The United States has a huge long-term fiscal gap, perhaps with a present value
as great as $74 trillion. The US may thus be unable to continue meeting its
current spending commitments without eventually enacting huge tax increases.
The tax cut enacted in 2001 may have increased the fiscal gap by about $13 trillion,
but the main cause of the gap is increasing life expectancy, which raises the cost
of Social Security and Medicare. While the fiscal gap can in theory be eliminated
at the stroke of a pen by simply changing stated policy, in practice this could lead
to serious disruption of people’s expectations. In addition, the fiscal gap may
impair future generations’ opportunity to take full advantage of technological
advances (such as in treating cancer) that have the potential to make their lives
significantly better than ours.