23
Congressional Budget Office Overview of the Federal Budget Presentation to the Maryland Association of CPAs, Inc. April 17, 2015 Barry Blom Principal Budget Analyst, Projections Unit This presentation provides 10-year budget projections published in Updated Budget Projections: 2015 to 2025 (March 2015), www.cbo.gov/publication/49973, economic forecasts from The Budget and Economic Outlook: 2015 to 2025 (January 2015), www.cbo.gov/publication/49892, and longer-term budget projections from Budgetary and Economic Outcomes Under Paths for Federal Revenues and Noninterest Spending Specified by Chairman Price, March 2015 (March 2015), www.cbo.gov/publication/49977.

Overview of the Federal Budget · Presentation to the Maryland Association of CPAs, Inc. April 17, 2015 . Barry Blom . Principal Budget Analyst, Projections Unit . This presentation

  • Upload
    others

  • View
    0

  • Download
    0

Embed Size (px)

Citation preview

Page 1: Overview of the Federal Budget · Presentation to the Maryland Association of CPAs, Inc. April 17, 2015 . Barry Blom . Principal Budget Analyst, Projections Unit . This presentation

Congressional Budget Office

Overview of the Federal Budget

Presentation to the Maryland Association of CPAs, Inc.

April 17, 2015

Barry Blom Principal Budget Analyst, Projections Unit

This presentation provides 10-year budget projections published in Updated Budget Projections: 2015 to 2025 (March 2015), www.cbo.gov/publication/49973, economic forecasts from The Budget and Economic Outlook: 2015 to 2025 (January 2015), www.cbo.gov/publication/49892, and longer-term budget projections from Budgetary and Economic Outcomes Under Paths for Federal Revenues and Noninterest Spending Specified by Chairman Price, March 2015 (March 2015), www.cbo.gov/publication/49977.

Page 2: Overview of the Federal Budget · Presentation to the Maryland Association of CPAs, Inc. April 17, 2015 . Barry Blom . Principal Budget Analyst, Projections Unit . This presentation

1 C O N G R E S S I O N A L B U D G E T O F F I C E

CBO’s History and Mission

■ Created by the Congressional Budget and Impoundment Control Act of 1974

■ Provides objective, timely, and nonpartisan analysis for budget and economic decisions

■ Most work supports the activities of committees rather than individual Members of Congress

Page 3: Overview of the Federal Budget · Presentation to the Maryland Association of CPAs, Inc. April 17, 2015 . Barry Blom . Principal Budget Analyst, Projections Unit . This presentation

2 C O N G R E S S I O N A L B U D G E T O F F I C E

CBO’s Organization and Staffing

■ CBO has about 230 full-time employees.

■ The director is appointed by the Speaker of the House and the President pro tempore.

■ The director appoints all CBO staff based solely on professional competence, not political affiliation.

■ Over 70 percent of CBO’s professional staff have advanced degrees in economics, public policy, or a related field.

Page 4: Overview of the Federal Budget · Presentation to the Maryland Association of CPAs, Inc. April 17, 2015 . Barry Blom . Principal Budget Analyst, Projections Unit . This presentation

3 C O N G R E S S I O N A L B U D G E T O F F I C E

CBO’s Responsibilities

CBO Helps Congress to:

■ Develop a budget plan

■ Stay within its budget plan

■ Assess the impact of federal mandates

■ Consider issues related to the budget and to economic policy

Page 5: Overview of the Federal Budget · Presentation to the Maryland Association of CPAs, Inc. April 17, 2015 . Barry Blom . Principal Budget Analyst, Projections Unit . This presentation

4 C O N G R E S S I O N A L B U D G E T O F F I C E

CBO’s Products

■ Annual baseline

■ Analysis of the President’s budget

■ Cost estimates

■ Scorekeeping tabulations

■ Long-term budget outlook

■ Budget options

■ Reports and testimony on budget and economic issues

Page 6: Overview of the Federal Budget · Presentation to the Maryland Association of CPAs, Inc. April 17, 2015 . Barry Blom . Principal Budget Analyst, Projections Unit . This presentation

5 C O N G R E S S I O N A L B U D G E T O F F I C E

What CBO Does Not Do

■ Make policy recommendations – Strictly nonpartisan; no judgments about a legislative proposal’s merits

■ Write legislation – Instead evaluates different proposals and options

■ Implement programs and regulations and enforce budget rules – The executive branch does that

■ Audit spending or receipts – GAO does that

Page 7: Overview of the Federal Budget · Presentation to the Maryland Association of CPAs, Inc. April 17, 2015 . Barry Blom . Principal Budget Analyst, Projections Unit . This presentation

6 C O N G R E S S I O N A L B U D G E T O F F I C E

Total Deficits or Surpluses

(Percentage of gross domestic product)

Deficits

Surpluses

Actual Projected

1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 -10

-8

-6

-4

-2

0

2

4

Average Deficit, 1965 to 2014

(2.7%)

Page 8: Overview of the Federal Budget · Presentation to the Maryland Association of CPAs, Inc. April 17, 2015 . Barry Blom . Principal Budget Analyst, Projections Unit . This presentation

7 C O N G R E S S I O N A L B U D G E T O F F I C E

Budget Totals, 2009, 2013, 2015-2016

Billions of Dollars Percentage of GDP Actual Baseline Actual Baseline

2009 2013 2015 2016 2009 2013 2015 2016

Total Revenues 2,105 2,775 3,191 3,470 14.6 16.7 17.7 18.4

Total Outlays 3,518 3,455 3,677 3,925 24.4 20.8 20.4 20.8 ______________________________________ ____________________________________ __________________________________ _______________________________________ _______________________________________ _______________________________________ _______________________________________ _______________________________________

Total Deficit -1,413 -680 -486 -455 -9.8 -4.1 -2.7 -2.4

Page 9: Overview of the Federal Budget · Presentation to the Maryland Association of CPAs, Inc. April 17, 2015 . Barry Blom . Principal Budget Analyst, Projections Unit . This presentation

8 C O N G R E S S I O N A L B U D G E T O F F I C E

Total Revenues and Outlays

(Percentage of gross domestic product)

Outlays

Revenues

1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 0

4

8

12

16

20

24

28 Actual Projected

Average Revenues, 1965 to 2014

(17.4%)

Average Outlays, 1965 to 2014

(20.1%)

Page 10: Overview of the Federal Budget · Presentation to the Maryland Association of CPAs, Inc. April 17, 2015 . Barry Blom . Principal Budget Analyst, Projections Unit . This presentation

9 C O N G R E S S I O N A L B U D G E T O F F I C E

GDP and Potential GDP

(Trillions of 2009 dollars)

Page 11: Overview of the Federal Budget · Presentation to the Maryland Association of CPAs, Inc. April 17, 2015 . Barry Blom . Principal Budget Analyst, Projections Unit . This presentation

10 C O N G R E S S I O N A L B U D G E T O F F I C E

Actual Values and CBO’s Projections of Key Economic Indicators

Page 12: Overview of the Federal Budget · Presentation to the Maryland Association of CPAs, Inc. April 17, 2015 . Barry Blom . Principal Budget Analyst, Projections Unit . This presentation

11 C O N G R E S S I O N A L B U D G E T O F F I C E

Revenues, by Major Source

(Percentage of gross domestic product)

1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 20250

1

2

3

4

5

6

7

8

9

109.5

IndividualIncome Taxes

Actual Projected

5.7

1.8

1.2

Payroll Taxes

CorporateIncome Taxes

Other RevenueSources

Page 13: Overview of the Federal Budget · Presentation to the Maryland Association of CPAs, Inc. April 17, 2015 . Barry Blom . Principal Budget Analyst, Projections Unit . This presentation

12 C O N G R E S S I O N A L B U D G E T O F F I C E

Revenues, Tax Expenditures, and Selected Components of Spending in 2015 (Percentage of gross domestic product)

IndividualIncome

Tax Revenues

PayrollTax Revenues

All OtherRevenues

All TaxExpenditures

MedicareSpending

Net ofOffsettingReceipts

DefenseSpending

Social SecuritySpending

0

2

4

6

8

10

Corporate Income Tax Expenditures

Payroll Tax Expenditures

Individual Income Tax Expenditures

Page 14: Overview of the Federal Budget · Presentation to the Maryland Association of CPAs, Inc. April 17, 2015 . Barry Blom . Principal Budget Analyst, Projections Unit . This presentation

13 C O N G R E S S I O N A L B U D G E T O F F I C E

Projected Spending in Major Budget Categories

(Percentage of gross domestic product)

Major Health Care Programs 6.1

Social Security

5.7

Net Interest 2.9

Nondefense Discretionary

2.5

Other Mandatory 2.3

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 0

1

2

3

4

5

6

7

Defense Discretionary

2.6

Page 15: Overview of the Federal Budget · Presentation to the Maryland Association of CPAs, Inc. April 17, 2015 . Barry Blom . Principal Budget Analyst, Projections Unit . This presentation

14 C O N G R E S S I O N A L B U D G E T O F F I C E

Components of the Total Increase in Outlays in CBO’s Baseline Between 2015 and 2025

Total Increase in Outlays:$2.4 Trillion

All Other Programs(16%)

Net Interest(24%)

Social Security(29%)

Major Health Care Programs(31%)

Page 16: Overview of the Federal Budget · Presentation to the Maryland Association of CPAs, Inc. April 17, 2015 . Barry Blom . Principal Budget Analyst, Projections Unit . This presentation

15 C O N G R E S S I O N A L B U D G E T O F F I C E

Projected Debt Held by the Public and Net Interest

(Billions of dollars)

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 20250

100

200

300

400

500

600

700

800

900

0

5,000

10,000

15,000

20,000

25,000Net Interest (Left axis)

Debt Held by the Public (Right axis)

Page 17: Overview of the Federal Budget · Presentation to the Maryland Association of CPAs, Inc. April 17, 2015 . Barry Blom . Principal Budget Analyst, Projections Unit . This presentation

16 C O N G R E S S I O N A L B U D G E T O F F I C E

Federal Debt Held by the Public

(Percentage of gross domestic product)

Page 18: Overview of the Federal Budget · Presentation to the Maryland Association of CPAs, Inc. April 17, 2015 . Barry Blom . Principal Budget Analyst, Projections Unit . This presentation

17 C O N G R E S S I O N A L B U D G E T O F F I C E

Why Does Rising Federal Debt Matter?

■ Boosts interest costs, putting more pressure on the rest of the budget and making it more difficult to constrain future deficits

■ Restrains economic growth and people’s income in the long term

■ Limits the ability of the government to respond to future challenges

■ Increases the risk of a fiscal crisis

Page 19: Overview of the Federal Budget · Presentation to the Maryland Association of CPAs, Inc. April 17, 2015 . Barry Blom . Principal Budget Analyst, Projections Unit . This presentation

18 C O N G R E S S I O N A L B U D G E T O F F I C E

Federal Debt Held by the Public

(Percentage of gross domestic product)

Page 20: Overview of the Federal Budget · Presentation to the Maryland Association of CPAs, Inc. April 17, 2015 . Barry Blom . Principal Budget Analyst, Projections Unit . This presentation

19 C O N G R E S S I O N A L B U D G E T O F F I C E

Population Age 65 or Older as a Share of the Population Ages 20 to 64

(Percent)

2000 2005 2010 2015 2020 2025 2030 20350

10

20

30

40

0

10

20

30

40Actual Projected

Page 21: Overview of the Federal Budget · Presentation to the Maryland Association of CPAs, Inc. April 17, 2015 . Barry Blom . Principal Budget Analyst, Projections Unit . This presentation

20 C O N G R E S S I O N A L B U D G E T O F F I C E

Spending for Social Security Under CBO’s Extended Baseline (Percentage of gross domestic product)

1999 2004 2009 2014 2019 2024 2029 2034 20390

2

4

6

8Actual

2024

2040

6.2

4.9

Extended Baseline Projection

5.62014

Page 22: Overview of the Federal Budget · Presentation to the Maryland Association of CPAs, Inc. April 17, 2015 . Barry Blom . Principal Budget Analyst, Projections Unit . This presentation

21 C O N G R E S S I O N A L B U D G E T O F F I C E

Federal Spending on the Major Health Care Programs, by Category

(Percentage of gross domestic product)

1999 2004 2009 2014 2019 2024 2029 2034 20390

1

2

3

4

5

6

7

8

9

Medicare

Medicaid, CHIP, and Exchange Subsidies

Actual Extended Baseline Projection

Page 23: Overview of the Federal Budget · Presentation to the Maryland Association of CPAs, Inc. April 17, 2015 . Barry Blom . Principal Budget Analyst, Projections Unit . This presentation

22 C O N G R E S S I O N A L B U D G E T O F F I C E

Conclusion

Given the aging of the population and rising costs for health care, attaining a sustainable federal budget will require the United States to deviate from the policies of the past 50 years in at least one of the following ways:

■ Letting revenues rise more than they would under current law

■ Reducing spending for large benefit programs to below the projected amounts

Changes in spending for other federal activities could affect the magnitude of the changes needed in taxes or large benefit programs but would not eliminate the need to make such changes.