The Nation’s Precarious Fiscal Future

Photograph Showing $100 BillsThe United States faces a highly challenging fiscal future. Absent change in policy, the federal fiscal path is unsustainable—debt is growing faster than the economy (GDP). This springs from the continuing gap between the amount of money the federal government collects in revenue, and the amount it spends—i.e., the federal deficit.

Today we issued an update on the fiscal condition of the U.S. government as of the end of FY 2017—and its likely fiscal future if policies don’t change.

The WatchBlog explores the nation’s fiscal health. Listen to our podcast with Susan Irving, our expert on debt and fiscal issues, then read on for more.

 

Staying in the red

The 2017 Financial Report, CBO, and GAO projections all show that, without policy changes, debt will continue to grow faster than the economy.

Debt held by the public—money the government has borrowed by selling Treasury bills, notes, and bonds—was 76% of the gross domestic product (the economy) at the end of fiscal year 2017.  If nothing changes, that ratio will surpass its historical high of 106% within 14 to 22 years.

Simulations Showing Projected Percentage of Gross Domestic Product

The challenge facing policymakers is not any single year’s deficit increase—it’s the outlook for future years. Health care costs, Social Security, and interest on the debt are all driving spending growth going forward.

Figure 5: Drivers of Long-Term Federal Spending

Under our simulation, absent any policy changes, interest becomes the largest single claim on the federal budget—exceeding 25% of all spending in 2059.

Tough choices

The timeline below shows that key Medicare and Social Security trust funds are projected to face major financial challenges.

Timeline Showing Major Financial Challenges to Medicare and Social Security Trust Funds

It’s clear that the federal government is going to have to make some tough choices in the near future. It is important to develop and begin to implement a long-term fiscal plan for returning to a sustainable path. The longer action is delayed, the greater and more drastic the changes will have to be.

Call to action

While changes to Social Security, health care, and interest require legislative actions to alter fiscal policies, federal agencies can still play a role in improving the nation’s fiscal health. Over the years, we’ve identified a number of things federal agencies can do, such as:

  • Reducing improper payments. Improper payments (payments that shouldn’t have been made or were made in the incorrect amount) are estimated to have cost the government about $141 billion in fiscal year 2017. Agencies need to identify the root causes of these payments and then implement internal controls aimed at both prevention and detection.
  • Reducing the tax gap (taxes owed vs. taxes paid). The annual net tax gap was most recently estimated to be $406 billion. This will require action on multiple fronts such as using tax gap and other data to develop a strategy to address noncompliance and providing better customer services (by phone, mail, and online) to help with tax prep.

These kinds of actions will help—both with responsible stewardship of taxpayer funds and with the nation’s financial condition. However, federal agencies alone cannot put the nation on a sustainable fiscal path.

Check out our February 2018 video explaining the nation’s financial condition and future, and ways to improve it.

Visit our website to learn more about America’s fiscal future.


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Lead Paint in Housing

Example of a Home with Peeling Lead PaintWas your home built before 1978? If so, there’s a chance that it contains some lead paint.

The Department of Housing and Urban Development estimates that roughly 35 percent of U.S. homes contain some lead-based paint.

So, what does this mean for you—and for your kids?

For National Healthy Homes Month, today’s WatchBlog explores our new report on lead paint in housing.

Caution: Children at play

Lead paint hazards in houses are the most common source of lead exposure for U.S. children. Kids, especially infants and toddlers, are at a much greater risk of exposure to lead than adults because they crawl around floors that may contain lead dust, and frequently put items in their mouths.

The Centers for Disease Control and Prevention estimated that approximately half a million U.S. children have blood lead levels high enough for targeting prevention-related actions. The CDC also says that there is no safe level of lead in the blood.

Lead exposure also has more serious health impacts for kids than adults. When absorbed into the body, lead can damage the brain and nervous system, slow development and growth, and cause learning or behavioral problems.

Federal help

In 1978 the United States banned lead-based paint in housing but a significant amount of homes built before then may contain lead paint. Areas that have a high concentration of homes built before 1978, as well as high poverty rates, are most at risk of lead paint hazards.

Examples of Homes with Lead Paint Hazards

HUD awards grants to state and local jurisdictions to help address lead paint hazards in low-income housing where young children are likely to live. Over the past 5 years, HUD awarded roughly $500 million in these grants—mostly to jurisdictions in the Northeast and Midwest, which are known to have a high prevalence of lead paint hazards.

Other areas with notable risk include the San Francisco Bay Area and the greater Los Angeles area. Check out our interactive map to learn more about areas of the country with lead-paint hazard risk.

Interactive Map Showing Lead Paint Hazard Risk and Locations of HUD's Lead Grant Awards

We took a look at these HUD grants, as well as other efforts by the department to ensure that housing with lead paint is safe for children, and recommended a number of additional actions. For example, HUD could strengthen its oversight of public housing authorities’ compliance with lead paint regulations.

Find out more in our full report.


  • Questions on the content of this post? Contact Lawrance Evans, Jr., at evansl@gao.gov.
  • Comments on GAO’s WatchBlog? Contact blog@gao.gov.
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Diversifying the Pipeline of STEM Talent

Education Thumbnail imageEducation programs in science, technology, engineering, and mathematics (STEM) play an important role in preparing students for careers in STEM fields. Over the last decade, the federal government has taken important steps toward diversifying the pipeline of STEM talent in the United States, primarily by supporting STEM education opportunities for historically underrepresented groups in these fields. In 2016, the federal government spent $2.9 billion on 163 STEM education programs across all grade levels—from preschool to graduate school.

So, are these programs broadening access to STEM fields?

As schools let out across the country, today’s WatchBlog explores federal STEM education programs for underrepresented groups.

Participation rates in STEM education programs

The America COMPETES Reauthorization Act of 2010 requires the federally-chartered Committee on STEM Education to provide information on the participation rates of underrepresented groups—including women, underrepresented minorities, and persons in rural areas—in federal STEM education programs.

The Committee on STEM Education is made up of multiple federal agencies that support STEM education programs. In its 2013 strategic plan, the Committee identified broadening the participation of underrepresented groups as one of its national goals.

However, we found the Committee didn’t report on the participation rates of underrepresented groups as required by law.  As a result, there’s no way to know if participation by these groups has increased or not.  Further, we don’t know which agencies or programs are succeeding in diversifying the pipeline and which are falling short. Likewise, we don’t know if progress is being made towards the Committee’s goal of broadening participation.

Availability of data

Committee leadership acknowledged that they haven’t reported these data and added that such participation data aren’t available across all STEM education programs. However, our survey of managers from all 163 federal STEM education programs indicated that participation data were generally available. Specifically, nearly three-quarters of STEM education programs reported tracking participants in fiscal year 2016. Of those programs, many also tracked specific participant characteristics. For example, 61 percent of programs tracked whether their participants were women and 54 percent documented those who were African American.

Figure Showing Percentage of Science, Technology, Engineering, and Mathematics (STEM) Education Programs That Tracked Certain Participant Characteristics in Fiscal Year 2016

We recommended that the Committee take action to fulfill its requirement to report participation rates of underrepresented groups. We also noted the Committee should report on participation rates of women, underrepresented minorities, and persons from rural areas, and develop strategies to help agencies overcome some of the challenges they may face collecting the data.

The Committee noted it plans to examine factors that inhibit the reporting of participation data; gaining insight on the challenges agencies face is a first step.

To learn more, read our report.


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After Showing Improvement, Trends for NASA’s Major Projects Slip Back

Image of earth and the moonEvery year, we look at NASA’s major projects to see how well they’re making progress against their cost and schedule goals—which we call our “Quick Look” review.

This year, these projects included a satellite that will study polar ice sheets, a lander that will collect data on Mars’s crust, and a project planning to demonstrate that sonic booms can be lowered to levels acceptable for commercial use of supersonic flight. All of these projects have life-cycle costs estimated to be at least $250 million.

Today’s WatchBlog explores our 10th annual Quick Look at the status of NASA’s major projects.

Listen to our podcast, then read on for more.

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Understanding Derivatives One Swap at a Time

Did you ever agree to swap your PB&J sandwich for your friend’s bologna sandwich? If so, you did a nonfinancial swap.

Since the 1980s, bankers have applied that basic concept to create financial contracts to swap a wide range of stuff—from interest rates to commodities to credit risk—you name it.
Commercial firms use swaps to manage risk. For example, airline companies use swaps to lock in their fuel prices to protect their profits against rises in fuel prices.

Swaps and other over-the-counter financial contracts whose value is derived from something else (called derivatives) have ballooned into a multitrillion-dollar market worldwide.

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Banking at the Border, Money Laundering, and “Derisking”

Banks are an important line of defense for fighting financial crimes. Banks and other financial institutions are subject to the Bank Secrecy Act, which helps federal law enforcement detect and deter the use of financial institutions for money laundering and other criminal activities such as financing terrorism. Money that crosses an international boundary may be of particular interest to authorities.

There can be unintended effects due to the law, as well. In some cases, banks may become so concerned that they will run afoul of the rules that they “derisk” their operations—they deny or restrict services to legitimate customers.

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The Troubled Voyage of Navy Shipbuilding

In 2007, the Navy embarked on a plan for a 330-ship fleet by 2018. Congress supported this plan, appropriating $24 billion more than the Navy’s budget request of $182 billion.

Things have not gone according to plan. Today, the Navy has a fleet of just 280 ships. That’s not only fewer ships than it planned on—that’s fewer than it had in 2007.

In our recent capstone report, we took a look back at the past 10 years of GAO reports on Navy shipbuilding to figure out what is behind the problems. Join us tomorrow, June 8, at 11 a.m. ET on Facebook Live for our next “Cuppa GAO: Coffee with our Experts,” where we’ll talk about our key findings.

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Who is in the Driver’s Seat? 

Image of highway trafficDriverless cars conjure up images of relaxing in traffic while your car chauffeurs you home.  Companies are racing to develop automated vehicle technologies, and cars like this may be just around the corner.

But are they safe?

Today’s WatchBlog takes a look at our recent report on what the federal government is doing to address safety and other challenges posed by these emerging technologies.

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What You Should Know About Event Ticketing

Buying tickets to see your favorite band can be a frustrating experience. Tickets often sell out quickly, only to appear soon after on resale sites at high prices. And when you buy your tickets, you may be hit with high ticketing fees that are only revealed right before you click that “pay” button.

Today’s WatchBlog explores our recent report on event ticket sales, including key issues facing consumers. Listen to our podcast and read on for more.

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Drone Safety (video podcast)

Heather Krause, a director in GAO's Physical Infrastructure team, speaking outside of Reagan National AirportOver a million Americans flew drones in 2017 for recreational or commercial purposes, and the Federal Aviation Administration expects that number to more than double over the next 5 years.

Drones can pose a number of safety risks—like potential crashes if communication fails between pilot and drone, or causing interference with commercial aircraft. The FAA is charged with implementing regulations and safety measures to ensure that drones are safely integrated into national air space.

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