Despite substantial attention given to fiscal policy concerns in recent years, the federal government's fiscal status has continued to deteriorate, with the enactment of tax cuts, a massive new Medicare entitlement, increased spending on defense and homeland security, and related economic developments. This paper provides new estimates of the nation's fiscal status over both the 10-year and long-term horizon, based on the most recent (January 2006) Congressional Budget Office official budget figures (CBO 2006). Our general conclusions are not surprising: under plausible assumptions, the nation faces significant short- and medium-term deficits and massive long-term shortfalls. Dealing with these problems will require spending cuts or tax increases that are far beyond the scale of anything currently considered politically palatable.
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