Facing Our Fiscal Challenges
GAO has long been concerned about the federal government’s fiscal outlook given the growing debt. The long-term fiscal path is unsustainable because debt is growing faster than the economy. The COVID-19 pandemic has necessitated a major federal response to address our national public health emergency and resulting economic turmoil. While it is essential to confront COVID-19 and heal our economy, these efforts further complicate our government’s fiscal condition. As the economy becomes stronger and public health goals have been achieved, a plan to address these fiscal challenges will be needed. In October, the U.S. Comptroller General testified that the federal government does not have a long-term fiscal plan to control the growing debt.
With this as a backdrop, the government will also be confronting challenges to funding many programs that millions of Americans rely on for their retirement security.
- Medicare is also facing difficulties, with spending growing faster than the economy. According to the Congressional Budget Office’s latest estimates, the Medicare Hospital Insurance trust fund will be depleted in 2024 and will only be able to meet 83 percent of its expected costs in 2025.
- The Social Security Old-Age and Survivors Insurance Trust Fund that supports retirement benefits is projected to be depleted in 2031, under current law, according to the Congressional Budget Office’s estimates. At that point continuing payroll taxes will be sufficient to pay only about three-quarters of scheduled benefits.
- GAO has also identified broader issues regarding retirement security in the United States.
- Further, the financial stability of the federal government’s pension insurance programs faces many structural challenges that require congressional action; most urgently, one insurance program faces a high likelihood of insolvency by 2026, which would result in many participants in insolvent pension plans receiving a small fraction of guaranteed benefits.
These fiscal challenges would threaten the retirement security of millions of Americans, which would be exacerbated by fundamental changes in the nation’s retirement system that have placed more responsibility and risk on individuals to plan and save for their own retirement.
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