Roadmap Needed to Address the Challenges Threatening the Nation's Long‐Term Fiscal Health

• Author: Gene L. Dodaro
• DOI: http://doi.org/10.1111/puar.12881
• Published date: 01 November 2017
• Date: 01 November 2017

Roadmap Needed to Address the Challenges Threatening the Nation’s Long-Term Fiscal Health 813

Public Administration Review,

Vol. 77, Iss. 6, pp. 813–814. Published 2017.

This article is a U.S. Government work

and is in the public domain in the USA.

DOI: 10.1111/puar.12881.

Gene L. Dodaro has served as the

eighth comptroller general of the United

States and head of the U.S. Government

Accountability Office (GAO) since 2010.

From 2008, he served as acting comptroller

general. Dodaro has testified before

Congress on important national issues,

including the nation ’ s long-term fiscal

outlook, efforts to reduce and eliminate

overlap and duplication across the federal

government, and GAO ’ s “High Risk

List” that focuses on specific challenges

from reducing improper payments under

Medicare and Medicaid to improving the

Pentagon ’ s business practices.

E-mail: griffithf@gao.gov

Perspective

O ur nation confronts a number of serious

economic, security, and social challenges that

require urgent attention from policy makers

in Washington. Solving these problems requires

tough choices about the level of federal spending

and investments, as well as difficult decisions about

ways to obtain needed resources. These challenges are

complicated by our government ’ s high and rising debt

as a share of the economy or gross domestic product

(GDP). The longer we wait to put together a plan of

action, the more difficult and painful solutions will be.

Today ’ s debt-to-GDP ratio is already high by

historical standards. Without a fundamental change

in fiscal policy, the structural imbalance between

revenue and spending will continue to grow. Simply

put, we are on an unsustainable long-term fiscal path.

My agency, the Government Accountability Office

(GAO), is extremely concerned about this situation

and has started issuing an annual report that provides

a frank assessment of the federal government ’ s fiscal

health.

Both Congress and the executive branch continue

to grapple with how to boost economic growth

and address national priorities in the short term.

In addition to near-term financing decisions, a

broader plan is needed to put the government on

a more sustainable long-term path. Such a plan

will ensure the United States can meet its future

security and social needs and has the flexibility to

address unforeseen events, such as the hurricanes that

recently battered Texas and Florida, or cyberattacks,

pandemics, and financial crises.

Last year saw a significant increase in both the

national deficit and the debt. According to the 2016

Financial Report of the United States Government,

the federal deficit reached $587 billion in fiscal year

2016—up from $439 billion the previous year. The

growth in federal receipts was relatively small ($18

billion), mainly due to extensions of tax preferences,

while spending grew $166.5 billion, largely

attributable to outlays for social security, Medicare,

and Medicaid, and interest on publicly held debt.

Debt held by the public increased from 74 percent

of GDP at the end of fiscal year 2015 to 77 percent

at the end of fiscal year 2016. To put that into

perspective, the average debt since1946 has equaled

44 percent of GDP.

The federal government ’ s long-term fiscal outlook

is unsustainable. The 2016 Financial Report , the

Congressional Budget Office (CBO) and GAO all

project that, unless there are policy changes, the debt-to-

GDP ratio will surpass its historical high of 106 percent

within 15 to 25 years. Propelling this growth are health

care costs associated with an older population and net

interest on the national debt. Spending in these areas

will continue to put pressure on the federal budget.

The financial difficulties facing medicare ’ s hospital

insurance trust fund and social security ’ s disability

insurance (DI) trust fund and old-age and survivors

insurance (OASI) fund make clear the need for

immediate action. For example, medicare ’ s hospital

insurance trust fund is expected to run short by 2029,

and payroll taxes are projected to cover only about 88

percent of all hospital-related medicare spending.

In the case of social security, an aging population and

slower labor force growth have led to a widening gap

between program costs and revenues. For both the DI

and OASI trust funds, social security is now paying out

more in benefits than it receives in noninterest revenue.

Without major reforms, by 2028, the DI trust fund will

have only enough money on hand to pay 93 percent of

benefits and, by 2035, the OASI trust fund will only

cover three out of four dollars of scheduled benefits.

Avoiding these projected outcomes will not be easy,

given their grounding in current law and policy. To

do so, policy makers will need to consider changes

affecting all federal activities and spending—

entitlement programs, other mandatory spending,

Gene L. Dodaro

U.S. Government Accountability Office

Roadmap Needed to Address the Challenges Threatening

the Nation ’ s Long-Term Fiscal Health