Transcript Slide 1

The Campaign to
Fix the Debt
October 2012
The Campaign to Fix the Debt
 The Campaign to Fix the Debt is a national bipartisan effort to
encourage our elected leaders to enact a comprehensive debt deal
within the next year.
 Participants of the Campaign include many of the nation’s top business
and thought leaders, as well as tens of thousands of Americans from all
walks of life.
 The Campaign seeks to create an environment where voting ‘yes’ on a
comprehensive debt solution reflects both good policy and safe politics.
 To achieve this goal, the Campaign will work at the grassroots and
grasstops levels through a combination of state and local coalition
building, business leader support, social media efforts, Congressional
outreach, and both earned and paid media.
 The Campaign believes that the national debt is the most serious
economic and national security threat facing this country, and we must
come together as a nation to fix it.
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Background on Our Fiscal Challenges:
Between a "Mountain of Debt" and a "Fiscal Cliff"
On One Hand . . . A Mountain of Debt
What Debt Is Likely to Be (Percent of GDP)
500%
450%
400%
350%
300%
250%
200%
Realistic Projections
2005: 37%
2012: 73%
2025: 106%
2040: 225%
2060: 460%
What Debt Is Likely
to Reach
Current Law Assuming
Fiscal Cliff
150%
100%
50%
0%
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Source: CRFB extrapolations of Congressional Budget Office data, Alternative Fiscal Scenario.
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Surpluses Turning Into Growing Deficits…
Spending and Revenues (Billions of Dollars)
$860B
Interest
Deficit
$220B
Surplus
Interest
Deficit
$1.1T
$5.1T
$236B
$223B
$1.6T
Interest
Primary
Spending
$3.3T
$2.0T
Primary
Spending
Revenues
2000
$1.4T
Primary
Spending
Revenues
$4.6T
$2.4T
Revenues
2012
2022
Interest Costs Will Reach $1 Trillion By 2024
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Source: Congressional Budget Office, Alternative Fiscal Scenario
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Debt Drivers
How We Got Here
 Economic Crisis
(Lost revenue and increased spending on
safety net programs, like unemployment
benefits and food stamps)
 Economic Response
(Stimulus spending/tax breaks and
financial sector rescue policies )
 Tax Cuts
(2001, 2003, and 2010)
 War Spending
(Iraq and Afghanistan)
Why It Will Get So Much Worse
 Rapid Health Care Cost Growth
(Causing Medicare and Medicaid costs
to rise)
 Population Aging
(Causing Social Security and Medicare
costs to rise, and revenues to fall )
 Growing Interest Costs
(From continued debt accumulation)
 Insufficient Revenue
(To meet the costs of funding government)
 Spending Increases
(General ramp up in spending)
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Growing Entitlement Spending
Federal Spending and Revenues (Percent of GDP)
70%
Actual
Projected
60%
50%
40%
30%
Average Historical
Revenues
Interest
Revenues
Health Care
20%
Social Security
10%
Other Spending
0%
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Source: CRFB extrapolations of Congressional Budget Office data, Alternative Fiscal Scenario.
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Consequences of Rising Debt
 “Crowding out” of private investment,
leading to slower economic growth
 Higher interest rates for families purchases,
such as houses, cars, college tuitions, etc.
 Higher federal interest payments
 Intergenerational inequity – passing the bill
onto our kids along with a worse economy
 Uncertain policy and economic
environment making it harder for families
and businesses to plan for the future
 Risk of eventual fiscal crisis
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On the Other Hand . . . A Fiscal Cliff
Kicking the can down the road
and continuing to borrow like
we do today will create a
Mountain of Debt.
Expiring tax cuts combined
with simultaneous across-theboard spending cuts will
create a Fiscal Cliff.
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Note: Estimates based on CBO’s current law and Alternative Fiscal Scenario deficits.
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What the Fiscal Cliff Entails
At the end of 2012, the following is scheduled to occur:
 All of the 2001/2003/2010 tax cuts will expire at once.
 The “sequester” will immediately cut defense spending across-theboard by over 9% and non-defense discretionary spending by 8%.
 The payroll tax holiday and extended unemployment benefits will
expire.
 The Alternative Minimum Tax (AMT) will hit 30 million taxpayers
rather than 4 million.
 All of the tax extenders will expire.
 Physicians will see a 30% cut in their Medicare payments.
 Tax increases from the Affordable Care Act will begin.
 The country will once again hit the debt ceiling.
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The Size of the Fiscal Cliff
FY 2013
Budget Impact
FY 2013-2022
Impact
2001/2003/2010 Income and Estate Tax Cuts
$110 billion
$2.8 trillion
AMT Patches (w/ Tax Cut Interactions)
$125 billion
$1.7 trillion
Sequester
$65 billion
$980 billion
Doc Fixes
$10 billion
$270 billion
Jobs Measures
$115 billion
$150 billion
Various “Tax Extenders”
$30 billion
$460 billion
Taxes from the Affordable Care Act
$25 billion
$420 billion
N/A
$1.2 trillion
~$500 billion
~$8 trillion
Policy
Net Interest
Total Fiscal Impact
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Note: Congressional Budget Office estimates and CRFB calculations.
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The Economic Impact of the Fiscal Cliff
 As a result of the Fiscal Cliff, CBO estimates the economy will shrink
by 3.9 percent in first quarter of 2013 and 1.9 percent in the second
quarter.
 The unemployment rate will increase by nearly 1 percent, which
could exacerbate existing long-term unemployment significantly.
 The Fiscal Cliff would help reduce deficits; however, it would do so
through mindless and abrupt increases in tax rates and nearly acrossthe-board spending cuts that do not address growing entitlement
costs or reform the tax code.
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Source: Congressional Budget Office.
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A Better Path Forward
Instead of a Fiscal Cliff or Mountain of Debt, we should enact a
comprehensive and thoughtful plan which would:
Go Big
 Enact at least $4 trillion of deficit reduction in order to stabilize
and reduce the debt relative to GDP.
Go Smart
 Replace mindless, abrupt deficit reduction with thoughtful
changes that reform the tax code and cut low-priority spending.
Go Long
 Keep debt under control over the long-term by focusing on the
long-term growth of entitlement programs.
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Background on the
Campaign to Fix the Debt
Overview and Opportunity for Citizen Involvement
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Objectives of the Campaign to Fix the Debt
 Create a political environment in which policymakers and political
candidates become champions of balanced and bipartisan fiscal
reform
 Build a national movement to demonstrate to policymakers that
supporting a comprehensive bipartisan debt solution is now the
politically safe, non-career-threatening vote
 Educate members of Congress about the key elements of a
comprehensive solution, building support for substantial fiscal reform
and making clear the consequences of inaction
 Enact a comprehensive debt reduction plan no later than July 4, 2013
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What Makes the Campaign Different
 Unprecedented National Movement
- Bipartisan support at the local, state and national levels
- Volunteers across the country mobilized through new social media
and digital strategies
 National Leadership of CEOs and Business Leaders
- Unprecedented business community support for a comprehensive
plan that will reduce the debt while strengthening the economy
 Bipartisan Leadership in Washington
- Collaboration with members from both parties and both Houses of
Congress to help create the environment for bipartisan fiscal
reform
- Readiness to shift from partisanship and politics as usual to solve this
problem
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The Campaign Leadership
Leadership of the Campaign includes national bipartisan leaders
from business, government and policy:
Founders
Erskine Bowles, Co-Chair, National Commission on Fiscal Responsibility and
Reform
Senator Alan Simpson, Co-Chair, National Commission on Fiscal Responsibility
and Reform
Co-Chairs:
Senator Judd Gregg
Governor Ed Rendell
Steering Committee:
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Governor Phil Bredesen
David Cote, CEO, Honeywell
Congressman Vic Fazio
James B. Lee Jr., Vice Chairman, JPMorgan Chase & Co.
Congressman Jim McCrery
Senator Sam Nunn
Congressman Jim Nussle
Michael Peterson, President and COO, Peterson Foundation
Steven Rattner, Chairman, Willett Advisors
Ambassador Bob Zoellick, Former President, World Bank
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Campaign Progress Thus Far
In a few short weeks, the campaign has:
 Garnered over 220,000 signatures for the Citizen’s Petition to Fix the
Debt on FixtheDebt.org, engaging potential volunteers in every state
 Continued behind the scenes work with a diverse group of members
on options for passing a comprehensive debt deal
 Increased media presence in national and local print and TV, finding
ways to spotlight the impressive contributions of CEOs who lead on
this issue
 Begun to build diverse partnerships consisting of both existing and
new organizations that will support leaders who work toward
reaching a debt deal
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How You Can Help:
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
Sign the petition to “Fix the Debt” at FixtheDebt.org or text “sign”
to 877877

Visit FixtheDebt.org to download the Citizen's Toolkit to learn how
to get involved

Send a letter to your elected member of Congress voicing your
concern and desire for a solution

Spread the word to your friends, family, neighbors, and colleagues,
as well as local clubs and associations
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Useful Resources
The Citizen’s Petition and Campaign Information:
http://www.fixthedebt.org
Policy Papers (Committee for a Responsible Federal Budget):
http://crfb.org
Between a Mountain of Debt and a Fiscal Cliff
Primary Numbers: The GOP Candidates
Going Big Could Improve the Chances of Success
Slideshow on Our Fiscal Challenges: Averting a Fiscal Crisis
Congressional Budget Office
Federal Debt and the Risk of a Fiscal Crisis
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