Transcript Slides – Choosing the Nation`s Fiscal Future

Choosing the Nation’s
Fiscal Future
The National Research Council
and
The National Academy of Public
Administration
Choosing the Nation’s Fiscal
Future
 Report of the Committee on the Fiscal
Future of the United States, 21 budget
and policy experts with a broad range of
perspectives.
 Supported by the John D. and Catherine
T. MacArthur Foundation.
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The Fiscal Challenge
 The federal government’s long term-fiscal
trajectory is unsustainable.
 Risks a financial crisis, long-term economic
erosion, and squeeze on program spending.
 Given the risk of delaying policy change, a plan
to stabilize the debt is needed soon.
 The longer we wait, the more costly and
politically difficult it will be to address.
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Framing the Choices:
Connecting Budgets and Values
 Fairness
 Economic Growth
 Efficiency
 Security and Risk
 Size of Government
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Tests for Fiscal Prudence
Does the proposed budget 
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

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
Include policy actions to start reducing deficit soon?
Put government on path to reduce debt – starting in
2012 – to no more than 60 percent of GDP within a
decade hence?
Align revenues and spending closely over the long
term?
Restrain health care cost growth and introduce
changes now in main entitlements, other spending
and in tax policies that will have gradual cumulative
beneficial budget effect?
Include spending and revenue policies that are costeffective and promote more efficient resource use?
Reflect a realistic assessment of the problems facing
state and local governments?
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Debt Savings from Stabilizing
Debt
Under Current Policies
150%
100%
Debt Savings
50%
20
40
20
35
20
30
20
25
20
20
20
15
20
10
20
05
20
00
19
95
19
90
19
85
0%
19
80
Debt to GDP
200%
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Federal Spending Under Four
Sustainable Budget Scenarios
40%
Percent of GDP
30%
Low
20%
Intermediate-1
Intermediate-2
High
10%
0%
2012 2019 2026 2033 2040 2047 2054 2061 2068 2075 2082
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Illustrative Spending-andRevenue Paths
 Low: holds revenues near their recent historical
average; requires very sharp reductions in
Medicare, Medicaid, Social Security, defense,
and other domestic spending growth.
 High: requires modest restraint in growth of
Medicare and Medicaid spending, maintains
currently scheduled Social Security benefits,
and permits expanded spending on defense
and other domestic programs; requires very
substantial increases in revenues.
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Illustrative Paths (continued)
 Intermediate-1: modestly constrains spending
growth for health and retirement programs,
spending for defense stays at baseline level,
allows modestly expanded spending on other
domestic programs, and requires higher
revenues.
 Intermediate-2: constrains spending growth for
health and retirement programs (but not as
much as Intermediate-1), requires reduced
spending growth for defense and other
domestic programs, and requires higher
revenues.
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Budget Process Reform
 Ways to improve the budget process to
make it more far-sighted –
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Annual Presidential report on long-term
outlook and actions to address.
Congressional budget process changes to
recognize long-term budget effects.
Goals set as part of the process.
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Full Report Available
Copies of the report will be available from
the National Academies Press at:
http://www.nap.edu/catalog.php?record_id=12808
or from NAPA at www.napawash.org.
The public will be invited to read and discuss
the report and related issues online at
www.ourfiscalfuture.org.
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