The Government Accountability Office (GAO) released projections this week that serve as a reminder of the importance of the deficit reduction committee’s work and the need for it to exceed the $1.2 trillion target necessary to avoid automatic spending cuts.
GAO concludes that “simulations continue to underscore the need to address the longer-term outlook as soon as possible while still recognizing the current weakness in the economy.” According to GAO, if the super committee is successful in reaching the $1.2 trillion deficit-reduction target for the next 10 years “even this level of deficit reduction is not sufficient to ensure sustainability.”
The fiscal outlook has improved somewhat due to savings in the Budget Control Act. However, even when these savings are accounted for, GAO’s alternative scenario (including more realistic spending and revenue assumptions) projects that by 2027 debt held by the public would exceed the post-World War Two high of 109 percent of GDP. Absent reforms, spending on Social Security and major health care entitlement programs would increase from 9.8 percent of GDP in 2011 to 14.5 percent of GDP by 2030.
The joint committee continued its work last week, meeting with the Senate’s “Gang of Six,” a bipartisan group that has recommended $4 trillion in deficit reduction over the next 10 years and served as a model for compromise on fiscal reform.
Tomorrow the joint committee is scheduled to hold a public hearing on discretionary spending in the federal budget and will hear again from Doug Elmendorf, director of the Congressional Budget Office.