The Governmentâs Long-Term Fiscal Shortfall: How Much Is Attributable to Social Security? (CRS Report for Congress)
| Release Date |
Revised July 18, 2007 |
| Report Number |
RS22232 |
| Report Type |
Report |
| Authors |
Marc Labonte, Government and Finance Division |
| Source Agency |
Congressional Research Service |
| Older Revisions |
-
Premium Aug. 29, 2005 (6 pages, $24.95)
add
|
Summary:
One reason that Social Security reform is on the congressional agenda is the largeprojected long-term fiscal shortfall facing Social Security, estimated at an average of0.9% of gross domestic product (GDP) between now and 2080. But relatively littleattention has been given to the potential long-term shortfall faced by the rest of thegovernment, which is estimated to be more than 6.5 times larger than Social Security'sshortfall. The government's overall fiscal gap under an extension of current policy,estimated at an average of 7.2% of GDP between now and 2080, is the result of the largeprojected increase in future spending that is not matched by any projected increase in taxrevenue. Most of the increase in spending occurs in Medicare and Medicaid; SocialSecurity is the third largest contributor to the fiscal gap. If viewed from the revenueside, the 2001 and 2003 tax cuts increased the fiscal gap by an average of 2.2% of GDPbetween now and 2080. The fiscal gap measure may be useful to policymakers becauseit highlights the unsustainability of current policy in the long term and the potential costof inaction, and it provides a measure that can be used to estimate the implications ofcurrent policy for the macroeconomy and generational equity.
