The Government Accountability Office (GAO) offers a blunt title for its most recent review of US fiscal policy: “The Nation’s Fiscal Health — Urgent and Sustained Action Needed to Improve the Fiscal Outlook (June 2026).
This figure shows the current-law projection of where US federal debt is headed, a projection built on the cheerful assumption that no new catastrophes like the Great Recession of 2008-09 or the COVID pandemic happen in the next 30 years or so.
The reasons why are the world’s worst-kept secret. For decades now, it was apparent that the oversize baby boomer generation born in the two decades after WWII would be retiring about now. For decades now, it has been apparent that the US health care system is driving up costs faster than the overall growth of the economy. Put these together, and the table shows that Social Security is projected to account for a rising share of GDP in the next 30 years, as are federal health care outlays (Medicare, Medicaid, the health insurance exchanges, and other programs).
In addition, the US government is right at the cusp of hitting one of the key signs of excessive debt, whether you are a person, a firm, or the government: the vicious cycle where interest payments start rising fast, because interest payments on past debt are so high that they are pushing up the need for more borrowing, which leads in turn to still-higher interest payments in the future.
The GAO asks what it would take to keep total US debt about where it is, at about 100% of GDP, heading into the future. Notice that this modest proposal would not require that the annual federal budget be balanced. It would just mean that annual deficits would be restrained enough that the total accumulated debt would grow only as fast as the overall economy. GAO writes:
To maintain debt held by the public at 100 percent of GDP in 2056 … our projections
estimate that the federal government would need to reduce deficits (i.e., reduce
the fiscal gap) by
- collecting 26 percent more revenue each and every year,
- spending 21 percent less each and every year on programs, or
- achieving comparable deficit reduction through a combination of revenue
increases and spending decreases.
It is deeply dispiriting to me that no prominent policy-maker at the federal level, of either party, has an actual plan for dealing with this situation. If you take the numbers seriously, taxing the wealthy (without any corresponding rise in spending) or cutting fraud and abuse (without any corresponding cut in taxes), whatever the merits of such proposals, are not large enough to even be in the right ballpark of what needs to be done–and thus are fundamentially unserious as proposals.
