Heritage Foundation Leadership for America

Entitlement Reforms are Needed to Control Spending

If tax revenues are kept near historical levels but entitlement spending remains on autopilot, federal spending will soar to nearly 80 percent of GDP over the long term, while interest payments alone will exceed 40 percent of GDP. Within two generations, total spending will be 42 percent of GDP. To prevent the economy from reaching this unsustainable point, Medicare, Medicaid, and Social Security must be modernized so that they do not impose such a tremendous burden on future generations.

Spending as a Percentage of GDP Under CBO Alternative Baseline, 2000–2082

Source: Spending and Revenues from CBO Long-Term Budget Outlook, December 2007 (Alternative Fiscal Scenario).