The Government Accountability Office (GAO) on Monday issued the fall update of its long-term fiscal outlook, underscoring the need for a more sustainable fiscal path in Washington.
As in the past, the GAO presents two different simulations: the Baseline Extended, which generally reflects current law, and the Alternative Simulation, which assumes some changes in current law. Under either scenario, GAO says, federal debt held by the public would grow as a share of the gross domestic product (GDP).
“While the timing and pace of growth varies depending on the assumptions used,” the report says, “neither set of assumptions achieves a sustainable path.”
The GAO also cautions against excessive reliance on cuts in discretionary spending, the part of the budget that many members of Congress focus on in discussing deficit reduction: “Discretionary spending limits alone do not address the fundamental imbalance between estimated revenue and spending, which is driven largely by the aging of the population and rising health care costs.”
In both of its simulations, GAO says, “spending for the major health and retirement programs will increase in coming decades, putting greater pressure on the rest of the federal budget.” It notes that the number of baby boomers turning 65 is projected to increase to 11,000 per day in 2029, up from 7,600 a day last year.