In a nutshell, the problem is that, in the absence of significant policy changes, and under reasonable assumptions about economic growth, demographics, and medical costs, federal spending will rise significantly faster than federal tax revenues in coming years.
As a result, if  1  My remarks reflect my own views and not necessarily those of my colleagues on the Federal Open Market Committee (FOMC). BIS Review 162/2010  1  current policy settings are maintained, the budget will be on an unsustainable path, with the ratio of federal debt held by the public to national income rising rapidly.