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Financial Report of the United States Government

Management’s Discussion & Analysis

An Unsustainable Fiscal Path

An important purpose of the Financial Report is to help citizens understand current fiscal policy and the importance and magnitude of policy reforms necessary to make it sustainable. This Financial Report includes the SLTFP and a related Note Disclosure (Note 26). The Statements display the PV of 75-year projections of the federal government’s receipts and non-interest spending16 for FY 2021 and FY 2020.

Fiscal Sustainability

A sustainable fiscal policy is defined as one where the debt-to-GDP ratio is stable or declining over the long term. The projections based on the assumptions in this Financial Report indicate that current policy is not sustainable. This report presents data, including debt, as a percent of GDP to help readers assess whether current fiscal policy is sustainable. The debt-to-GDP ratio was approximately 100 percent at the end of FY 2021, similar to (but slightly below) the ratio at the end of FY 2020. The long-term fiscal projections in this report are based on the same economic and demographic assumptions that underlie the 2021 Social Security and Medicare Trustees’ Reports. The data and projections presented in the 2021 Trustees’ Reports include the Trustees’ best estimates of the effects of the COVID-19 pandemic and the 2020 recession, which were not reflected in last year’s reports. As discussed below, if current policy is left unchanged and based on this report’s assumptions, the debt-to-GDP ratio is projected to exceed 200 percent by 2041 and reach 701 percent in 2096. Preventing the debt-to-GDP ratio from rising over the next 75 years is estimated to require some combination of spending reductions and revenue increases that amount to 6.2 percent of GDP over the period. While this estimate of the “75-year fiscal gap” is highly uncertain, it is nevertheless nearly certain that current fiscal policies cannot be sustained indefinitely.

Delaying action to reduce the fiscal gap increases the magnitude of spending and/or revenue changes necessary to stabilize the debt-to-GDP ratio as shown in Table 7 below.

The estimates of the cost of policy delay assume policy does not affect GDP or other economic variables. Delaying fiscal adjustments for too long raises the risk that growing federal debt would increase interest rates, which would, in turn, reduce investment and ultimately economic growth.

The projections discussed here assume current policy17 remains unchanged, and hence, are neither forecasts nor predictions. Nevertheless, the projections demonstrate that policy changes must be enacted to move towards fiscal sustainability.

The Primary Deficit, Interest, and Debt

The primary deficit – the difference between non-interest spending and receipts – is the determinant of the debt-to-GDP ratio over which the government has the greatest control (the other determinants include interest rates and growth in GDP). Chart 8 shows receipts, non-interest spending, and the difference – the primary deficit – expressed as a share of GDP. The primary deficit-to-GDP ratio spiked during 2009 through 2012 due to the 2008-09 financial crisis and the ensuing severe recession, as well as the effects of the government’s response thereto. These elevated primary deficits resulted in a sharp increase in the ratio of debt to GDP, which rose from 39 percent at the end of 2008 to 70 percent at the end of 2012. As an economic recovery took hold, the primary deficit ratio fell, averaging 2.1 percent of GDP over 2013 through 2019, The primary deficit-to-GDP ratio again spiked in 2020, rising to 13.3 percent of GDP in 2020, due to increased spending to address the COVID-19 pandemic and lessen the economic impacts of stay-at-home and social distancing orders on individuals, hard-hit industries, and small businesses. Spending remained elevated in 2021 due to additional funding to support economic recovery, but increased receipts reduced the primary deficit-to-GDP to 10.8 percent.

The primary deficit ratio is projected to fall to 4.7 percent in 2022 and then decrease to 4.3 percent in 2027 as the economy grows and spending due to legislation enacted in response to the COVID-19 pandemic decreases. After 2027, however, increased spending for Social Security and health programs due to the ongoing retirement of the baby boom generation and increases in the price of health care services is projected to result in increasing primary deficit ratios that reach 5.0 percent of GDP in 2030. The primary deficit ratio peaks at 6.3 percent in 2043, gradually decreases beyond that point as aging of the population continues at a slower pace, and reaches 4.9 percent of GDP in 2096, the last year of the projection period.

Primary deficit trends are heavily influenced by tax receipts. Receipts as a share of GDP were markedly depressed in 2009 through 2012 because of the recession and the effects of the government’s response thereto. The share subsequently increased to 18.0 percent of GDP by 2015, before falling below the 30-year average of 17.1 percent in 2018, after enactment of the TCJA.

Receipts were 18.1 percent of GDP in 2021. After 2025, receipts grow slightly more rapidly than GDP over the projection period as increases in real incomes cause more taxpayers and a larger share of income to fall into the higher individual income tax brackets.

On the spending side, the non-interest spending share of GDP, was 28.9 percent in 2021, slightly less than the share of GDP in 2020. The ratio of non-interest spending to GDP is projected to fall to 22.0 percent in 2022 and remain near that level through 2024. After 2024, the non-interest spending share of GDP is projected to rise gradually, reaching 25.7 percent in 2078, before declining to 25.3 percent in 2096, the end of the projection period. Beginning in 2025, these increases are principally due to faster growth in Medicare and Social Security spending (see Chart 8). The aging of the baby boom generation, among other factors, is projected to increase the spending shares of GDP of Social Security and Medicare are projected to increase by about 0.9 and 1.5 percentage points, respectively, from 2022 to 2041. After 2041, the Social Security and Medicare spending shares of GDP continue to increase in most years, albeit at a slower rate, due to projected increases in health care costs and population aging, before declining toward the end of the projection period.

On a PV basis, deficit projections reported in the FY 2021 Financial Report increased in both present-value terms and as a percent of the current 75-year PV of GDP. As discussed in Note 26, the largest factor affecting the projections was the actual budget results for FY 2021 and the budget estimates published in the FY 2022 President’s Budget. Actual budget results for FY 2021 lead to higher 75-year PV of spending for mandatory programs other than Social Security, Medicare, and Medicaid. Budgetary estimates result in higher 75-year PVs for individual income tax receipts and outlays for non-defense discretionary programs. The second largest factor was the update of economic and demographic assumptions which increases the imbalance by 0.2 percent of the 75-year PV of GDP ($6.3 trillion). The third largest factor is the effect of new Social Security, Medicare, and Medicaid program-specific actuarial assumptions, which increase this imbalance as a share of the 75-year PV of GDP by 0.2 percentage points ($3.6 trillion). The change in reporting period – the effect of shifting calculations from 2021 through 2095 to 2022 through 2096 – increases the imbalance of the 75-year PV of receipts less non-interest spending by $1.4 trillion.

One of the most important assumptions underlying the projections is the future growth of health care costs. As discussed in Note 25, these future growth rates – both for health care costs in the economy generally and for federal health care programs such as Medicare, Medicaid, and PPACA exchange subsidies – are highly uncertain. In particular, enactment of the PPACA in 2010 and the MACRA in 2015 established cost controls for Medicare hospital and physician payments whose long-term effectiveness of which is not yet clear. The Medicare spending projections in the long-term fiscal projections are based on the projections in the 2021 Medicare Trustees’ Report, which assume the PPACA and MACRA cost control measures will be effective in producing a substantial slowdown in Medicare cost growth. As discussed in Note 25, the Medicare projections are subject to much uncertainty about the ultimate effects of these provisions to reduce health care cost growth. For the long-term fiscal projections, that uncertainty also affects the projections for Medicaid and exchange subsidies, because the cost per beneficiary in these programs is assumed to grow at the same reduced rate as Medicare cost growth per beneficiary. The projections in the Medicaid Actuarial Report, which end in 2027, are adjusted to accord with the actual Medicaid spending in FY 2021. Actual Medicaid spending includes temporary spending increases due to changes in enrollment and other temporary measures related to the pandemic. The amounts related to these temporary spending increases cannot be identified, which adds uncertainty to the projections. After 2027, the projections assume no further change in State Medicaid coverage under the PPACA, and the numbers of aged beneficiaries (65-plus years) and non-aged beneficiaries (less than 65 years) are expected to grow at the same rates as the aged and non-aged populations, respectively. The most recent Social Security and Medicare Trustees’ Reports were released in August 2021. See Note 26—Long-Term Fiscal Projections for additional information.

As discussed in Note 26 for the FY 2021 report, other key assumptions include, but are not limited to the following. For receipts, individual income taxes are based on the share of individual income taxes of salaries and wages in the current law baseline projection in the FY 2022 President’s Budget, and the salaries and wages projections in the Social Security 2021 Trustees’ Report. That baseline accords with the tendency of effective tax rates to increase as growth in income per capita outpaces inflation (also known as “bracket creep”) and the expiration dates of individual income and estate and gift tax provisions of the TCJA.18 Projections for the other categories of receipts and spending are consistent with the economic and demographic assumptions in the Trustees’ Reports and include updates for actual budget results for FY 2021 or budgetary estimates from the FY 2022 President’s Budget. Where possible, those budget totals are adjusted before spending is projected to remove outlays for programs or activities that are judged to be temporary, such as spending related to the COVID-19 pandemic and economic recovery. Where not possible, budget totals were not adjusted, resulting in higher projections of future spending, increasing the uncertainty surrounding this year’s projections. See Note 26—Long-Term Fiscal Projections for additional information about the assumptions used in this analysis.

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The primary deficit-to-GDP projections in Chart 8, projections for interest rates, and projections for GDP together determine the debt-to-GDP ratio projections shown in Chart 9. That ratio was approximately 100 percent at the end of FY 2021 and under current policy is projected to exceed the historic high of 106 percent in 2024, rise to 200 percent by 2041 and reach 701 percent by 2096. The change in debt held by the public from one year to the next generally represents the budget deficit, the difference between total spending and total receipts. The debt-to-GDP ratio rises continually in great part because primary deficits lead to higher levels of debt, which lead to higher net interest expenditures, and higher net interest expenditures lead to higher debt.19 The continuous rise of the debt-to-GDP ratio indicates that current policy is unsustainable.

These debt-to-GDP projections are higher than the corresponding projections in both the 2020 and 2019 Financial Reports. For example, the last year of the 75-year projection period used in the FY 2019 Financial Report is 2094. In the FY 2021 Financial Report, the debt-to-GDP ratio for 2094 is projected to be 682 percent, which compares with 614 and 474 percent projected for that same year in the FY 2020 Financial Report and the FY 2019 Financial Report, respectively.20

The Fiscal Gap and the Cost of Delaying Policy Reform

The 75-year fiscal gap is one measure of the degree to which current policy is unsustainable. It is the amount by which primary surpluses over the next 75 years must, on average, rise above current-policy levels in order for the debt-to-GDP ratio in 2096 to remain at its level in 2021. The projections show that projected primary deficits average 5.7 percent of GDP over the next 75 years under current policy. If policies were adopted to eliminate the fiscal gap, the average primary surplus over the next 75 years would be 0.6 percent of GDP, 6.2 percentage points higher than the projected PV of receipts less non-interest spending shown in the basic financial statements. Hence, the 75-year fiscal gap is estimated to equal 6.2 percent of GDP. This amount is, in turn, equivalent to 32.4 percent of 75-year PV receipts and 25.0 percent of 75-year PV non-interest spending. The fiscal gap was estimated at 5.4 percent in the FY 2020 Financial Report.

In these projections, closing the fiscal gap requires running substantially positive primary surpluses, rather than simply eliminating the primary deficit. The primary reason is that the projections assume future interest rates will exceed the growth rate of GDP. Achieving primary balance (that is, running a primary surplus of zero) implies that the debt grows each year by the amount of interest spending, which under these assumptions would result in debt growing faster than GDP.

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Table 7
Costs of Delaying Fiscal Reform
Period of Delay Change in Average Primary Surplus
Reform in 2022 (No Delay) 6.2 percent of GDP between 2022 and 2096
Reform in 2032 (Ten-Year Delay) 7.3 percent of GDP between 2032 and 2096
Reform in 2042 (Twenty-Year Delay) 9.0 percent of GDP between 2042 and 2096

Table 7 shows the cost of delaying policy reform to close the fiscal gap by comparing policy reforms that begin in three different years. Immediate reform would require increasing primary surpluses by 6.2 percent of GDP on average between 2022 and 2096 (i.e., some combination of reducing spending and increasing revenue by a combined 6.2 percent of GDP on average over the 75-year projection period). Table 7 shows that delaying policy reform forces larger and more abrupt policy reforms over shorter periods. For example, if policy reform is delayed by 10 years, closing the fiscal gap requires increasing the primary surpluses by 7.3 percent of GDP on average between 2032 and 2096. Similarly, delaying reform by 20 years requires primary surplus increases of 9.0 percent of GDP on average between 2042 and 2096. The differences between the required primary surplus increases that start in 2032 and 2042 (7.3 and 9.0 percent of GDP, respectively) and that which starts in 2022 (6.2 percent of GDP) is a measure of the additional burden that delay would impose on future generations. Future generations are harmed by policy reform delay, because the higher the primary surplus is during their lifetimes the greater the difference is between the taxes they pay and the programmatic spending from which they benefit.


The debt-to-GDP ratio is projected to rise over the 75-year projection period and beyond if current policy is unchanged, based on this report’s assumptions, which implies that current policy is not sustainable and must ultimately change. If policy changes are not so abrupt as to slow economic growth, then the sooner policy changes are adopted to avert these trends, the smaller the changes to revenue and/or spending that would be required to achieve sustainability over the long term. While the estimated magnitude of the fiscal gap is subject to a substantial amount of uncertainty, it is nevertheless nearly certain that current fiscal policies cannot be sustained indefinitely.

These long-term fiscal projections and the topic of fiscal sustainability are discussed in further detail in Note 26 and the RSI section of this Financial Report.

Social Insurance

The long-term fiscal projections reflect government receipts and spending as a whole. The SOSI focuses on the government’s “social insurance” programs: Social Security, Medicare, Railroad Retirement, and Black Lung.21 For these programs, the SOSI reports: 1) the actuarial PV of all future program revenue (mainly taxes and premiums) - excluding interest - to be received from or on behalf of current and future participants; 2) the estimated future scheduled expenditures to be paid to or on behalf of current and future participants; and 3) the difference between 1) and 2). Amounts reported in the SOSI and in the RSI section in this Financial Report are based on each program’s official actuarial calculations.

This year’s projections for Social Security and Medicare are based on the same economic and demographic assumptions that underlie the 2021 Social Security and Medicare Trustees’ Reports and the 2021 SOSI, while comparative information presented from last year’s report is based on the 2020 Social Security and Medicare Trustees’ Reports and the 2020 SOSI. Table 8 summarizes amounts reported in the SOSI, showing that net social insurance expenditures are projected to be $71.0 trillion over 75 years as of January 1, 2021 for the “Open Group,” an increase of $5.5 trillion over net expenditures of $65.5 trillion projected in the FY 2020 Financial Report.22 The current-law 2021 amounts reported for Medicare reflect the physician payment levels expected under the MACRA payment rules and the PPACA-mandated reductions in other Medicare payment rates, but not the payment reductions and/or delays that would result from trust fund depletion.23 Similarly, current-law projections for Social Security do not reflect benefit payment reductions and/or delays that would result from fund depletion. By accounting convention, the transfers from the General Fund to Medicare Parts B and D are eliminated in the consolidation of the SOSI at the government-wide level and as such, the General Fund transfers that are used to finance Medicare Parts B and D are not included in Table 8. For the FYs 2021 and 2020 SOSI, the amounts eliminated totaled $43.2 trillion and $40.9 trillion, respectively. SOSI programs and amounts are included in the broader fiscal sustainability analysis in the previous section, although on a slightly different basis (as described in Note 26).

The amounts reported in the SOSI provide perspective on the government’s long-term estimated exposures for social insurance programs. These amounts are not considered liabilities in an accounting context. Future benefit payments will be recognized as expenses and liabilities as they are incurred based on the continuation of the social insurance programs' provisions contained in current law. The social insurance trust funds account for all related program income and expenses. Medicare and Social Security taxes, premiums, and other income are credited to the funds; fund disbursements may only be made for benefit payments and program administrative costs. Any excess revenues are invested in special nonmarketable U.S. government securities at a market rate of interest. The trust funds represent the accumulated value, including interest, of all prior program surpluses, and provide automatic funding authority to pay cover future benefits.

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Table 8: Social Insurance Future Expenditures in Excess of Future Revenues
Dollars in Trillions 2021 2020 Increase/(Decrease)
$ %
Open Group (Net):        
  Social Security (OASDI) $(22.7) $(19.7) $3.0 15.2%
  Medicare (Parts A, B, & D) $(48.2) $(45.7) $2.5 5.5%
  Other  $(0.1)  $(0.1)  $ -  0.0%
  Total Social Insurance Expenditures, Net
  (Open Group)
$(71.0)  $(65.5)  $5.5 8.4%
  Total Social Insurance Expenditures, Net
  (Closed Group)
$(93.6)  $(87.0)  $6.6 7.6%
Social Insurance Net Expenditures as a % of GDP*
Open Group
  Social Security (OASDI) (1.3%) (1.2%)  
  Medicare (Parts A, B, & D) (3.1%) (3.0%)  
Total (Open Group) (4.4%) (4.2%)  
Total (Closed Group) (5.8%) (5.6%)  
Source: SOSI. Amounts equal estimated present value of projected revenues and expenditures for scheduled benefits over the next 75 years of certain 'Social Insurance' programs (e.g., Social Security, Medicare). 'Open Group' totals reflect all current and projected program participants during the 75-year projection period. 'Closed Group' totals reflect only current participants.
* GDP values used are from the 2021 & 2020 Social Security and Medicare Trustees Reports and represent the present value of GDP over the 75-year projection period.  As the GDP used for Social Security and Medicare differ slightly in the Trustees Reports, the two values are averaged to estimate the 'Other' and Total Net Social Insurance Expenditures as percent of GDP. As a result, totals may not equal the sum of components due to rounding.

Table 9 identifies the principal reasons for the changes in projected social insurance amounts during 2021 and 2020.

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Table 9: Changes in Social Insurance Projections
Dollars in Trillions 2021 2020
NPV - Open Group (Beginning of the Year)  $(65.5)  $(59.1)
Changes in:
    Valuation Period $(2.2) $(2.2)
    Demographic data, assumptions, and methods $1.5 $3.3
    Economic data, assumptions, and methods1 $(1.2) $(1.8)
    Law or policy $(0.2) $(0.6)
    Methodology and programmatic data1 $(1.2) $0.2
    Economic and other healthcare assumptions2 $(3.8) $(5.4)
    Change in projection base2 $1.6 $0.1
Net Change in Open Group measure $(5.5) $(6.4)
NPV - Open Group (End of the Year) $(71.0) $(65.5)
1Relates to Social Security Program.
2Relates to Medicare Program.

The following briefly summarizes the significant changes for the current valuation (as of January 1, 2021) as disclosed in Note 25—Social Insurance. Note 25 is compiled from disclosures included in the financial statements of those entities administering these programs, including SSA and HHS. See Note 25 for additional information.

  • Change in valuation period (affects both Social Security and Medicare): This change replaces a small negative net cash flow for 2020 with a much larger negative net cash flow for 2095. As a result, the PV of the estimated future net cash flows decreased (became more negative) by $2.2 trillion.
  • Changes in demographic data, assumptions, and methods (affects both Social Security and Medicare): There were two changes to ultimate demographic assumptions compared to prior valuation: the ultimate total fertility rate was increased; and an additional cause of death category was added, by separating dementia out from the all-other-causes category, and ultimate mortality improvement rates were updated for cardiovascular disease. In addition to this ultimate demographic assumption change, the starting demographic value and the way these values transition to the ultimate assumptions were changed. Birth rate data through the third quarter of 2020 indicated somewhat lower birth rates. Death rates increased significantly for 2020 and 2021. Overall, changes to these assumptions caused the PV of the estimated future net cash flows to increase (become less negative) by $1.5 trillion.

  • Changes in economic data and assumptions (affects Social Security only): Several changes were made to the ultimate economic assumptions since the last valuation period. The ultimate average real wage differential increased. Additionally, the real wage differential assumptions for the first ten years of the projection period were also increased. The ultimate age-sex-adjusted unemployment rate was reduced. The higher real wage differential and then combined changes to the unemployment assumption and the labor force methodology increased the PV of estimated future net cash flows. In addition to these changes in ultimate economic assumptions, the starting economic values and the way these values transition to the ultimate assumptions were changed. Near-term interest rates were adjusted downward. Real interest rates are now assumed to be negative for calendar year 2021 through 2024, with a gradual rise to the ultimate real interest rate. The level of potential GDP is assumed to be roughly 1.0 percent lower than the level beginning with the second quarter 2020. The changes to near-term interest rate and the starting values and near-term economic growth assumptions decrease the PV of the estimated future net cash flows. There were no additional notable changes in economic methodology. Overall, changes to these assumptions caused the PV of the estimated future net cash flows to decrease (become more negative) by $1.2 trillion.
  • Changes in law or policy (affects both Social Security and Medicare): For Social Security, between the prior valuation and the current valuation, one change in policy is expected to have significant effect on the long-range cost. The DACA policy extends indefinitely the ability of those qualifying to remain in the country and work lawfully. A memorandum was issued on January 20, 2021. Most of the provisions enacted as part of Medicare legislation since the prior valuation date has little or no impact on the program. The following provisions did have financial impact. The CARES Act (P.L. 116-136, enacted on March 27, 2020) included provisions that affect the HI and SMI programs. The CAA (P.L. 116-260, enacted on December 7, 2020) included provisions that affect the HI and SMI Programs. An Act to Prevent-the-Board Direct Spending Cuts and for Other Purposes (P.L. 117-7, enacted on April 14, 2021) included provisions that affect the HI and SMI Programs. Overall, the changes to these laws, regulations, and policies caused the PV of the estimated future net cash flows to decrease (become more negative) by $0.2 trillion for Social Security and Medicare, with $0.1 trillion each for Social Security and Medicare.

  • Changes in methodology and programmatic data (affects Social Security only). Several methodological improvements and updates of program-specific data are included in the current valuation (beginning on January 1, 2020). The most significant are as follows: The current valuation uses a 10-percent sample of all newly entitled worker beneficiaries in a recent year to project average benefit levels of retired-workers and disabled-workers beneficiaries. Recent data and estimates indicated lower near-term and ultimate levels of revenue from taxation of Social Security benefits than projected. The methodology for projecting retroactive benefits for retired workers was improved to better capture the different rules for workers who become newly entitled prior to normal retirement age versus those who become entitled at or after normal retirement age. Overall, changes in methodology and programmatic data caused the PV of the estimated future net cash flows to decrease (become more negative) by $1.2 trillion for Social Security.

  • Changes in economic and other healthcare assumptions (affects Medicare only): The economic assumptions used in the Medicare projections are the same as those used for the OASDI (described above) and are prepared by the Office of the Chief Actuary at SSA. In addition to the economic assumptions changes described above, the healthcare assumptions are specific to the Medicare projections. Changes to these assumptions in the current valuation include: slightly faster projected spending growth for outpatient services and for physician-administered drugs; and higher direct and indirect remuneration and shifts to Medicare Advantage offset higher gross drug prices. The net impact of these changes caused the PV of the estimated future net cash flows to decrease (become more negative) by $3.8 trillion.

  • Change in Projection Base (affects Medicare only): Actual income and expenditures in 2020 were different than what was anticipated when the 2020 Medicare Trustees’ Report projections were prepared. For Part A and Part B income and expenditure in 2020 were lower than anticipated based on actual experience, mainly due to the impact of the COVID-19 pandemic. Part D was largely unaffected by the pandemic and total income and expenditures were only slightly higher than the estimated based on actual experience. Actual experience of the Medicare Trust Funds between January 1, 2020 and January 1, 2021 is incorporated in the current valuation and is more than projected in the prior valuation. Overall, the net impact of the Part A, B, and D projection base change is an increase (become less negative) in the estimated future net cash flows by $1.6 trillion for Medicare.

As reported in Note 25, uncertainty remains about whether the projected cost savings and productivity improvements will be sustained in a manner consistent with the projected cost growth over time. Note 25 includes an alternative projection to illustrate the uncertainty of projected Medicare costs. As indicated earlier, GAO disclaimed opinions on the 2021, 2020, 2019, 2018 and 2017 SOSI because of these significant uncertainties.

Costs as a percent of GDP of both Medicare and Social Security, which are analyzed annually in the Medicare and Social Security Trustees’ Reports, are projected to increase substantially through the mid-2030s because: 1) the number of beneficiaries rises rapidly as the baby-boom generation retires; and 2) the lower birth rates that have persisted since the baby boom cause slower growth in the labor force and GDP.24 According to the Medicare Trustees’ Report, spending on Medicare is projected to rise from its current level of 4.0 percent of GDP to 6.2 percent in 2045 and to 6.5 percent in 2095.25 As for Social Security, combined spending is projected to generally increase from its current level of 5.1 percent of GDP to a peak of 6.2 percent for 2077, and then decline to 5.9 percent by 2095. The government collects and maintains funds supporting the Social Security and Medicare programs in trust funds. A scenario in which projected funds expended exceed projected funds received, as reported in the SOSI, will cause the balances in those trust funds to deplete over time. Table 10 summarizes additional current status and projected trend information, including years of projected depletion, for the Medicare Hospital Insurance and Social Security Trust Funds.

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Table 10: Trust Fund Status
Fund Projected Depletion Projected Post-Depletion Trend
Medicare Hospital Insurance* 2026 
(unchanged from FY 2020 Report)
In 2026, trust fund income is projected to cover 91.0 percent of benefits, decreasing to 78.0 percent in 2045, then returning to 91.0 percent by 2095.  
Combined Old-Age Survivors and Disability Insurance** 2034
one year earlier than FY 2020 Report)
In 2034, trust fund income is projected to cover 78.0 percent of scheduled benefits, decreasing to 74.0 percent by 2095.
*Source: 2021 Medicare Trustees Report     ** Source: 2021 OASDI Trustees Report
Projections assume full Social Security and Medicare benefits are paid after fund depletion contrary to current law.

As previously discussed and as noted in the Trustees’ Reports, these programs are on a fiscally unsustainable path. Additional information from the Trustees’ Reports may be found in the RSI section of this Financial Report.

Reporting on Climate Change

As stated in EO 14008, Tackling the Climate Crisis at Home and Abroad “the United States and the world face a profound climate crisis…Domestic action must go hand in hand with United States international leadership, aimed at significantly enhancing global action.” Among other things, the EO “directs each federal agency to develop a plan to increase the resilience of its facilities and operations to the impacts of climate change and directs relevant agencies to report on ways to expand and improve climate forecast capabilities – helping facilitate public access to climate related information and assisting governments, communities, and businesses in preparing for and adapting to the impacts of climate change.” As a corollary to EO 14008, EO 14030, Climate-Related Financial Risk, is intended to help the American people understand how climate change could impact their financial security, to strengthen the U.S. financial system so that climate change does not affect the system’s stability, and to inform federal government decision-making to mitigate the risks of climate change. Section 5(a) of EO 14030 specifically tasks OMB and the National Economic Council, in consultation with Treasury, to develop recommendations to integrate climate-related financial risk into financial management and reporting, with a focus on the climate-related financial risk of lending programs. Section 5(a) directs the recommendations to include an evaluation of changes to accounting standards where appropriate for federal financial reporting.

Although not required to do so, many agencies included similar types of information about climate change in their FY 2021 financial reports and/or included climate information in different sections of their financial reports.

Approximately one third of the CFO Act agencies referred to their climate action or adaptation plans. SSA has developed plans to prepare for power disruptions, increased flooding in both coastal and non-coastal locations, reduced water supply, and disruptions and damage to transportation infrastructure. VA is implementing changes to building design and resilience standards, developing a facility climate risk list, updating sustainable building certification requirements, preparing for surges in demand for medical supplies and pharmaceuticals, and planning to create a bio-surveillance system and epidemiologic investigation program to surveil for high consequence infections in veterans receiving VA care.

In addition, at least one quarter of the CFO Act agencies discussed climate change in the context of program performance. For example, HHS has established the first national level office established to address climate change and health equity; it is seeking to protect vulnerable communities who disproportionately bear the brunt of pollution and climate-driven disasters (such as drought and wildfires) at the expense of public health. Treasury has initiated work related to: climate transition finance, climate-related economic and tax policy, and climate-related financial risks.

Also, one third of the CFO Act agencies discussed climate change in the forward-looking section of their MD&A. State has a new Special Presidential Envoy for Climate to lead diplomatic engagement on the climate crisis, exercise climate leadership in international fora, increase international climate ambition and ensure that climate change is integrated into all elements of the Administration’s foreign policy-making process. DOI’s 2022-2026 Strategic Plan will, among other things, address the climate crisis and invest in a clean energy future. DOI will also strengthen climate resilience and conservation partnerships and increase renewable energy production on public lands and waters to support a carbon pollution-free power sector by 2035.

One third of the Inspectors General from CFO Act agencies identified climate change as a management challenge. DOI’s Office of Inspector General recognized that climate change is a cross-cutting issue affecting tribal communities, land use, water resources, wildlife, and their habitats, and the frequency and severity of natural disasters. EPA’s Office of Inspector General identified climate change as among the top management challenges facing the agency focusing on EPA’s role in providing leadership on this issue.

Like Inspectors General, agency heads also recognized the importance of climate change, with about one third of the CFO Act agency heads citing climate change in their financial statements transmittal messages. The NASA Administrator stated that NASA contributes significantly to what is known about Earth’s changing climate and cited recent agency efforts related to climate change, disaster mitigation, fighting forest fires, and improving real-time agricultural processes. The Secretary of Transportation noted that the Infrastructure Investment and Jobs Act will address the climate crisis by building a network of electric vehicle chargers across the country, by helping make our transportation infrastructure more resilient, and by making it safer and easier for people to get around without a car.

As required by EO 14030, in October, the National Economic Council issued a report26 laying out a government-wide strategy to address the financial risk that climate change poses to the government and the U.S. economy. In addition, FASAB, which is an advisory committee under the Federal Advisory Committee Act and the generally accepted accounting principles standard setter for the federal government, has begun a research project on climate-related financial reporting. The project includes development of draft staff implementation guidance, which is intended to summarize existing FASAB guidance that may be applied to climate-related events or transactions. The project also includes an assessment of the need for additional guidance. Lastly, on December 8, 2021, after the end of FY 2021, EO 14057, Catalyzing Clean Energy Industries and Jobs Through Federal Sustainability, was issued. Among other things, this EO directs agencies to develop plans, processes, and analytic tools that will allow federal agencies and programs to adapt to climate change.


16 For the purposes of the SLTFP and this analysis, spending is defined in terms of outlays. In the context of federal budgeting, spending can either refer to: 1) budget authority – the authority to commit the government to make a payment; 2) obligations – binding agreements that will result in either immediate or future payment; or 3) outlays, or actual payments made.  (Back to Content)

17 Current policy in the projections is based on current law, but includes certain adjustments, such as extension of certain policies that expire under current law but are routinely extended or otherwise expected to continue (e.g., reauthorization of the Supplemental Nutrition Assistance Program). (Back to Content)

18 The 2020 projections assumed the individual income and estate and gift tax provisions of the TCJA would continue past their legal expiration on December 31, 2025. See the FY 2020 Financial Report. (Back to Content)

19 The change in debt each year is also affected by certain transactions not included in the budget deficit, such as changes in Treasury’s cash balances and the nonbudgetary activity of federal credit financing accounts. These transactions are assumed to hold constant at about 0.3 percent of GDP each year, with the same effect on debt as if the primary deficit was higher by that amount.  (Back to Content)

20 See the Note 24 of the FY 2020 Financial Report of the U.S. Government for more information about changes in the long term fiscal projections between FYs 2019 and 2020. (Back to Content)

21 The Black Lung Benefits Act provides for monthly payments and medical benefits to coal miners totally disabled from pneumoconiosis (black lung disease) arising from their employment in or around the nation's coal mines. See Railroad Retirement Board’s projections are based on economic assumptions that underlie the 28th Actuarial Valuation of the Assets and Liabilities Under the Railroad Retirement Acts as of December 31, 2019 with Technical Supplement. (Back to Content)

22 'Closed' Group and 'Open' Group differ by the population included in each calculation. From the SOSI, the 'Closed' Group includes: 1) participants who have attained eligibility; and 2) participants who have not attained eligibility. The 'Open' Group adds future participants to the 'Closed' Group. See ‘Social Insurance’ in the RSI section in this Financial Report for more information. (Back to Content)

23 MACRA permanently replaces the Sustainable Growth Rate formula, which was used to determine payment updates under the Medicare physician fee schedule with specified payment updates through 2025. The changes specified in MACRA also establish differential payment updates starting in 2026 based on practitioners’ participation in eligible APM; payments are also subject to adjustments based on the quality of care provided, resource use, use of certified electronic health records, and clinical practice improvement.  (Back to Content)

24 A Summary of the 2021 Annual Social Security and Medicare Trust Fund Reports, page 12. (Back to Content)

25 Percent of GDP amounts are expressed in gross terms (including amounts financed by premiums and state transfers). (Back to Content)

26 The report can be found here: A ROADMAP TO BUILD A CLIMATE-RESILIENT ECONOMY ( (Back to Content)

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Last modified 01/31/23