Transcript Slide 1

Federal Budget Briefing—ASMC PDI 2010
presented by
Jeffrey S. Thiebert, National Grassroots Director
THE CONCORD COALITION
www.concordcoalition.org
www.concordcoalition.org
THE CONCORD
COALITION
About The Concord Coalition
The Concord Coalition is a nationwide, non-partisan, grassroots
organization advocating generationally responsible fiscal policy. The
Concord Coalition was founded in 1992 by the late former Senator Paul
Tsongas (D-Mass.), former Senator Warren B. Rudman (R-N.H.) and
former U.S. Secretary of Commerce Peter Peterson. Former Senator Bob
Kerrey (D-Ne.) became co-chair of the Concord Coalition in January
2002.
www.concordcoalition.org
THE CONCORD
COALITION
In billions of 1996 constant (chain) dollars
Current Fiscal Policy
$1,800
$1,600
$1,400
$1,200
$1,000
$800
$600
$400
$200
$0
1980 1984 1988 1992 1996 2000 2004 2008 2012 2016
Fiscal Years
www.concordcoalition.org
THE CONCORD
COALITION
Federal Revenue and Spending
Fiscal Year 2009
Revenues
Spending
Individual Income Taxes
26%
Social Security
19%
Corporate Income Taxes
4%
Health Care
22%
Payroll Taxes (SI, Medicare, & FICA)
25%
International Affairs
1%
Other Taxes
5%
Income Security
15%
Borrowed Funds
40%
Education
2%
Total Revenue
100% Interest on the National Debt
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6%
National Defense
19%
Environment
1%
Other Expenses
15%
TOTAL
100%
THE CONCORD
COALITION
Americans Want to Cut Spending – But Not on the
Programs That Cost the Most
Source: The Economist/YouGov Poll, April 2010 and Congressional Budget Office, January 2010.
www.concordcoalition.org
THE CONCORD
COALITION
Composition of Projected FY 2010 Federal Government
Revenues and Outlays
(Deficit: $1.35 Trillion)
Interest
Domestic*
Estate & Gift Taxes
($21 billion)
Defense
Other Taxes
Corporate Taxes
Other
Entitlements
Social
Insurance
Taxes
Medicare
& Medicaid
Individual
Income
Taxes
Social
Security
Outlays: $3.52 trillion
Revenue: $2.18 trillion
*Includes all appropriated domestic spending such as education, transportation, homeland security, housing
assistance, and foreign aid.
Source: CBO January 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
$2.09 Trillion
$1.43 Trillion
59%
41%
Source: Congressional Budget Office, January 2010.
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THE CONCORD
COALITION
Mandatory spending is consuming a
growing share of the budget
1970
62%
1990
31%
40%
45%
2010
39%
55%
7%
15%
Mandatory
Net Interest
6%
Discretionary
Source: Congressional Budget Office, January 2010.
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THE CONCORD
COALITION
Outlays of Select Mandatory Spending Programs
(FY 2010 Projected)
Source: Congressional Budget Office, January 2010.
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THE CONCORD
COALITION
Change in Composition of
Discretionary Spending
32%
40%
68%
60%
Defense
Source: Congressional Budget Office, January 2010.
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50%
50%
Non-defense
THE CONCORD
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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THE CONCORD
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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THE CONCORD
COALITION
As a Percentage of GDP
Defense Discretionary Spending as a
Percentage of GDP
Source: Congressional Budget Office, January 2010.
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THE CONCORD
COALITION
Projected Growth in Entitlement Spending far
Greater than Defense Spending
Source: Government Accountability Office and Congressional Budget Office. 2010.
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THE CONCORD
COALITION
Federal Spending vs. Revenues as a
Percent of GDP (FY 1980-2020)
CBO March Baseline Compared to the President’s Budget
Actual
Projected
Percentage of GDP
Average outlays: 21.0%
Average revenues: 18.3%
 CBO March 2010 Baseline

CBO’s Estimate of the President’s Budget
Source: Congressional Budget Office, March 2010..
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THE CONCORD
COALITION
Current Policy Trends Lead to Large Sustained Deficits
Fiscal Years 2011-2020
Billions of Dollars
-$6.0 Trillion Deficit
-$14.6 Trillion Deficit
CBO March 2010 Baseline
The Concord Coalition Plausible Baseline adds in the effects of the new Health Care Reform law
and 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, March 2010 and Concord Coalition analysis.
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THE CONCORD
COALITION
Why Deficits Matter
• Reduce national savings
• Increase dependence on foreign lenders
• Increase burden on future generations:
– Through rising debt service costs;
– By reducing productivity-enhancing
investments
• Weakened ability to meet contingencies or new
challenges
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THE CONCORD
COALITION
Debt Held by the Public as a Percent of GDP
1940-2040
As a Percentage of GDP
World War II
108.6%
Source: OMB Historical Tables 2009.
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2008 to 2010
40%  64%
THE CONCORD
COALITION
Debt Held by the Public as a Percent of GDP
1940-2040
As a Percentage of GDP
Actual
World War II
108.6%
Source: GAO Analysis, 2010 and OMB Historical Tables 2010.
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Projected
2010
63.6%
THE CONCORD
COALITION
Percent of Debt Held by the Public
Owned by Foreigners
(1987-2009)
Source: United States Treasury Department, Treasury Bulletin, December 2009.
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THE CONCORD
COALITION
Billions of Dollars
Interest Costs Go Through The Roof
Source: Congressional Budget Office, Analysis of the President’s Budget, March 2010.
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THE CONCORD
COALITION
Interest Costs Skyrocket Because of Recent Borrowing
The simulations assume that discretionary spending grows with the economy and that
all expiring tax provisions are extended.
Source: Government Accountability Office, April 2008 and Feb. 2010.
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THE CONCORD
COALITION
Americans are living longer
and having fewer children
Consequently, fewer workers are available
to support each Social Security recipient
1960: 5.1 to 1
Source: Social Security Administration, May 2009.
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Today: 3.1 to 1
2029: 2.2 to 1
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, May 2009.
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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 2009.
THE CONCORD
www.concordcoalition.org
COALITION
Billions of Dollars
Social Security Cash Deficits
Source: Congressional Budget Office, March 2010.
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THE CONCORD
COALITION
Social Security and Medicare Part A Cumulative Cash
Surpluses and Deficits
In Constant 2009 Dollars — 2009 through 2085
In Billions of Constant 2009 Dollars
$147 Billion: Cumulative
Social Security Cash Surplus
-$28 Trillion: Cumulative
Social Security Cash Deficits
-$58 Trillion: Cumulative
Medicare Part A Cash Deficits
-86 Trillion: Cumulative Social Security
and Medicare Part A Cash Deficits
2010
2020
2030
2040
2050
2060
2070
2080
Calendar Year
Source: Social Security Trustees’ Report—May 2009 (Intermediate Projections)
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THE CONCORD
COALITION
Medicare Costs Soar in the Coming Decades
Calendar Year
General Revenues required to fund the program
Income from dedicated taxes, premiums, and state transfers
Source: Medicare Trustees’ Report, May 2009.
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THE CONCORD
COALITION
Social Security, Medicare and Medicaid Cost Growth
Outlays as a Percentage of GDP
Medicaid
Medicare
Social
Security
Source: Government Accountability Office, Feb. 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, February 2010.
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Interest
THE CONCORD
COALITION
Current fiscal policy is on an unsustainable path
Federal Outlays as a Percentage of GDP
Interest
All Other
Spending
Medicaid
Average tax revenue
Medicare
Social Security
Source: Government Accountability Office, Feb. 2010.
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THE CONCORD
COALITION
Policy Changes Matter
Projected Debt Held by the Public as a Percent of
GDP Under Alternative Scenarios (2010-2045)
Source: Government Accountability Office, Feb. 2010
.
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THE CONCORD
COALITION