BUDGET ISSUES: Long-Term Fiscal Challenges
GENERAL ACCOUNTING OFFICE WASHINGTON DC
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Today the challenges of combating terrorism and ensuring our homeland security have come to the fore as urgent claims on our attention and on the federal budget. While there are indications that an economic recovery is underway, the recession that began last spring has had real consequences for the budget. These are important changes in the last year. At the same time, the known fiscal pressures created by the retirement of the baby boom generation and rising health care costs remain the same. Absent substantive reform of the entitlement programs, a rapid escalation of federal spending for Social Security, Medicare, and Medicaid beginning less than 10 years from now is virtually certain to overwhelm the rest of the federal budget. Indeed, the slowing economy and tax and spending decisions, including the increased spending levels necessary to respond to new security challenges, have increased pressures on the budget. Correspondingly, the ultimate task of addressing these needs without unduly exacerbating the long-range fiscal challenge has become much more difficult.
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