Thursday, March 24, 2011
GAO Released Its Latest Update On The Long-Term Fiscal Picture For The U.S.
On March 21, GAO released its latest update on the long-term fiscal picture for the U.S. (January 2011 Update—The Federal Government's Long-Term Fiscal Outlook) Its long-term simulations “underscore the need to begin addressing the long-term federal fiscal outlook,” GAO said. Even if the economy bounces back and economic stimulus measures wind down, “the outlook is for large and growing deficits,” the report said. As it has done previously, GAO uses two simulations: “Baseline Extended” and an “Alternative.” The Baseline Extended follows the Congressional Budget Office's January 2011 baseline estimates for the first 10 years and then holds revenue and spending other than interest on the debt and the large entitlement programs (Social Security, Medicare, and Medicaid) constant as a share of gross domestic product. In the Alternative simulation, tax provisions other than the temporary Social Security payroll tax reduction are extended to 2021 and the alternative minimum tax exemption amount is indexed to inflation through 2021. GAO stressed that its simulations are meant solely to provide a broad context for consideration of policy options. The purpose is to facilitate a dialogue and nothing should be construed as advocating particular policy choices, GAO said. The report can be found at http://www.gao.gov/new.items/d11451sp.pdf.