The U.S. Fiscal Imbalance: June 2022
[from Penn Wharton, University of Pennsylvania]
We estimate that the U.S. federal government faces a permanent fiscal imbalance equal to over 10 percent of all future GDP under current law where future federal spending outpaces tax and related receipts. Federal government debt will climb to 236 percent of GDP by 2050 and to over 800 percent of GDP by year 2095 (within 75 years).
- We estimate that, under current law, the U.S. federal government faces a permanent present-value fiscal imbalance of $244.8 trillion, or 10.2 percent of all future GDP. This imbalance is equal to 52.7 percent of all future government receipts, 35.6 percent of all future expenditures, or some combination of both.
- Even ignoring the negative macroeconomic feedback effects of rising debt on GDP in these “conventional” estimates, government debt climbs to 236 percent of GDP by 2050. Thereafter, debt continues to climb and exceeds over 800 percent of GDP within 75 years, by the year 2095.
- Under the alternative “no-sunset” policy—where sunsets in 2017 Tax Cuts and Jobs Act are not enforced—the fiscal imbalance increases to $276.4 trillion, or 11.5 percent of all future GDP.
- For the major entitlement programs—including Social Security, Disability and Medicare Part A—about one-half (54 percent) of the fiscal imbalance in perpetuity comes from past and current generations receiving more in benefits than they paid in taxes.
Read the full analysis [archived PDF].
View the data [archived XLSX].
Brief based on work by Agustin Diaz, Jagadeesh Gokhale and Kent Smetters. Prepared by Mariko Paulson.