This report provides a clear-eyed assessment of the federal budget outlook over the coming decade. It projects large and persistent deficits and discusses why they matter. The report suggests three ways to balance the budget while simultaneously making room for new priorities. One approach primarily involves spending cuts and smaller government, another relies more heavily on tax increases to support an activist government, and the third suggests a balanced mix of spending cuts and tax increases along with a reallocation of government priorities. All three are designed to restore fiscal sanity over the coming decade and help prepare for the baby boom’s retirement.