Authors: Jagadeesh Gokhale and Kent A. Smetters
Abstract: We estimate federal spending and taxes by birth-year, gender, race, and education, by interacting official budget totals with microsimulation demographics to project federal budget imbalances. Future federal spending exceeds tax receipts under current policy. The federal Fiscal Imbalance totals $162.6 trillion in present value, six-fold larger than outstanding debt held by the public. Restoring fiscal balance would require immediately and permanently either raising all federal taxes by 26.1 percent or reducing all federal spending by 33.4 percent, or some combination of the two. Holding harmless some population groups from changes, including people over age 59, increases the required adjustment rate.