GAO: America's Money Matters – Understanding the Nation’s Long-Term Fiscal Health

GAO: America's Money Matters – Understanding the Nation’s Long-Term Fiscal Health



hi I'm Kirsten an analyst at the US Government Accountability Office politicians talking heads and analysts like me are always talking about how large the debt is and how the debt will be passed down to my generation my kids generation and maybe even my grandkids generation the debt is part of the bigger picture of the federal government's current and future fiscal health at Gao we're constantly assessing the government's fiscal condition and evaluating ideas to improve it let's take a closer look at what's going on have you seen this number before fourteen point seven trillion dollars it's the amount of money that the federal government has borrowed from corporations state and local governments foreign governments and individuals like you as of the end of fiscal year 2017 this is only a portion of the total debt which includes money that the government borrows from itself and is around 20 trillion dollars as you can see it's a number that just keeps growing each fiscal year if the government spends more money than it brings in that year that's a deficit the nation borrows money to cover that deficit which increases the debt you'd think that with revenues growing and deficits shrinking in the early 2000s the nation would be in good shape more recently however deficits have been increasing and are projected to continue increasing in the future some big trends in federal spending have a lot to do with this so how is the country spending its money Congress thoughts federal spending in a couple ways programs such as Social Security Medicare and Medicaid are considered mandatory spending for many of these programs Congress sets payment and benefit formulas in a program law not in an annual spending law if there are more people receiving Social Security for example the program costs more than it did last year programs such as defense law enforcement transportation and national parks are considered discretionary spending Congress chooses how much money to spend for these programs annually the other component is the net interest the government pays each year on the trillions of dollars of debt it already has as the debt continues to grow interest payments will become a larger and larger part of federal spending the cost associated with mandatory spending programs will also continue to grow as our population ages and healthcare costs rise as mandatory spending and interest on the debt grow they can place pressure on spending in other important areas we all expect to be protected from military threats but also from cyber threats which are multiplying as we speak nobody can predict how much cybersecurity will cost as the threats are always evolving with technology and while nobody wants to see a natural disaster we all know that they happen and that people will be seeking any federal assistance there is to help them recover these kinds of things are considered fiscal risks to the government things that when they happen the government is expected to step in and provide funding to help there are many more fiscal risks than the ones I just mentioned and they're very hard to plan for all of these are reasons why the country spends money faster than it comes in recently enacted cuts and taxes are projected to increase this imbalance according to the trends in our fiscal outlook all of this is bad news for the nation's future in our simulated policy situation the debt will surpass its historical high in the next 15 years putting the squeeze on the federal budget without policy changes critical Social Security and Medicare programs are projected to run short of funds to fully pay benefits within the next 20 years Social Security disability insurance in 2028 Medicare Hospital insurance in 2029 and Social Security old-age and survivors insurance in 2035 growing pressure from these programs and interest on the debt are projected to lead to trillion-dollar annual deficits in the near future tackling trillions of dollars of debt and strengthening the nation's financial condition will likely require making changes to mandatory programs discretionary spending and revenue if we wait to make these changes they will only get bigger and require harder decisions to make future changes less painful there are a few things the government could do right away for example sometimes it makes payments to people by mistake and the government doesn't collect all the taxes it's owed right now there's also not enough strong data and good financial information available across the government in many cases to help policymakers make important financial decisions agencies need to take action to provide additional or better information on how much policies and programs cost with some effort the federal government could fix these things it would be a start but nearly enough to fully tackle the growing debt or close the future gaps it's important for policymakers to address the nation's long-term fiscal health in order to solve many of the other challenges facing the nation learn more at gao.gov

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