Transcript Slide 1

Fiscal Future: The Challenges Ahead
presented by
Robert L. Bixby, Executive Director
THE CONCORD COALITION
www.concordcoalition.org
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THE CONCORD
COALITION
Composition of FY 2010 Federal Government
Revenues and Outlays
(Deficit: $1.29 Trillion)
Interest
Domestic*
Defense
Estate & Gift Taxes
($18 billion)
Other Taxes
Corporate Taxes
Other
Entitlements
Social
Insurance
Taxes
Medicare
& Medicaid
Individual
Income
Taxes
Social
Security
Outlays: $3.45 trillion**
Revenue: $2.1 trillion
*Includes all appropriated domestic spending such as education, transportation, homeland security, housing assistance and foreign aid.
**Numbers may not add due to the preliminary nature of the fiscal year numbers.
Source: CBO October 2010 and Department of Treasury 2010.
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THE CONCORD
COALITION
Current Policy Trends Lead to Large Sustained Deficits
Fiscal Years 2011-2020
Billions of Dollars
-$6.2 Trillion Deficit
-$15.2 Trillion Deficit
CBO August 2010 Baseline
The Concord Coalition Plausible Baseline assumes that discretionary spending grows at the rate
of nominal GDP, that war costs slow gradually, that Medicare physician payment cuts are
postponed, and that all expiring tax provisions (including those from the 2009 stimulus package)
are extended with AMT relief.
Source: Congressional Budget Office, August 2010 and Concord Coalition analysis.
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THE CONCORD
COALITION
Federal Spending vs. Revenues as a
Percent of GDP (FY 1980-2020)
CBO August Baseline Compared to the President’s Budget
Actual
Projected
Percentage of GDP
Average outlays: 21.0%
Average revenues: 18.3%
 CBO August 2010 Baseline

CBO’s Estimate of the President’s Budget
Source: Congressional Budget Office, August 2010..
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COALITION
Debt Held by the Public as a Percent of GDP
1940-2040
300
Actual
Projected
As a Percentage of GDP
250
200
150
World War II
108.6%
100
2010
63.6%
50
1940
1943
1946
1949
1952
1955
1958
1961
1964
1967
1970
1973
1976
1979
1982
1984
1987
1990
1993
1996
1999
2002
2005
2008
2011
2014
2017
2020
2023
2026
2029
2032
2035
2038
0
Source: GAO Analysis, 2010 and OMB Historical Tables 2010.
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COALITION
Percent of Debt Held by the Public
Owned by Foreigners
Percentage of Ownership of Publicly-Held Debt
(1987-2010)
Source: United States Treasury Department, Treasury Bulletin, September 2010.
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COALITION
Billions of Dollars
Interest Costs Go Through The Roof
Source: Congressional Budget Office August 2010 and CBO’s Analysis of the President’s Budget, March 2010.
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THE CONCORD
COALITION
Social Security, Medicare, & Medicaid as a
Percentage of the Federal Budget
All other Federal
Spending
Social Security,
Medicare and Medicaid
$2.07 Trillion
$1.42 Trillion
59%
41%
Source: Congressional Budget Office, August 2010.
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THE CONCORD
COALITION
Percentage of Revenues
Social Security, Medicare, Medicaid and Interest
Consume All Federal Revenues in Less Than 15 Years
Year
Social Security, Medicare and Medicaid
Source: Government Accountability Office, 2010.
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Interest
THE CONCORD
COALITION
America’s Population is Aging
Percentage of Population Aged 65 and Over
Population age 65 and Over
Year
Source: Social Security and Medicare Trustees’ Report, 2010.
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THE CONCORD
COALITION
Health Care Costs are Rising Faster
Than the Economy
Percentage of GDP
Historic Level of
Federal Spending
Historic Level of
Federal Revenues
Assumes that health care cost growth will not exceed GDP growth.
Assumes that health care cost growth continues at the average rate for the past 40 years (2.5
percentage points greater than GDP growth.)
Assumes that health care cost growth rate declines to 1.0 percentage point greater than GDP growth—
consistent with the assumption used by the Medicare Trustees.
Source: Congressional Budget Office, June 2010.
THE CONCORD
www.concordcoalition.org
COALITION
Federal Health Care Spending
Under Current Law
Percentage of GDP
2009
Projection
2010
Projection
2010 Projection
2009 Projection
2010 Projection Excluding Effects of Recent Health Care Legislation
Source: Congressional Budget Office, June 2010.
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THE CONCORD
COALITION
Factors Explaining Future Federal Spending on Medicare,
Medicaid, and Social Security
Percent of Growth Attributed to:
2035
2080
Health Care Cost Growth
37%
56%
Aging
63%
44%
Source: Congressional Budget Office, June 2010.
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THE CONCORD
COALITION
Sources of Growth in the Federal Budget
Over the Next 30 Years
Individual Income Taxes = 6.5%
Current Defense Spending = 4.7%
Source: Government Accountability Office and Congressional Budget Office. 2010.
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COALITION
As a Percentage of GDP
Defense Discretionary Spending as a
Percentage of GDP
Source: Congressional Budget Office, August 2010.
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COALITION
Outlays of Select Non-Defense Discretionary Programs
(FY 2010 Projected)
Education Transportation Housing,
Natural
Energy & Resources
Nutrition Asst.
Veterans
Foreign Aid
General
Government
Science,
Space &
Technology
*includes ground, air, and water
Source: Congressional Budget Office, January 2010.
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COALITION
As a Percentage of GDP
Non-Defense Discretionary Spending as a
Percentage of GDP
Source: Congressional Budget Office, January 2010.
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COALITION
Current fiscal policy is on an unsustainable path
Federal Outlays as a Percentage of GDP
Interest
All Other
Medicaid
Average tax revenue
Medicare
Social Security
Source: Government Accountability Office, 2010.
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THE CONCORD
COALITION
Key Points of Agreement
Members of the Fiscal Wake-Up Tour do not necessarily agree on the ideal
levels of spending, taxes and debt, but we do agree on the following key points:
• Current fiscal policy is unsustainable
• There are no easy solutions, such as cutting waste fraud
and abuse or growing our way out of the problem.
• Finding solutions will require bipartisan cooperation and
a willingness to discuss all options.
• Public engagement and understanding is vital in finding
solutions.
• This is not about numbers. It is a moral issue.
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THE CONCORD
COALITION