The primary deficit is a key determinant of growth in the debt-to-GDP ratio, and is the area policymakers have the most control in addressing. Spending on net interest: primarily the cost to service federal debt.The primary deficit: the gap between non-interest (program) spending and revenues.In our simulation below, debt will continue to grow faster than GDP during the next 30 years if no action is taken.ĭeficits represent the different between spending and revenues, and are composed of two parts: The federal government has run a deficit and added to its debt in every fiscal year since 2002. However, this pattern has changed during more recent times. It has typically decreased during times of peace and economic expansion. ![]() Increasingly large deficits are driving unsustainable debt levelsįor most of the nation’s history, the government’s debt as a share of Gross Domestic Product (GDP) has increased during wartime and recessions. Dodaro, Comptroller General of the United States and head of the GAO. Without substantive changes to revenue and spending policy, the federal debt is poised to grow faster than the economy, a trend that is unsustainable,” said Gene L. “GAO’s latest report on the nation’s fiscal health paints a sobering picture. ![]() Today’s WatchBlog post looks at our latest and sixth annual report on the nation’s fiscal health, including areas where immediate action is needed. As a result, newly-issued debt would cost the government more and maturing debt would have to be refinanced at the prevailing (potentially higher) interest rate. These historically large deficits were due primarily to the economic disruptions caused by COVID-19-which decreased revenues in FY 2020-and the additional spending by the federal government in response to help the nation recover from the pandemic.Īdditionally, while interest rates have been historically low during the last 20 years, the Congressional Budget Office (CBO) expects rates will increase during the next 30 years. Increased federal spending in response to COVID-19, as well as rising interest rates, have added to our nation’s financial woes.Īt $2.8 trillion, the FY 2021 budget deficit was the second largest in history-just short of the FY 2020 deficit of $3.1 trillion.
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