Breakdown by Budget Category
Our national debt is growing rapidly because of a fundamental imbalance between spending and revenues that will continue to expand in future years. The Congressional Budget Office (CBO) projects that federal spending will rise from 23.1 percent of GDP in 2024 to 27.3 percent in 2054 as a result of three main drivers: an aging population, rising healthcare costs per capita, and rapidly escalating interest costs. Revenues under CBO’s projections would be insufficient to meet the promises that have been made, growing from 17.5 percent of GDP to 18.8 percent over the same period.
Using the budget categories from CBO’s long-term spending and revenue projections, the Solutions Initiative participating organizations developed specific policy proposals and recommendations to address our fiscal situation and meet their policy priorities over the next 30 years. Topics addressed include revenues and spending on healthcare, Social Security, discretionary, other mandatory, and interest payments.
Interactive Chart
How Each Organization Approaches
Federal Spending in 2054
Budget
Categories
Federal
Healthcare
Programs
America already has the most expensive healthcare system in the world, yet such spending is projected to continue to rise rapidly. Improving our system to provide high-quality care at lower costs is a key part of our nation’s long-term fiscal health.
Social Security is the largest program in the federal budget and represents an essential part of Americans’ retirement. As the large baby-boom generation retires and average life expectancy continues to rise, the program will come under escalating financial strain. Putting Social Security’s finances on sustainable footing not only ensures that older Americans will receive continued support, but will also improve the government’s long-term fiscal trajectory. All seven groups would extend the solvency of Social Security’s trust funds by at least 30 years.
Social
Security
Discretionary
Spending
Discretionary spending represents almost 30 percent of total federal spending and funds a wide variety of programs, including defense, education, and transportation. Outlays in this category are split roughly evenly between defense and nondefense spending, which is set by Congress through the annual appropriation process.
This category covers a wide variety of programs, including support for lower-income families, unemployment benefits, veterans’ pensions and other benefits, student loans, crop insurance, and federal civilian and military retirement benefits.
Other
Mandatory
Spending
Revenues
Revenues include taxes and tax expenditures. Currently America’s tax code does not raise sufficient revenues to pay for its spending obligations, and tax breaks cost more than any individual government spending program.
Higher interest costs can squeeze areas of the budget that support future economic growth, such as education, infrastructure, and research and development.