the federal budget now and in the future...source: joint commimee on taxadon, x-141-15, december 7,...

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THE CONCORD COALITION

www.concordcoalition.org

TheFederalBudgetNowandIntheFuture

presentedby

JoshuaGordon,PolicyDirector

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50

100

150

200

250

179018001810182018301840185018601870188018901900191019201930194019501960197019801990200020102020203020402050

AmericaisonanUnsustainableFiscalPathDebtHeldbythePublic,asaPercentofGDP,1790-2050

Source:CongressionalBudgetOffice.

AsaPercentageofGDP

Historical Projected

WorldWarII106%

201677%

$936

$1,065$481

$344$582

$280$583

$223

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

ComposiMonofFiscalYear2015FederalBudgetDeficit:$438Billion

*IncludesMedicare,Medicaid,CHIP,andexchangessubsidiesspendingnetofoffseBngreceipts.

**IncludesallappropriateddomesDcspendingsuchaseducaDon,transportaDon,homelandsecurity,housingassistanceandforeignaid.

Source:CongressionalBudgetOffice,January2016.

Outlays:$3.69trillion Revenues:$3.25trillion

Interest

DomesHc**

SocialSecurity

MajorHealthCarePrograms*

OtherMandatory

Defense

Estate&GiQTaxes($19billion)

IndividualIncomeTaxes

SocialInsuranceTaxes

CorporateTaxes

OtherTaxes

$882

$1,541

Billion

sofD

ollars

Source:CongressionalBudgetOffice,August2016.

-$1,400

-$1,200

-$1,000

-$800

-$600

-$400

-$200

$0

2015(Actual) 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

ThenextPresident’sfirstbudget.

DeficitsAreProjectedtoGrowAnnualDeficits,inBillionsofDollars,2016-2026

40%

15%

45%11%

MandatorySpending DiscreHonaryNetInterest

*ProjectedSource:CongressionalBudgetOffice,August2016.

AutomaMcExpendituresAreConsumingaGrowingShareoftheBudget

1966 1991 2016*

23%66%

2026*

“AutomaHc”

6%

31% 63%67% 26%

7%

OutlaysofSelectMandatorySpendingPrograms FiscalYear2016Projected

$910

$591

$381

$165$87 $110

$75$32 $31 $23 $15

$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

$1,000

SocialSecurity

Medicare Medicaid FederalCivilian&Military

ReMrement

EarnedIncome&ChildTaxCredits

VeteransSupport(Pensions

&EducaMonSubsidies)

FoodStamps

Unemploy-mentComp.

FamilySupport

ChildNutriMon

Agriculture

InBillionsofD

ollars

Source:CongressionalBudgetOffice,January2016.

OutlaysofSelectNon-DefenseDiscreMonarySpendingPrograms

FiscalYear2016Projected

$94$89

$72$67

$55 $55

$37$31

$18 $18

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

$100

EducaMon TransportaMon Veterans(HealthCare)

IncomeSecurity(Housing)

ForgeignAid JusMce Environment Science-Space-Technology

CommunityandRegionalDevelopment

GeneralGovernment

InBillionsofD

ollars

Source:CongressionalBudgetOffice,January2016.

DiscreMonarySpendingWillDeclinetoRecordLowLevels

2

3

4

5

6

1976

1981

1986

1991

1996

2001

2006

2011

2016

2021

2026

Non-DefenseDiscreHonary(NDD)SpendingNDD40-yearaverage

NDD40-yearlow

Source:CongressionalBudgetOffice,January2016.

Percen

tageofG

DP

Percen

tageofG

DP

2

3

4

5

6

7

1976

1981

1986

1991

1996

2001

2006

2011

2016

2021

2026

DefenseDiscreHonarySpendingDefense40-yearaverage

Defense40-yearlow

TaxExpendituresAreLargerthanMajorSpending

Programs

0

1

2

3

4

5

6

7

8

9

10

IndividualIncomeTaxRevenues

TaxExpenditures SocialSecurity Defense Medicare

Percen

tageofG

DP

Taxexpenditures,individualincometaxrevenueandselectedcomponentsofspending,Fiscal2015.

Source:JointCommiMeeonTaxaDon,x-141-15,December7,2015&CongressionalBudgetOfficeBudgetOffice,January2016.

InterestCostsAreFastestGrowingSpendingCategory

SmallIncreasesinRatesLeadtoSignificantlyLargerPayments.

0

100

200

300

400

500

600

700

800

900

1000

1100

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

AddiHonalCostsWithJusta1%IncreaseinRates

ProjectedInterestCosts

Source:CongressionalBudgetOffice,January2016.

Billion

sofD

ollars

TheSourcesofGrowthinFederalSpending

-2

-1

0

1

2

3

4

5

Grow

thasa

PercentageofGDP

ChangeinOutlaysasaPercentageofGDP,2016-2046

Source:CBOLong-TermOutlookExtendedBaseline,July2016.

MedicareMedicaid,CHIP,

ExchangeSubsidies

SocialSecurity

AllOtherSpending

Interest

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Age20-64Age65&Over

IncreaseinWorkingAgePopulaHon

IncreaseinOver-65

10%

America’sPopulaMonisAgingPercentageChangeIncreaseinPopulaHon

Source:2015CBOLong-TermOutlook&ConcordCoaliDonAnalysis

2010-2030

82%

AmericansareLivingLongerandHavingFewerChildren

Consequently,fewerworkersareavailabletosupporteachSocialSecurityandMedicarerecipient

1960:5to1 2010:3to1 2030:2to1

Source:SocialSecurityTrustees,July2016.

SocialSecurityPromisedBenefitsExceedDedicatedTaxRevenues

Source:SocialSecurityTrustees,June2016(IntermediateProjecDons).

SocialSecurityOutlays

PayrollTax&TaxaHonofBenefits

Percen

tofG

DP

CalendarYear

CashDeficitsRiseto1.6%ofGDPandstabilize

4

5

6

7

2014 2019 2024 2029 2034 2039 2044 2049 2054 2059 2064 2069 2074 2079 2084 2089

MoreBeneficiariesDriveGrowthinFederalHealthCareSpending

0

1

2

3

4

5

6

7

8

9

2016 2020 2026 2030 2036 2040 2046

FederalHealthCareSpendingAiributabletoHealthCareInflaHon

FederalHealthCareSpendingonProjectedBeneficiaries

OutlaysforMedicare,Medicaid,CHIPandexchangesubsidies

Source:CBO2016Long-TermOutlook&ConcordCoaliDonAnalysis.

Percen

tageofG

DP

U.S.anOutlieronSpendingVs.LifeExpectancy

0

50

100

150

200

250

1940

1945

1950

1955

1960

1965

1970

1975

1980

1985

1990

1995

2000

2005

2010

2015

2020

2025

2030

2035

2040

2045

2050

AmericaisonanUnsustainableFiscalPathDebtHeldbythePublic,asaPercentofGDP,1940-2050

Source:CongressionalBudgetOffice.

AsaPercentageofGDP

Historical Projected

WorldWarII106%

201677%

HigherDebtLeadstoLowerIncomes

Per-personsizeoftheeconomygrowswithdeficitreducHon.

82

78

74

60

65

70

75

80

852019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

2034

2035

2036

2037

2038

2039

2040

CBOIllustraHveDeficitReducHonPlan

ExtendedBaselinewithEconomicFeedback

AlternaHveScenariowithEconomicFeedback

RealGNPPe

rPerson

(InTho

usandsofD

ollars)

Source:CongressionalBudgetOfficeLong-TermOutlook,June2015.

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