now spends at the rate of 23 percent of our GDP, a major increase over the 19-20 percent rate of the administrations of his two most recent predecessors.  Let’s recognize that both major parties have contributed to our present predicament; the problem remains that there does not appear to be the political will to actually reverse our current slide to fiscal oblivion.  The angst and hand wringing excited by the prospect of a “fiscal cliff” (though it’s more in the nature of a “slide” than a “cliff”) is instructive.  It reflects the fact that the 2011 bipartisan budget deal establishing the fiscal cliff scenario was a sham, which both sides had no real interest in seeing actually occur.  However, if not now just when will we begin to face up to the consequences of our disastrous policy choices?  Our inability to tolerate any fiscal “pain” is predictive of an answer, which is apparently not until we’ve arrived at a point, as has Europe, when there are absolutely no other possibilities left for evading the consequences of decades of feckless policy decisions.  The prospects of GAO warnings being acted on affirmatively now appear to be about as good as those of the survival of the proverbial snowflake in Hades. 

    • Ross200 says:

      The first step towards fiscal recovery is simple and rather intuitive.  Let’s let the Bush Tax Cuts expire for everyone. Of course, in the 2012 National Exit Poll and other polls only about 10-13 of the American People support this approach. There would be yelling and howling if this was done and many political careers would be destroyed, but it is the right thing to do. Msgrowan, are you ready to give up your Bush Tax Cut to save the nation? I am ready. 

  6. Fly Ace says:

    The royal couple in DC will spend our money on their lifestyle and the country can go down the toilet just as he was put there to do.  I dred what may happen when the people who voted for him again wake up.  This may result in disaster!!!!
     

    • RetFed says:

      Hey we have years of failed economic policies to blame for this mess.  Starting with Trickle Down Ronnie!

  7. little taxpayer says:

    They didn’t factor in the effects of Obamacare.  It’s already hard to find physicians who will treat the elderly for the reimbursement provided by Medicare.  Obamacare further reduces payments to health care providers, which will lead to a shortage of medical care for seniors.  Obama was sincere in 2008 when he told that woman that her sick mother would just have to take pain pills and die to make room for younger, more productive workers to get health care. There aren’t going to be nearly as many surviving seniors as the GAO predicts.

  8. Rbarron1 says:

    To bad we know what the problem is but we just keep on blaming the other guy. Can we not find the middle.

    • ReaperComing says:

      have seen the abe lincon movie yet gives good insight to what happens as a country begins to crumble apart similiar to today, except no great leaders anymore

  9. grannybunny says:

    I sincerely hope they didn’t spend too much money to arrive at a conclusion that everyone already knew.

  10. steve5656546346 says:

    We knew this before the election:  we voted to go bankrupt.

    • RedRacer1999 says:

      It was known in 2000 but Bush was elected anyway and racked up 13 trillion in debt. But don’t worry, he and his family are doing just fine in Texas on the ranch we taxpayers spent millions to improve.

      • PA says:

        Very scary times for the federal worker and retiree and the entire country.
        We are in this together – stop blaming.

      • Mad as h*** fed says:

        yeah and so is the CURRENT president—he’ll no doubt be ‘waving’ to all of us from his VILLA VACATION in Hawaii while we FALL off the clif HE created!!!!!!!!!!!

      • Combat Vet. says:

        I suppose the new Admin. has NOT racked up any debt.  You must be one of the idiots who voted to ruin this great nation.
        A combat Vet.

      • Msgrowan says:

        The national debt was approximately $9 trillion at the conclusion of the second Bush administration (much of which had been incurred in earlier administrations).  In the less than four years since, President Obama has pushed that total to $16 trillion plus, racking up $7 trillion plus on his own in his yet-to-be -completed first term.  Tsk, tsk.  Bush was such a piker in comparison.   His successor knows how to REALLY spend (and more to come).

        • Ross200 says:

          What a selective analysis of the facts of on the deficit and debt.  How much of the current deficit and debt is due to the Bush Tax cuts which the country could not afford?  How much of the deficit and debt is due to the Iraq and Afghanistan Wars started by President Bush?  How much of the deficit and debt is due to the economic collapse and recession caused Wall Street, banks, mortgage companies etc. and the failure of the Bush Administration to regulate business. Much of the so called Obama deficit spending is for unemployment benefits  food stamps etc. to take care of those impacted by the unfortunate economic conditions.   You right wing Republicans are so selection with the facts.  

      • $15300432 says:

        Hmmm facts and history aren’t your friends are they??

  11. Andy2x says:

    How long did it take them to figure that one out?

  12. Fed_Peasant says:

    I think that the 2040 scenario will come sooner….much sooner!

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