Federal budget 'unsustainable' says CBO

The United States is operating on an unsustainable federal budget that is bound to seriously damage the economy as federal debt grows much faster than the economy, the Congressional Budget Office said today. Unless the federal government significantly changes its fiscal policy, providing healthcare to the high number of aging Americans will cripple the U.S. economy, said the CBO long-term budget outlook, released today. Medicare and Medicaid, the federal government’s major health care programs, have been consuming increasingly more of the federal budget as Baby Boomers age. Efforts to reduce overall government spending will “require potentially painful actions to slow the rise of health care costs,” the report said. The CBO said that to prevent deficits from growing to unmanageable levels, revenues must rise as a share of GDP, projected spending must fall, or budget-makers must achieve a combination of the two outcomes. The report said that making these changes soon would “lessen the risk that an unsustainable fiscal path poses to the economy.”