Economic Impacts of Waiting to Resolve the Long-Term Budget Imbalance

Report
December 10, 2010

Economic and Budget Issue Brief

To prevent federal debt from rising to unsupportable levels, policymakers would eventually have to restrain the growth of spending, raise revenues significantly above their historical share of gross domestic product (GDP), or pursue some combination of those two approaches. Addressing the long-term budget imbalance would, at a minimum, require stabilizing the ratio of federal debt to national output. In deciding when and how to do that, an important consideration is, what are the costs of delay? This issue brief analyzes the economic effects of waiting 10 years--from 2015 to 2025--to implement policies that would stabilize the ratio of debt to output.