Action Is Needed to Address the Federal Government’s Fiscal Health
The nation faces serious fiscal challenges that require Congress and the administration to make difficult, near-term policy choices in setting national priorities and charting a path forward for economic growth. These choices will influence the level and composition of federal spending and how the government obtains needed resources. Decisions in the near term to enhance economic growth and address national priorities need to be accompanied by a forward-looking fiscal plan to put the government on a sustainable long-term path.
Tough Choices and Opportunities Ahead
To change the long-term fiscal path, policymakers will need to consider policy changes to the entire range of federal activities, both revenue (including tax expenditures) and spending (entitlement programs, other mandatory spending, and discretionary spending). One way to quantify the magnitude of the needed policy changes is by calculating the fiscal gap—the difference between revenue and program spending (aside from spending on interest payments)—that would need to be closed immediately and permanently to hold debt as a share of GDP constant over the next 75 years. If action is delayed, the necessary changes will be more significant.