Federal Mandatory Spending on the Elderly

Pursuant to a congressional request, GAO provided information on federal mandatory spending on the elderly.

GAO noted that: (1) GAO estimates that federal mandatory spending on the elderly for the applicable programs as a share of gross domestic product (GDP) will grow from 6 percent in 2000 to 6.5 percent in 2010; (2) in the following decade, as the baby boom generation begins to retire, this spending will accelerate, reaching 8.4 percent of GDP in 2020; (3) this represents a growth of about 30 percent in federal mandatory spending on the elderly as a share of GDP between 2010 and 2020; (4) not surprisingly, Social Security and Medicare comprise the largest share of federal spending on the elderly; (5) Medicaid's spending on the elderly as a share of GDP is projected to grow the fastest, doubling over the next 20 years; (6) on the other hand, GAO's estimates show that federal spending on civilian and military retirees is projected to remain relatively constant as a share of the economy; (7) future claims of the elderly on the economy are likely to be larger than indicated by GAO's estimates; (8) for example, GAO's estimates do not include federal tax expenditures targeted to the elderly, such as the extra standard deduction for those elderly taxpayers who do not itemize deductions, Veterans Administration expenditures for the elderly, other federal programs targeted to or used by the elderly (including those for housing and food assistance), or spending by state and local governments; and (9) GAO's estimates also do not include private spending on the elderly, such as for pensions, prescription drugs, or long-term care including out-of-pocket costs and hours of work foregone by those caring for elderly parents.