Friday, September 19, 2008

GAO Report: U.S. Financial Condition and Fiscal Future

With all the news about government bailouts recently, I have been doing some research on U.S. government spending.

I found an interesting presentation on the Government Accountability Office (GAO) website. This was part of former Comptroller General David M. Walker's "Fiscal Wake Up Tour". It remains to be seen if anyone in Washington (or anywhere else in the country) has awakened yet, but the presentation has some interesting nuggets of information.

Some highlights:

- The Fiscal Burden numbers on page 18: $175k per person, $455k per household
- We face large and growing structural deficits largely due to known demographic trends and rising health care costs
- GAO’s simulations show that balancing the budget in 2040 could require actions as large as:
• Cutting total federal spending by 60 percent or
• Raising federal taxes to two times today's level
- Closing the current long-term fiscal gap based on reasonable assumptions would require real average annual economic growth in the double-digit range every year for the next 75 years
- During the 1990s, the economy grew at an average 3.2 percent per year
- As a result, we cannot simply grow our way out of this problem. Tough choices will be required.

Keep in mind this was given in January - well before any of the latest financial obligations (and those that have yet to be promised) were on the books.

The bottom line: current entitlement programs and tax levels are inherently unsustainable.

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