GAO Finds US Fiscal Policy Unstable

The bipartisan Government Accountability Office (GAO) reports that the fiscal policy of the U.S. Government remains today, as their analysts found it in 1992, "structurally unbalanced" and if unchanged, destined to result in a "federal debt burden that ultimately spirals out of control."

In the Sept. 2006 update to its The Nation's Long-Term Fiscal Outlook (.pdf) report to Congress, GAO presents "what if" simulations of the government’s fiscal outlook through 2050. The "what ifs" applied by GAO are that discretionary spending may grow faster or slower, and that current tax cuts may be renewed or allowed to expire. Under all of the scenarios analyzed, GAO finds the nation’s long-term fiscal future to be "at risk."

Under any reasonable set of expectations about future spending and revenues, the risks posed to the Nation's future financial condition are too high to be acceptable.

By definition, what is unsustainable will not be sustained. The question is how our current imprudent and unsustainable path will end. At some point, action will be taken to change the Nation's fiscal course.

The sooner appropriate actions are taken, the sooner the miracle of compounding will begin to work for the federal budget rather than against it. Conversely, the longer action to deal with the Nation's long-term fiscal outlook is delayed, the greater the risk that the eventual changes will be disruptive and destabilizing. – Sept. 2006 Update: The Nation's Long-Term Fiscal Outlook (.pdf)

Also See:
US Debt vs. US Deficit
Bush: US Budget Faces "New Realities" Since 9-11
The Federal Budget Process