Causes of the Federal Government’s Unsustainable Spending

Government spending is outpacing the economy at an unsustainable rate. By analyzing the long-run fiscal trends between spending and revenue, this paper examines the factors driving the federal budget’s underlying unsustainability. The findings suggest that just 2 percent of all spending accounts within the federal government are unsustainable. But while the problem is contained, it is significant, as projected spending from those accounts is equivalent to 60 percent of gross spending over the next 10 years, with spending on public health care contributing the largest component to the fiscal imbalance. Unless the growth in spending on public health care programs slows, the federal budget will remain unsustainable, severely limiting future fiscal choices.

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