Several times a year, the non-partisan Congressional Budget Office (CBO) releases its “baseline” projections of future spending, revenue, deficits, and debt. In addition, the President and Congress each release their own medium-term tax and spending plans.
The United States spends more on health care than any other developed country, and these costs continue to grow – particularly at the federal level. Rising Medicare, Medicaid, and other federal health spending consumes a growing share of the budget and crowds out other priorities.
Social Security is the single largest federal spending program, providing cash benefits to 60 million seniors, disabled workers, and family members. Yet with life expectancy growing and millions of baby boomers retiring, the program is on a path toward insolvency.
Although a significant share of federal spending goes toward health care and Social Security, the budget covers many other areas from defense to food stamps to education.
It requires significant tax revenue to fund the federal government. Yet the federal tax code has not been reformed in over 30 years, and faces many problems – including that it is littered with numerous deductions, credits, and other preferences that cost over $1 trillion per year.
There is growing consensus that the federal budget process – the process through which Congress and the President set tax and spending priorities – is in many ways broken. But numerous proposals have been put forward to improve this process.
The U.S. economy is the largest in the world and faster economic growth offers an opportunity to improve wages and the economic well-being of all citizens. Faster growth would also improve the country’s overall fiscal condition.
