Federal Spending Is Unsustainable

by Amanda Griffin-Johnson Mercatus senior research fellow Veronique de Rugy’s latest publication describes the dire consequences of the federal government’s spending trajectory. She shows the long-term divergence between federal government spending and tax revenue in the chart below. As Veronique de Rugy explains: If we do not change course, servicing this debt will end up as our biggest...

by Amanda Griffin-Johnson

Mercatus senior research fellow Veronique de Rugy’s latest publication describes the dire consequences of the federal government’s spending trajectory. She shows the long-term divergence between federal government spending and tax revenue in the chart below. As Veronique de Rugy explains:

If we do not change course, servicing this debt will end up as our biggest budget item. Given current policies, the Congressional Budget Office projects that the cost of the debt as a percentage of gross domestic product (GDP) will explode from a mere 1.8 percent of GDP in 2012 to 46 percent of GDP in 2084.

At the state level, it’s also imperative that spending levels do not exceed projected revenue in years to come. While that may seem obvious to anyone who has had to balance a budget at home, the state government unfortunately does not always follow this model. For more information, check out our policy brief, “Know Your Income, Then Budget.”