Long-run Fiscal Condition of the US
by Adam Hughes*, 12/22/2003
A new report from the CBO shows just how harmful current tax policies have been to the long-run health of the country.
Report.pdf (application/pdf Object)
This Congressional Budget Office report looks at a range of possible paths for federal spending and revenues over the next 50 years and combines them into various hypothetical scenarios. Analysis of those scenarios suggests the following conclusions:
Unless taxation reaches levels that are unprecedented in the United States, 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.
If taxation is restricted to the levels that prevailed in the past, the growth of entitlement spending will have to be substantially reduced. Restricting the growth of outlays for defense, education, transportation, and other discretionary programs would not be enough to ensure fiscal sustainability.
Likewise, economic growth alone is unlikely to bring the nation's long-term fiscal position into balance. Moreover, issuing ever-larger amounts of debt or dramatically raising tax rates could significantly reduce growth.