Transcript Fiscal Future: The Challenges Ahead presented by Robert L. Bixby, Executive Director THE CONCORD COALITION www.concordcoalition.org www.concordcoalition.org THE CONCORD COALITION.

Fiscal Future: The Challenges Ahead
presented by
Robert L. Bixby, Executive Director
THE CONCORD COALITION
www.concordcoalition.org
www.concordcoalition.org
THE CONCORD
COALITION
A Funny Thing Happened on the Way to the Surplus
Changes to the 2001 Surplus Projections, 2009
Total Surplus as Projected in 2009
(in billions of dollars)
710
Tax Cuts
-363
Economic and Technical Revenue Losses
-639
Subtotal-Total Revenues Changes
-1,002
Discretionary Outlays
417
Mandatory Outlays
409
Interest
225
Subtotal-Changes in Outlays
Economic and Technical Changes in Outlays
Subtotal-Total Outlay Changes
Memorandum:
72
1123
Total Impact on Surplus
-2,125
Deficit Projected in Jan. 2010
-1414
Total Legislative Changes $1,413
Total Economic and Technical Changes $711
Source: Congressional Budget Office, Jan. 2010
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1,051
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COALITION
Composition of Projected FY 2010 Federal Government
Revenues and Outlays
(Deficit: $1.34 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: $3.49 trillion
Revenue: $2.14 trillion
*Includes all appropriated domestic spending such as education, transportation, homeland security, housing
assistance, and foreign aid.
Source: CBO August 2010.
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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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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
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%
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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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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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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
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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
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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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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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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
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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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