Transcript TANF Presentation

Deficit Negotiations
and the Supercommittee
Ron Haskins
October 19, 2011
2
The Unsustainable Fiscal Path, 2010-2080
70
60
Percent of GDP
50
40
30
20
Average Federal Revenue,
1970-2009
Net Interest
Medicare, Medicaid,
Exchange Subsidies, and
CHIP
10
Social Security
0
2010
2015
2020
2025
2030
2035
2040
2045 2050
Year
2055
2060
2065
Source: Congressional Budget Office, “Supplemental Data for the Congressional Budget Office's Long-Term Budget Outlook (June 2010),” available at
http://www.cbo.gov/ftpdocs/115xx/doc11579/LTBO-2010data.xls.
Note: Based on the Alternative Fiscal Scenario.
2070
2075
2080
3
Spending and the Deficit as a Percentage
of GDP in 2010, 2020, and 2050
30
2010
26.0
25
2020
2050
Percent of GDP
20
16.5
15
12.4
12.9
10.4 10.4
9.4
10
5
4.8 4.8 4.8
4.8 5.2
5.9
6.6
6.5
5.1
3.8
1.4
0
Defense
Social Security
Medicare, Medicaid, All Other Noninterest
CHIP, and Exchange
Subsidies
Net Interest
Deficit
Source: Congressional Budget Office, “Supplemental Data for the Congressional Budget Office's Long-Term Budget Outlook (June 2010),” available at
http://www.cbo.gov/ftpdocs/115xx/doc11579/LTBO-2010data.xls.
Notes: Based on the Alternative Fiscal Scenario. The all other noninterest category includes defense spending. The separate defense category is assumed to grow at the same rate as GDP.
4
Overview of Presentation
•
•
•
•
Sources of Debt
Preconditions for Action
The Debt Ceiling Deal
Taking Action: Social Security, Medicare, Tax
Increases
• Public Support for Action
5
Causes of Increased U.S. Debt:
Spending, Economic Estimates, Tax Cuts, 2001-2011
Contribution to Debt ($ Trillions)
6
5
4.9
4.1
4
3.5
3
2
1
0
New Spending
Source: Pew, “10 Essential Fiscal Charts,” 2011
Economic Estimates
Tax Cuts
6
Causes of Increased U.S. Debt:
Contribution to Debt ($ Trillions)
Spending and Tax Cuts by Category, 2001-2011
1.80
1.60
1.40
1.20
1.00
0.80
0.60
0.40
0.20
0.00
1.70
1.39
1.33
1.26
0.73
0.69
0.66
0.27
0.02
Spending on Tax Category
Source: Pew, “10 Essential Fiscal Charts,” 2011
7
Taking Action: Preconditions
• Public recognition that deficits are a problem
• Public willingness to pay new taxes and accept
spending cutbacks
• Everything on the table
• Bipartisanship
• Presidential Leadership
8
Percentage Change in Spending
Actions Necessary to Get to
Debt/GDP Ratio of 60 Percent by 2021
50
45
40
35
30
25
20
15
10
5
0
- 46
+ 36
- 21
+ 16
- 15
8
Discretionary Mandatory Only All Spending
Only
Income Taxes
Only
All Revenues Spending Cuts
and Revenue
Increases
Source of Deficit Reduction
Note: Current policy baseline; $6.1 trillion deficit reduction in 2021 (assuming tranche 1 of debt ceiling agreement has been achieved, $917 billion cut).
Source: Pew, “10 Essential Fiscal Charts,” 2011.
9
August Debt Ceiling/Deficit Reduction Package
• Raise Debt Ceiling (up to $2.4 trillion)
• Deficit Reduction of $917 Billion
• Establish Supercommittee to Reduce Deficit by
Additional $1.5 or $1.2 Trillion
10
What Republicans and
Democrats Wanted Out of Budget Deal
Got What They Wanted?
What They Wanted
Democrats
Republicans
Cuts in Defense
Yes
No
No Cuts in Big Entitlements
Yes
No
No Tax Increases
No
Yes
11
Impact of Debt Ceiling Deal on Increase in
the Federal Debt, 2012-2021
Increase to the Debt in Trillions
14
12
11.628
9.511
10
8
6
4
2
0
Extended Policy Baseline
After Debt Ceiling Deal
Source: Congressional Budget Office, “Summary Data for the Alternative Fiscal Scenario,” from Long Term Budget and Economic Outlook (June, 2011) and “Table 3: Effect on the Deficit of the
Budget Control Act of 2011,” from Impact of the Budget Control Act of 2011 (August 1, 2011).
12
Discretionary Spending Caps
• 10 Years; $917 Billion
• Half Domestic; Half Defense/Security
• Firewall Between Domestic and Defense (2012
only)
• Action So Far
13
Impacts of Debt Ceiling Cuts
on Defense Spending, 2012-2021
1,000
Spending (Billions)
900
800
712
724
738
753
769 786
700
600
700
650 661
675 689
806
826
705 722
847
739
869
756
891
773
500
400
300
200
100
CBO Baseline
Baseline with Debt Ceiling Cuts, Round 1
Baseline with Debt Ceiling Cuts, Rounds 1 and 2
0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Year
Note: Figures are in budget authority.
Source: Congressional Budget Office, “Table 1-6: Illustrative Paths for Discretionary Budget Authority Subject to Caps in Budget Control Act” and “Table 1-5: CBO Baseline Projections of
Discretionary Spending,” from CBO Budget and Economic Outlook: An Update (August, 2011) and “Table 1: Estimated Savings from Automatic Reductions,” from Estimated Impact of Automatic
Budget Enforcement Procedures Specified in the Budget Control Act (September, 2011).
14
Impacts of Debt Ceiling Cuts
on NonDefense Spending, 2012-2021
700
Spending (Billions)
600
511
528
538
550
562
576
500
505
400
467
478
489
500
590
511
639
656
606
622
524
538
552
564
300
200
100
CBO Baseline
Baseline with Debt Ceiling Cuts, Round 1
Baseline with Debt Ceiling Cuts, Rounds 1 and 2
0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Year
Note: Figures are in budget authority.
Source: Congressional Budget Office, “Table 1-5: CBO Baseline Projections of Discretionary Spending,” and “Table 1-6: Illustrative Paths for Discretionary Budget Authority Subject to Caps in
Budget Control Act” from Budget and Economic Outlook: An Update (August, 2011) and “Table 1: Estimated Savings from Automatic Reductions,” from Estimated Impact of Automatic Budget
Enforcement Procedures Specified in the Budget Control Act (September, 2011).
15
Overview of Supercommittee
• Goal: $1.5 B, 10 Years (begin 2013)
• 12 Members (6 Rs; 6 Ds)
• Due Dates:
– Report to Congress: November 23
– Congress Vote on Proposal: December 23
– Up or Down Vote; No Filibuster; No
Amendments
– If Fail; Sequester Triggered
16
Taking Action:
• Social Security Reforms
• Medicare Reforms
• Tax Increases
17
Taking Action: Social Security Reforms
Reduce COLA by 0.5 Percentage Points
30
Raise the Full Retirement Age to 70
30
Index Earnings in the AIME and Bend Points in the PIA
Formula to Prices
60
50
Lower Initial Benefits to Top 70 Percent of Earners
Reduce PIA Factors to Index Initial Benefits to Prices Rather
Than Earnings
100
Tax Covered Earnings Above the Taxable Minimum; Do Not
Increase Benefits
90
Increase the Payroll Tax by 3 Percentage Points Over 20
Years
50
30
Increase the Payroll Tax by 1 Percentage Point in 2012
0
20
40
60
80
100
120
Percentage Improvement in Actuarial Balance
Source: Congressional Budget Office, “Summary Figure 1,” in Social Security Policy Options, summary (2010).
18
9
Annual Average Real Growth
in GDP and in Health Expenditures
8
7.7%
Average Annual Real Health Expenditure
Growth
7
Average Annual Real GDP Growth
6.5%
Percent Growth
6
5.7%
5
4.5%
4.3%
4.2%
4
3.2%
3.2%
3.4%
3
2
1.5%
1
0
1960s
1970s
1980s
1990s
2000s
Note: The 2000s consist of 2000-2009.
Sources: Centers for Medicare and Medicaid Services, "Table 1: National Health Expenditures Aggregate, Per Capita Amounts, Percent Distribution, and Average Annual Percent Growth:
Selected Calendar Years: 1960-2009," NHE Web Tables; Bureau of Economic Analysis," Table 1.2.4 Price Indexes for Gross Domestic Product by Major Type of Product," National Income and
Product Account Tables.
19
Taking Action:
Medicare Reform Premium Support
•
•
•
•
•
•
Service Areas
Mandatory Health Care Services
Open Market; Bids from Any Entity
Central Clearing House
Setting Annual Premium Amounts
Adjustments to Premium
20
Taking Action: Reducing Tax Expenditures
Item
Cost (in Billions)
Mortgage Interest
$93.8
Property Taxes on Real Property
$22.8
Capital Gains on Sales of Principle Residences
$16.5
Reduced Rates of Dividends / Long-Term Capital Gains
$84.2
Capital Gains at Death
$31.7
Investment Income on Life Insurance
$25.7
Charitable Contributions
$34.5
Employer Contributions for Health Care, Health Premiums
$117.3
EITC
$52.4
State Taxes
$43.6
Total = $522.5 Billion
21
Polls: The Deficit Is Top Priority
Percent Who Say Deficit Is Top
Priority
70
60
56
50
40
53
60
2009
2010
58
55
51
53
40
30
35
20
10
0
2002
2003
2004
2005
Source: Pew Research Center for the People & The Press, various years.
2006
Year
2007
2008
22
Polls: Public Support for Sacrifice
70%
70%
70%
67%
61%
60%
60%
60%
52%
50%
50%
50%
44%
40%
40%
36%
30%
30%
20%
20%
10%
10%
40%
30%
27%
20%
10%
5%
4%
1%
0%
0%
Yes
Willing
No
-10%
Source: Gallup, April 2011.
0%
Not
Some, Don't
Willing But Not Know/No
Others Answer -10%
Source: CBS News Poll, January 2011.
Willing
Not Willing
Don't
Know/No
Answer
Source: CBS News Poll, January 2011.
23
Polls: Willingness To Cut Specific Programs
Foreign economic aid
75
Foreign military aid
69
Spending by the regulatoryagencies generally
56
Space programs
54
Federal welfare spending
51
Subsidies to business
51
Farm subsidies
42
Federally funded scientific research programs
42
Federal housing programs
41
Defense spending
41
The food stamp program
40
Pollution control
37
Spending for mass transportation
35
Federal aid to cities
34
Federal jobs programs
33
Federal highway financing
31
Revenue sharing with states and cities
28
Health care
24
Federal aid to education
21
Social security payments
11
0
Source: Harris Interactive Poll, January 17 – 27, 2011
10
20
30
40
50
Percent Supporting Specific Cuts
60
70
80