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Fiscal Solutions Tour: The Challenges Ahead. presented by Robert L. Bixby, Executive Director THE CONCORD COALITION www.concordcoalition.org. Interest. Domestic*. Defense. Other Entitlements. Medicare & Medicaid. Social Security. - PowerPoint PPT Presentation
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www.concordcoalition.orgTHE CONCORD
COALITION
presented by
Robert L. Bixby, Executive Director
THE CONCORD COALITION www.concordcoalition.org
Fiscal Solutions Tour: The Challenges Ahead
www.concordcoalition.orgTHE CONCORD
COALITION
Estate & Gift Taxes($18 billion)
Composition of FY 2010 Federal Government Revenues and Outlays(Deficit: $1.29 Trillion)
Interest
Domestic*
Social Security
Medicare & Medicaid
Other Entitlements
Defense
Other TaxesCorporate Taxes
Social Insurance Taxes
Individual Income Taxes
Outlays: $3.45 trillion** Revenue: $2.1 trillion*Includes all appropriated domestic spending such as education, transportation, homeland security, housing assistance and foreign aid.
**Numbers may not add due to the preliminary nature of the fiscal year numbers.
Source: CBO October 2010 and Department of Treasury 2010.
www.concordcoalition.orgTHE CONCORD
COALITION
Current Policy Trends Lead to Large Sustained DeficitsFiscal Years 2011-2020
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.
Bil
lion
s of
Dol
lars
-$15.2 Trillion Deficit
-$6.2 Trillion Deficit
www.concordcoalition.orgTHE CONCORD
COALITION
CBO August 2010 Baseline CBO’s Estimate of the President’s Budget
Federal Spending vs. Revenues as a Percent of GDP (FY 1980-2020)
CBO August Baseline Compared to the President’s Budget
Source: Congressional Budget Office, August 2010..
Average outlays: 21.0%
Average revenues: 18.3%
Per
cen
tage
of
GD
P
Actual Projected
www.concordcoalition.orgTHE CONCORD
COALITION
Percent of Debt Held by the Public Owned by Foreigners
(1987-2010)
Source: United States Treasury Department, Treasury Bulletin, September 2010.
Per
cent
age
of O
wne
rshi
p of
Pub
licl
y-H
eld
Deb
t
www.concordcoalition.orgTHE CONCORD
COALITION
Interest Costs Go Through The Roof
Source: Congressional Budget Office August 2010 and CBO’s Analysis of the President’s Budget, March 2010.
Bil
lion
s of
Dol
lars
www.concordcoalition.orgTHE CONCORD
COALITION
Factors Explaining Future Federal Spending on Medicare, Medicaid, and Social Security
Source: Congressional Budget Office, June 2010.
Percent of Growth Attributed to: 2035 2080
Health Care Cost Growth 37% 56%
Aging 63% 44%
www.concordcoalition.orgTHE CONCORD
COALITION
Debt Held by the Public as a Percent of GDP 1940-2040
Source: GAO Analysis, 2010 and OMB Historical Tables 2010.
As
a P
erce
ntag
e of
GD
P
Actual Projected
World War II108.6% 2010
63.6%
www.concordcoalition.orgTHE CONCORD
COALITION
62% 31%
7%
40%
15%
45% 39%
6%
55%
Mandatory DiscretionaryNet Interest
Source: Congressional Budget Office, August 2010.
Mandatory spending is consuming a growing share of the budget
1970 1990 2010
www.concordcoalition.orgTHE CONCORD
COALITION
Outlays of Select Non-Defense Discretionary Programs (Fiscal Year 2010)
Source: Congressional Budget Office.
*includes ground, air, and water
Education Transportation Housing, Natural Veterans Foreign Aid General Science, Energy & Resources Government Space & Nutrition Asst. Technology
www.concordcoalition.orgTHE CONCORD
COALITION
Non-Defense Discretionary Spending as a Percentage of GDP
Source: Congressional Budget Office, August 2010.
As
a P
erce
nta
ge o
f G
DP
www.concordcoalition.orgTHE CONCORD
COALITION
Defense Discretionary Spending as a Percentage of GDP
Source: Congressional Budget Office, August 2010.
As
a P
erce
nta
ge o
f G
DP
www.concordcoalition.orgTHE CONCORD
COALITION
Sources of Growth in the Federal Budget Over the Next 30 Years
Source: Government Accountability Office and Congressional Budget Office. 2010.
Individual Income Taxes = 6.5%
Current Defense Spending = 4.7%
www.concordcoalition.orgTHE CONCORD
COALITION
Shortcomings of the Current System
• There is no fiscal goal
• PAYGO has large and confusing exemptions
• PAYGO does not apply to automatic spending growth
• Annual appropriations have no enforceable cap
• Long-term costs are not accounted for
• Inadequate oversight
www.concordcoalition.orgTHE CONCORD
COALITION
Possible Changes
• Set a fiscal goal such as debt-to-GDP ratio
• Eliminate PAYGO exemptions
• Set targets for major entitlement programs enforced by automatic
triggers
• Set multi-year enforceable spending caps
• Require long-term cost estimates in the budget resolution and for major
initiatives
• Adopt biennial budgeting and/or “base closing” approach