GAO Marshalls Its Data to Warn Leaders of Fiscal Crisis

Set apart with an atypically colorful cover designed around a compass, the first-ever annual report on fiscal health from the Government Accountability Office warns the incoming president and congressional leaders that federal finances remain on an “unsustainable long-term fiscal path.”

The 47-page compilation done in cooperation with the Congressional Budget Office combines the latest alarming macro-numbers with calls for action by Congress as well as specific remedies that can be undertaken by agency managers.

“Health care expenditures and net interest are now the main drivers of growing federal spending, and without policy changes, the debt-to-GDP ratio is projected to reach historic levels within 15-25 years,” wrote Comptroller General Gene Dodaro in his opening letter. “Decisions over the near term to enhance economic growth and address national policies need to be accompanied by a fiscal plan to put the national government on a more long-term sustainable path.”

» Get the best federal news and ideas delivered right to your inbox. Sign up here.

Painting a grim big picture, GAO noted that the federal budget deficit, after six years of declining, in fiscal 2016 increased to $587 billion—up from $439 billion in 2015.

A key driver, health care spending, is rising faster than the rest of the economy, GAO said, citing Medicare, Medicaid, the Children’s Health Insurance Program and federal subsidies under the Affordable Care Act.

The Social Security Trust fund, stretched for the foreseeable future by the retirement of the baby-boom generation, will deplete the disability trust fund by 2023 “and then only be sufficient to pay 89 percent of scheduled benefits,” the report warned. The larger retirement trust fund “will deplete its assets by 2035 and only be sufficient to pay 77 percent of scheduled benefits.”

The Pension Benefit Guaranty Corporation’s net position is declining, GAO added.

One large-scale solution, said GAO, drawing on its past reports, would be for Congress to stop relying on the “after the fact” measure of the debt limit—which is regularly raised amidst lawmaker grumbling. Instead, it recommended that “decisions about providing Treasury the authority to borrow be made when decisions about spending and revenues are made,” the report said.

Agencies can help ease the fiscal crisis in four major ways, GAO said. They can reduce improper payments, address the persistent tax gap; continue to address duplication, overlap and fragmentation; and improve information on programs and fiscal operations.

Improper government payments made—to fraudsters submitting false bills to Medicare, for example--totaled $144 billion in fiscal 2016, GAO said, or $1.2 trillion since fiscal 2003.

If the Internal Revenue Service could improve enforcement and collect all taxes owed under current law, it could help reduce the annual budget deficit by $458 billion, an estimate updated only every few years, GAO said.

Efforts to curb program duplication and overlap by both Congress and the executive branch from fiscal 2010-2015 have generated $56 billion in financial benefits, with an additional $69 billion projected through 2025, GAO said.

Finally, agencies have shown progress in strengthening general internal controls over financial reporting, focusing more on the revenue impact of tax expenditures enacted by Congress as policies to help qualified beneficiaries as well as the movement to standardize and boost transparency of spending data under the 2014 Digital Accountability and Transparency Act.

“Absent policy changes,” GAO wrote, “the federal government’s fiscal path is unsustainable and … the debt-to-GDP ratio would surpass its historical high of 106 percent [just after World War II] within 15 to 25 years.”

Asked why the watchdog decided to establish the new annual report, Christopher Mihm, GAO’s managing director for strategic issues, told Government Executive, “We came to realize over the last many months that we’d been talking about debt in the long term and improper payments and [such], but we do this in disparate ways, in different formats and time frames.”

So the agency “saw value in stepping back and pulling this together to provide citizens, the Congress, the administration and the broader public an integrated perspective on the nation’s long-term fiscal health.” Moving briefly away from “individual reports on a routine basis,” Mihm said, might “better help decision makers.”

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
FROM OUR SPONSORS
JOIN THE DISCUSSION
Close [ x ] More from GovExec
 
 

Thank you for subscribing to newsletters from GovExec.com.
We think these reports might interest you:

  • Forecasting Cloud's Future

    Conversations with Federal, State, and Local Technology Leaders on Cloud-Driven Digital Transformation

    Download
  • The Big Data Campaign Trail

    With everyone so focused on security following recent breaches at federal, state and local government and education institutions, there has been little emphasis on the need for better operations. This report breaks down some of the biggest operational challenges in IT management and provides insight into how agencies and leaders can successfully solve some of the biggest lingering government IT issues.

    Download
  • Communicating Innovation in Federal Government

    Federal Government spending on ‘obsolete technology’ continues to increase. Supporting the twin pillars of improved digital service delivery for citizens on the one hand, and the increasingly optimized and flexible working practices for federal employees on the other, are neither easy nor inexpensive tasks. This whitepaper explores how federal agencies can leverage the value of existing agency technology assets while offering IT leaders the ability to implement the kind of employee productivity, citizen service improvements and security demanded by federal oversight.

    Download
  • IT Transformation Trends: Flash Storage as a Strategic IT Asset

    MIT Technology Review: Flash Storage As a Strategic IT Asset For the first time in decades, IT leaders now consider all-flash storage as a strategic IT asset. IT has become a new operating model that enables self-service with high performance, density and resiliency. It also offers the self-service agility of the public cloud combined with the security, performance, and cost-effectiveness of a private cloud. Download this MIT Technology Review paper to learn more about how all-flash storage is transforming the data center.

    Download
  • Ongoing Efforts in Veterans Health Care Modernization

    This report discusses the current state of veterans health care

    Download

When you download a report, your information may be shared with the underwriters of that document.