President

in the long run. The concern about long-term financing for the tax cuts isparticularly important because of the likelihood of rising spending pressuresin the future. The Office of Management and Budget projects, for example,that under current law total noninterest Federal spending could reach25 percent of GDP by 2080, compared with 18.2 percent today. Thebreakdown of projected spending in Chart 5-4 shows that the main drivingforce behind this increase is the growth in spending on entitlement programs,primarily Medicare, Medicaid, and Social Security, which could reachapproximately 20 percent of GDP by 2080. The benefits of making the taxcuts permanent might also be offset if the tax cuts are financed by a reductionin efficient government spending (spending whose benefits exceed both thedirect cost to the taxpayer and the deadweight loss).130 | Economic Report of the President