GOVERNMENT ACCOUNTABILITY OFFICE WASHINGTON DC WASHINGTON DC United States
The long-term fiscal projections indicate that the governments debt-to-GDP ratio will rise from 79 percent in2019 to 474 percent over the 75-year projection period, and will continue to rise thereafter, if current policy is kept in place. The projections in this Financial Report show that current policy is not sustainable. These projections assume that current policy will continue indefinitely, and are, therefore, neither forecasts nor predictions. While the projections are inherently uncertain, it is nevertheless nearly certain that current fiscal policies cannot be sustained indefinitely. The primary deficit is the difference between non-interest spending and receipts. The ratio of the primary deficit to GDP is useful for gauging long-term fiscal sustainability. This ratio spiked from FY 2009 through FY 2012 due to the financial crisis of 2008-09, the ensuing severe recession, and increased spending and temporary tax reductions enacted to stimulate the economy and support recovery. As the economic recovery took hold, the primary deficit-to-GDP ratio fell, averaging 2.1 percent from FYs 2013-2019. The ratio is projected to rise to 2.9 percent in FY 2020 and then shrink slightly through FY 2024 as the economy grows. After FY 2024, increased spending for Social Security and health programs is projected to result in increasing primary deficits that will peak in FY 2040 at 3.9 percent. This effect is due to the continued retirement of the baby boom generation and increases in health care costs. After FY 2040, the ratio is projected to gradually decrease to 2.5 percent by FY2094 as the aging of the population slows. The primary deficit projections, along with those for interest rates and GDP, determine the debt-to-GDP ratio projections.