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Now that the U.S. Federal Government has reached its legal debt limit of $14.3 trillion, stark choices lie ahead. Current spending growth is unsustainable.Indeed,t h e Government Accountability Office estimates entitlement spending on Social Security, Medicare and Medicaid alone will amount to more than 20 percent of GDP by 2080, if current policies are unchanged. That level of spending would absorb 100 percent of federal revenues, assuming the federal tax share of GDP increased from its average level of 18 percent to 20 percent.
In the next decade, federal budget deficits could add another $10 trillion to public debt. By 2035, total federal spending could reach 34 percent of GDP, and climb to 42 percent by mid-century. As recently as 2001,federal spending was 18 percent of GDP, but rose to nearly 25 percent in 2009, and has stayed at that level.
In the next decade, federal budget deficits could add another $10 trillion to public debt. By 2035, total federal spending could reach 34 percent of GDP, and climb to 42 percent by mid-century. As recently as 2001,federal spending was 18 percent of GDP, but rose to nearly 25 percent in 2009, and has stayed at that level.