From the U.S. Government Accountability Office, www.gao.gov

Transcript for: America's Fiscal Health Update

Description: This podcast covers updates on the fiscal condition and
long-term fiscal health of the U.S. government. 

Related GAO Work: GAO-19-314SP: The Nation's Fiscal Health: Action Is
Needed to Address the Federal Government's Fiscal Future

Released: April 2019


[ Background Music ]

[ Susan Irving: ] If we do anything to endanger the full faith and
credit of the United States, it affects our ability to continue to be
the strongest, safest economy in the world.

[ Matt Oldham: ] Welcome to GAO's Watchdog Report, your source for news
and information from the U.S. Government Accountability Office. I'm Matt
Oldham. Every year, GAO sends a report to Congress on the nation's
fiscal health. It projects what we could expect federal finances to look
like over the next 30 years if we continue on our current path. I'm with
Susan Irving. She's a senior advisor on debt and fiscal issues here at
GAO. And she's here to talk about updates to this year's report. You
know, I could swear we were just here about a year ago talking about
this very issue. What has changed from last year?

[ Susan Irving: ] Well, you're right. We were here a year ago and the
year before that. And, in fact, GAO has been running long-term
simulations since 1992. Well, what's changed, I'm sorry to say, is this
situation has gotten, what we might delicately call, a little more
complicated. That is, according to CBO, legislation between June 2017
and April 2018 added money to the deficit and to the debt.

[ Matt Oldham: ] And in our last conversation, you opened with the term
unsustainable. Is that trend continuing?

[ Susan Irving: ] Oh, yes. And I think it's worth saying why we're so
clear about the word unsustainable. If you ask a question about the size
of debt, you really don't know how to calibrate it unless you know
something about the wealth supporting or having to support that debt. I
mean, if I owe you $200, it's my problem. But I have to tell you, if I
owe you 2 million, it's your problem. So we measured debt as a share of
the economy, a share of GDP because it's the wealth of the economy
that's supporting it. And by definition, if debt is growing faster than
the economy that must support it, it is unsustainable. So we need to
take action to get to a sustainable path.

[ Matt Oldham: ] So what is contributing to this unsustainability? 

[ Susan Irving: ] Well, basically it's the gap between spending and
revenues that is built into the design of our laws at the moment. And
some people see this as oh, that's a spending problem. We have to get
rid of it. Another says oh, it's all a revenue problem. But if you think
about the fact that the deficit, which is what over time builds up to be
debt, is the gap between spending and revenues. We now have to look at
both sides of that equation.

[ Background Music ]

[ Matt Oldham: ] So it doesn't sound like much progress has been made
since last year's fiscal health report was released?

[ Susan Irving: ] No, I think that's a fair statement.

[ Matt Oldham: ] Is a reasonable take-away from this the view that all
deficits are bad?

[ Susan Irving: ] No, I think that would be a mistake. And I'm actually
glad you asked that because sometimes people who care about this process
are caricatured as thinking deficits are always bad but if you think
about it, our revenues are largely income-based, income tax. So in a
recession, income taxes go down. You expect the deficit to grow when
there is a recession. You expect it to grow when there is a major war.
In World War II, the debt was bigger than the economy because I guess it
made no sense to have no debt if you had no country. This is growing not
because of war and recession. This is growing over time because of
interest on a growing deficit and debt.

[ Matt Oldham: ] So what do you believe is the bottom line of this
year's fiscal health report?

[ Susan Irving: ] The bottom line in this report is hey, wait a minute.
It's time to take action. Interest is going to be bigger than whole
areas of government spending. We pride ourselves on leaving a world for
our children and future generations that protects the strength and the
role of this economy and this nation. If the debt continues to grow as a
share of the economy, we will be endangering our ability to do that. It
affects our ability to respond to unforeseen shocks. It affects our
ability to improve lives across this country, to invest in the future,
and if we do anything to endanger the full faith and credit of the
United States, it affects our ability to continue to be the strongest,
safest economy in the world.

[ Matt Oldham: ] Susan Irving is a GAO senior advisor on debt and fiscal
issues. And she was talking about an annual report on the future of the
nation's fiscal health. Thank you for your time, Susan.

[ Susan Irving: ] Thank you.

[ Background Music ]

[ Matt Oldham: ] And thank you for listening to the Watchdog Report. To
hear more podcasts, subscribe to us on Apple Podcasts.

[ Background Music ]

[ Matt Oldham: ] For more from the congressional watchdog, the U.S.
Government Accountability Office, visit us at gao.gov.