Transcript CONCERNED ABOUT OUR NATION’S FISCAL FUTURE? COME SEE THE FISCAL WAKE-UP TOUR The Fiscal Wake-Up Tour is a public discussion about our nation’s.

CONCERNED ABOUT OUR NATION’S FISCAL FUTURE?
COME SEE THE FISCAL WAKE-UP TOUR
The Fiscal Wake-Up Tour is a public discussion
about our nation’s fiscal future
featuring
United States Senator Susan Collins
The Fiscal Wake-Up Tour is a joint public engagement initiative by The Concord Coalition, the Brookings Institution, the Heritage
Foundation, and the Peter G. Peterson Foundation. For more information about the Fiscal Wake-Up, go to www.concordcoalition.org.
The Fiscal Wake-Up Tour
presented by
Robert L. Bixby, Executive Director
THE CONCORD COALITION
www.concordcoalition.org
www.concordcoalition.org
THE CONCORD
COALITION
Social Security, Medicare, & Medicaid as a
Percentage of the Federal Budget
All other Federal
Spending
Social Security,
Medicare and Medicaid
$1.88 Trillion
$1.35 Trillion
58%
42%
CBO treatment of TARP, Fannie
Mae and Freddie Mac: $627 billion
Source: Congressional Budget Office, March 2009.
www.concordcoalition.org
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.
www.concordcoalition.org
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.
www.concordcoalition.org
THE CONCORD
COALITION
Composition of Projected FY 2009 Federal Government
Revenues and Outlays
(Deficit: $1.67 Trillion)
Interest
In Billions of Dollars
Domestic*
Estate & Gift Taxes
($22 billion)
Defense
Other Taxes
Other
Entitlements
Corporate Taxes
Financial
Rescue**
Social
Insurance
Taxes
Medicare
& Medicaid
Individual
Income
Taxes
Social
Security
Outlays: $3.85 trillion
Revenue: $2.19 trillion
*Includes all appropriated domestic spending such as education, transportation, homeland security, housing
assistance, and foreign aid.
**CBO classification of funds allocated for TARP, Fannie Mae, and Freddie Mac. Source: CBO March 2009.
THE CONCORD
www.concordcoalition.org
COALITION
Federal Spending vs. Revenues as a
Percent of GDP (FY 1980-2009)
CBO March Baseline Compared to CBO Estimate of the President’s Budget
Percentage of GDP
Actual
Projected
Average outlays: 21.0%
Average revenues: 18.3%
CBO March 2009 Baseline
Source: Congressional Budget Office, June 2009.
www.concordcoalition.org
CBO’s Estimate of the President’s Budget
THE CONCORD
COALITION
Percent of Debt Held by the Public
Owned by Foreigners
(1987-2008)
Source: United States Treasury Department, Treasury Bulletin, December 2008.
www.concordcoalition.org
THE CONCORD
COALITION
Billions of Dollars
Current Low Interest Rates Mask the
Rising Interest Costs of Borrowing
Source: Congressional Budget Office, March 2009.
www.concordcoalition.org
THE CONCORD
COALITION
Washington Needs a Fiscal Wake-Up Call From
“We The People”
www.concordcoalition.org
•
The Fiscal Wake-Up Tour consists of
speakers from diverse perspectives
who are increasingly alarmed by the
nation’s long-term fiscal outlook.
•
Our mission is to cut through the
usual partisan rhetoric and stimulate
a more realistic public dialogue on
what we want our nation’s future to
look like, along with the required
trade-offs.
•
Elected leaders in Washington know
there is a problem, but they are
unlikely to act unless their
constituents — We The People —
demand it.
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.
www.concordcoalition.org
THE CONCORD
COALITION
Saving Our Future
Requires
Tough Choices Today
-
Portland, ME
August 25, 2009
David M. Walker
President and CEO
The Peter G. Peterson Foundation
and
Former Comptroller General of the United States
13
Federal Spending for Mandatory and
Discretionary Programs
1968
Net Interest
1988
Discretionary
Source: PGPF analysis of Office of Management and Budget data.
2008
Mandatory
14
Major Fiscal Exposures
($ trillions)
 Explicit liabilities
 Publicly held debt
 Military & civilian pensions
2000
2008
$6.9
$12.2
0.5
1.3
13.0
42.9
& retiree
health
 Other
 Commitments & contingencies
 E.g.,
PBGC, undelivered orders
 Implicit exposures
 Future
Social Security benefits
3.8
6.6
 Future
Medicare Part A benefits
2.7
12.7
 Future
Medicare Part B benefits
6.5
15.7
 Future
Medicare Part D benefits
--
7.9
$20.4
$56.4
Total
Source: PGPF analysis of 2000 and 2008 Financial Report of the United States Government.
Note: Estimates for Social Security and Medicare are at present value as of January 1 of each year and all other data are as of September 30.
2009 Social Security and Medicare Trustees’ reports show implicit exposures totaling $45.8 trillion
15
$56.4 =
Trillion
16
Potential Fiscal Outcomes
Under Alternative Simulation
Revenues and Composition of Spending as a Share of GDP
Percent of GDP
Revenue
Source: GAO March 2009 analysis.
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18
19
The Way Forward
Implement statutory budget controls that address discretionary and mandatory spending
as well as tax preferences
Achieve Social Security reform that makes the program solvent, sustainable, secure
and more savings oriented
Reduce the rate of increase in health care costs and more effectively target related
taxpayer subsidies and tax preferences
Pursue comprehensive health care reform that addresses coverage, cost, quality
and personal responsibility
Pursue comprehensive tax reform that makes the system more streamlined,
understandable, equitable and competitive while also generating adequate revenues
Review, re-prioritize and re-engineer the base of the federal government to focus on the
future and generate real results
Ensure that we have processes that will enable us to achieve the above objectives within
a reasonable period of time
20
These Challenges Go Beyond
Numbers and Dollars—
It’s About
21
Why this Matters to Me:
The Walker Grandchildren
Christi
Grace
Daniel
The Budget and Entitlements:
Time to Take Action
Stuart Butler
The Heritage Foundation
Portland, Maine
August 2009
Entitlements crowd out everything at historical level of taxes
30%
25%
20%
Tax Revenue
15%
2009
Social Security
Medicaid
10%
5%
Medicare
0%
1975
1985
1995
2005
2015
Federal Spending and Tax Revenue as a Percentage of Gross Domestic Product
Source: Congressional Budget Office and Office of Management and Budget
2025
2035
2045
2055
Here is today’s actual situation
30%
2009
Deficits
25%
20%
Rest of the budget
Tax Revenue
15%
Social Security
Medicaid
10%
5%
Medicare
0%
1975
1985
1995
2005
2015
Federal Spending and Tax Revenue as a Percentage of Gross Domestic Product
Source: Congressional Budget Office and Office of Management and Budget
2025
2035
2045
2055
Could let deficits climb to alarming levels
13%
2009
11%
9%
7%
5%
Deficits
3%
Historical Average
1%
1975
-1%
1985
1995
2005
2015
-3%
Federal Deficit as a Percentage of GDP; assumes taxes at current law
Source: Congressional Budget Office and Office of Management and Budget
2025
2035
2045
2055
Could raise taxes to balance the budget
30%
2009
25%
20%
Tax Revenue
15%
Rest of the budget
Social Security
Medicaid
10%
5%
Medicare
0%
1975
1985
1995
2005
2015
Federal Spending and Tax Revenue as a Percentage of Gross Domestic Product
Source: Congressional Budget Office and Office of Management and Budget
2025
2035
2045
2055
Let’s look at the tax-raising choice
30.4%
Percent GDP
30%
Balanced Budget
w/o policy changes
25%
22.6%
Highest Tax Burden
in History, 20.9%
President Obama's
Budget Proposal
2009
22.5%
Current Policy
Extended
20%
Historical Average Tax Burden, 18.3%
15%
1995
2005
2015
2025
2035
2045
Source: Congressional Budget Office
What would balancing mean for tax rates on our children?
60%
60%
43%
35%
2050
25%
17%
35%
2050
2008
10%
2050
2008
2008
2050
2008
Lowest Bracket
Middle Bracket
Highest Bracket
Corporate Taxes
Source: Congressional Budget Office (assumes healthcare grows 1% faster than GDP for 2050 figures and 1.7% faster than GDP for 2082 figures)
Unfunded impact of House health bill over 10 years
Long-term unfunded impact = $10 trillion
How could we slow down entitlements?
• Fix the way Washington spends your money
– Show long-term obligations in the annual federal budget
– Transform entitlements into 30-year budgeted programs,
weighed against other needs
• Make retirement programs fair but affordable
– Strengthen guarantees for modest income Americans
– Income-adjust Medicare and Social Security benefits and
premiums
– Raise the age for early/normal retirement benefits + No
payroll tax on older workers
How could we slow down entitlements?
• Encourage more savings/insurance for middleincome and low-paid workers
– Build personal accounts within Social Security
– Automatic enrolment for IRAs, 401(k)s
– Encourage long-term care insurance