“Unsustainable” Long-Term Budget Outlook Issued by CBO

This afternoon, the Congressional Budget Office estimated the public debt will soar from 41% of GDP at the end of FY08 to 60% at the end of FY10 without any policy changes and that the federal government is on an "unsustainable" fiscal policy path.  Once the economy is on a firm path to recovery, a lot of deficit reduction will be required to put us on a sustainable fiscal policy path.  Federal Medicare and Medicaid expenditures currently equal 5% of GDP, and CBO projects that spending will double by 2035 if left unchecked.  By comparison, Social Security will rise from just under 5% of GDP to 6% of GDP by 2035.  CBO Director Doug Elmendorf's blog provides an excellent summary.