GAO: Budget Crisis Could Come Faster Than We Think

If Congress cuts the AMT without doing much to control Medicare and Social Security spending, the deficit could increase to about 25% of the budget in 2018, and the budget itself would be large enough to cover the cost of only about half of spending on items other then Medicare, Medicaid, Social Security and interest on the federal debt, GAO researchers warn.

Under that scenario, the government would have to borrow money to pay for everything but interest, Medicare, Medicaid and Social Security by 2030, and the government would have to borrow to pay for almost everything but interest and Social Security by 2040, the researchers report.

“Our updated simulations continue to illustrate that the long-term fiscal outlook is unsustainable,” GAO officials write in a discussion of the results of the GAO fiscal outlook simulations. “By definition, what is unsustainable will not be sustained. The question is how and when the nation’s current imprudent and unsustainable path will end…. 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.”