The Challenge of Attaining a Sustainable Federal Budget

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The Challenge of Attaining a Sustainable Federal Budget
by Douglas Elmendorf
As the nation addresses the budgetary challenges facing the federal government, one of the central questions to resolve is how big a government we want to have. During the past 40 years, government spending has ranged from as low as 18.2 percent of gross domestic product (GDP) in 2000 and 2001 to as high as 25.0 percent in 2009, averaging about 21 percent. Revenues, however, have averaged only 18 percent of GDP. One possible approach to addressing the longstanding mismatch between government spending and revenues—a mismatch that would grow substantially if current tax and spending policies are extended—would be to shrink spending so that it equals revenues at their historical 18-percent share of GDP. What would it take to accomplish that?
http://cboblog.cbo.gov/?p=2371