Long-Term Budget Outlook
December 23, 2003
The nation will be left in unsustainably deep debt and/or taxes will rise to unprecedented levels as higher health-care costs and an aging population lead to exploding spending on Medicare, Medicaid and Social Security, says the Congressional Budget Office (CBO).
A new CBO study on the long-term budget picture concludes that current spending policies will probably be financially unsustainable over the next 50 years. An ever-growing burden of federal debt held by the public would have a corrosive and potentially contractionary effect on the economy.
- Total federal spending for Medicare and Medicaid equaled 3.9 percent of GDP in 2003.
- In 2050 it could range anywhere from 6.4 percent of gross domestic product (GDP) to more than 21 percent, with estimates depending on assumptions about the economy.
- The growth in Social Security, by contrast, will be less than government health programs; it is projected to increase by two-fifths as a share of GDP by 2030, but will grow more slowly thereafter.
Source: Dow Jones Newswires, "Long-Term Outlook For Federal Budget Is Dismal, CBO Says," Wall Street Journal, December 23, 2003; "The Long-Term Budget Outlook," Congressional Budget Office, December 2003.
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