presented by robert l. bixby, executive director the concord coalition daunting budget outlook...
TRANSCRIPT
presented by
Robert L. Bixby, Executive Director
The Concord Coalition www.concordcoalition.org
Daunting Budget Outlook
United States Naval Academy
March 8, 2007
Composition of Actual FY 2006 Federal Government Revenues and Outlays
(Deficit: $248 Billion)
544
506
520
496
361
227
0
250
500
750
1,000
1,250
1,500
1,750
2,000
2,250
2,500
2,750
1044
838
354
14328
Interest
Other
Social Security
Medicare & Medicaid
Defense
Domestic*
Estate & Gift Taxes
Other Taxes
Corporate Taxes
Social Insurance Taxes
Individual Income Taxes
Outlays: $2.65 trillion Revenue: $2.41 trillion*Includes all appropriated domestic spending such as education, transportation, homeland security, housing assistance, and foreign aid. Source: CBO & Treasury, 2006
Bil
lio
ns
of
Do
lla
rs
1965 1985 2006
66%
27%
7%
44%
14%
42% 38%
9%
53%
Mandatory DiscretionaryNet Interest
Source: Congressional Budget Office, January 2007
Mandatory spending is consuming a growing share of the budget
NOTE: Numbers may not add up due to rounding.
Outlays of Select Mandatory Spending Programs
(FY 2007 Projected)
$0
$100
$200
$300
$400
$500
$600
$ B
illio
ns
SocialSecurity
Medicare Medicaid FederalRetirement& Disability
Unemploy-ment
Comp.
EarnedIncome &Child TaxCredits
FoodStamps
FamilySupport
ChildNutrition
Source: Congressional Budget Office, January 2007
Change in composition of discretionary spending
1965 1985 2006
66%34%
61%39%
49% 51%
Defense Non-defense
Source: Congressional Budget Office, Jan. 2007
Defense Discretionary Spending as a Percentage of GDP
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004
Source: Congressional Budget Office, January 2006
As
a P
erc
en
tag
e o
f G
DP
Outlays of Select DiscretionaryNon-Defense Programs
(FY 2007 Projected)
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$ B
illio
ns
Education Transpor-tation
IncomeSecurity
NaturalResources
& Env.
Veterans Foreign Aid HomelandSecurity
Science,Space, &
Technology
Source: Congressional Budget Office, January 2007*includes ground, air, and water
Federal Spending vs. Revenues as a Percent of GDP (FY 1980-2006)
16%
18%
20%
22%
24%
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006
Fiscal Year
Revenues Total Outlays
Source: Congressional Budget Office, January 2007 and Office of Management and Budget, 2007
Average outlays: 21%
Average revenues: 18.3%
Perc
en
tag
e o
f G
DP
Debt Held by the Public as a Percent of GDP 1980-2006
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006
Source: Office of Management and Budget; Forecast: Congressional Budget Office, January 2007
Percent of Debt Held by the Public Owned by Foreigners
Source: United States Treasury Department
(1980-2006)
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
1987 1990 1993 1996 1999 2002 2005
Current Policy Trends Lead to Large Sustained DeficitsFiscal Years 2008-2012
-$600
-$400
-$200
$0
$200
2008 2009 2010 2011 2012
Fiscal Year
Source: Congressional Budget Office, January 2007 and Concord Coalition analysis.
Bil
lion
s of
Dol
lars
President’s Proposed 2008 Budget: -$513 billion deficit
President’s Budget with AMT Reform and Plausible War Spending: -$1.342 trillion deficit
Non-defense Spending as a Percent of GDP under the President’s Budget
2%
3%
4%
5%
6%
1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010
Fiscal Year
Perc
ent of G
DP
Source: Office of Management and Budget, February 2006
1980-2005 Historical average: 3.77%
Current Policy Trends Lead to Large Sustained DeficitsFiscal Years 2008-2017
-$1,000
-$800
-$600
-$400
-$200
$0
$200
$400
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Fiscal YearCBO January 2007 Baseline
The Concord Coalition Plausible Baseline assumes that discretionary spending grows at the rate of nominal GDP, that war costs slow gradually, and that all expiring tax provisions are extended with AMT relief.
Source: Congressional Budget Office, January 2007 and Concord Coalition analysis.
Bil
lion
s of
Dol
lars
$4.9 Trillion Deficit
$800 Billion Surplus
Social Security and Medicare Part A Cumulative Cash Surpluses and Deficits
In Constant 2006 Dollars—2006 through 2080
-$2,500
-$2,000
-$1,500
-$1,000
-$500
$0
$500
In B
illion
s o
f C
on
sta
nt
20
06
D
ollars
2006 2010 2020 2030 2040 2050 2060 2070 2080
Calendar Year
Source: Social Security Trustees’ Report—March 2006 (Intermediate Projections)
$692 Billion: Cumulative Social Security Cash Surplus
-$27.4 Trillion: Cumulative Social Security Cash Deficits
-$44.4 Trillion: Cumulative Medicare Part A Cash Deficits
-71.8 Trillion: Cumulative Social Security and Medicare Part A Cash Deficits
Medicare Costs Soar in the Coming Decades
0
5
10
15
2005 2010 2020 2030 2040 2050 2060 2070 2080
Calendar Year
As a
Perc
en
tag
e o
f G
DP
General Revenues required to fund the program
Income from dedicated taxes, premiums, and state transfers
Source: Medicare Trustees’ Report, 2006
Current Fiscal Policy is on an Unsustainable Path
0
10
20
30
40
50
2007 2015 2030 2045
The simulation assumes that discretionary spending grows with the economy after 2007 and that all expiring tax provisions are extended. After 2017, revenue is held constant as a share of GDP.
Net Interest
Social Security
Medicare and Medicaid
All other spending
Revenue
Source: Government Accountability Office, February 2007.
0%
50%
100%
150%
200%
250%
300%
2006 2010 2015 2020 2025 2030 2035 2040
Assumes discretionary spending grows with the economy and all expiring tax cuts are extended
Assumes discretionary spending increases only with inflation and tax cuts expire
Source: Government Accountability Office, September 2006
Policy Changes Matter
Projected Debt Held by the Public as a Percent of GDP Under Alternative Scenarios
(2006-2040)
Washington Needs a Fiscal Wake-Up Call From “We The People”
• 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.
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 free lunch solutions, such as cutting
waste fraud and abuse or growing our way out of the problem.
• The best way to make the hard choices is through a bipartisan process with all options on the table.
• Public engagement and understanding is vital in finding solutions.
• This is not about numbers. It is a moral issue.