Most Recent Federal Fiscal Outlook Report

Summary

Since 1992, GAO has published long-term fiscal simulations showing federal deficits and debt levels under both "Baseline Extended" and an "Alternative" set of assumptions. GAO has regularly updated these twice a year. GAO developed its long-term model in response to a bipartisan request from Members of Congress concerned about the long-term effects of fiscal policy. GAO's simulations provide a broad context for consideration of policy options by illustrating both the importance of taking action and the magnitude of the steps necessary to change the path. They are not intended to suggest particular policy choices that are the prerogative of elected officials but rather to help facilitate a dialog on this important issue.

GAO’s simulations continue to underscore the need to address the long-term outlook as soon as possible while still recognizing the current weakness in the economy. Rising health care costs and the aging of the U.S. population continue to create budgetary pressure. The oldest members of the baby-boom generation are already eligible for Social Security retirement benefits and Medicare. The Social Security program, which historically ran large cash surpluses that helped reduce the need to borrow from the public to finance other programs, is now projected to pay more in benefits than it receives in tax income each year into the future. Budgetary pressure will increase in coming decades as more members of the baby-boom generation retire and become eligible for federal health programs. The policy actions required to address the long-term fiscal challenge are significant, and changing the outlook will likely require difficult decisions about both federal spending and revenue. The challenge is made greater by the need to balance these actions to address the long-term outlook with their potential effects on the economic recovery.

The Federal Government's Long-Term Fiscal Outlook
April 2012 Update
GAO-12-521SP, April 2, 2012