Just in time for the debt ceiling negotiations, Congressional Budget Office director Douglas Elmendorf has written a blog post that nicely breaks down the nature of the debt overhang. It includes this graph:
And these options:
Given the aging of the population and the rising cost of health care, attaining a sustainable budget for the federal government will require the United States to deviate from the policies of the past 40 years in at least one of the following ways:
- Raise federal revenues significantly above their average share of GDP;
- Make considerable changes to the sorts of federal benefits we provide for older Americans;
- Substantially reduce the role of the rest of the federal government-that is, defense (the largest single piece), Food Stamps, unemployment compensation, other income security programs, veterans’ benefits, federal civilian and military retirement benefits, transportation, health research, education and training, and other programs-in our economy and society.