Unfortunately, we are experiencing what seems likely to be the calm before the storm. In particular, spending on entitlement programs will begin to climb quickly during the next decade. In fiscal 2006, federal spending for Social Security, Medicare, and Medicaid together totaled about 40 percent of federal expenditures, or 8-1/2 percent of GDP.
3 In the medium-term projections released by the CBO in January, these outlays increase to 10-3/4 percent of GDP by 2017, an increase of about 2 percentage points of GDP in little more than a decade, and they will likely continue to rise sharply relative to GDP in the years after that.