Transcript Concord Coalition Chart Talk Slides

Generational Outlook: The Federal Budget
Now and in the Future
The Concord Coalition
www.concordcoalition.org
June 2008
Composition of Actual FY 2007 Federal
Government Revenues and Outlays
(Deficit: $163 Billion)
2,750
2,500
Billions of Dollars
2,250
Interest
238
Domestic*
493
Defense
549
26
138
1,500
1,250
Other
Entitlements
309
Medicare
& Medicaid
561
Other Taxes
370
Corporate
Taxes
870
Social
Insurance
Taxes
2,000
1,750
Estate & Gift Taxes
1,000
750
1163
500
250
Social
Security
Individual
Income
Taxes
581
0
Outlays: $2.73 trillion
Revenue: $2.57 trillion
*Includes all appropriated domestic spending such as education, transportation, homeland
security, housing assistance, and foreign aid. Source: CBO 2008.
Mandatory spending is consuming a
growing share of the budget
1967
1987
26%
68%
44%
2007
42%
38%
53%
7%
14%
Mandatory
Net Interest
9%
Discretionary
Source: Congressional Budget Office, January 2008
NOTE: Numbers may not add up due to rounding.
Social Security, Medicare, & Medicaid as a
Percentage of the Federal Budget
All other Federal
Spending
Social Security,
Medicare and Medicaid
$1.6 Trillion
$1.1 Trillion
58%
42%
Source: Congressional Budget Office, January 2008.
Outlays of Select Mandatory Spending Programs
(FY 2008 Projected)
$700
$600
$ Billions
$500
$400
$300
$200
$100
$0
Social
Medicare Medicaid Federal Unemploy- Earned
Security
Retirement ment
Income &
& Disability Comp. Child Tax
Credits
Food
Stamps
Family
Support
Child
Nutrition
Source: Congressional Budget Office, January 2008
Change in Composition of
Discretionary Spending
1967
1987
32%
36%
68%
64%
Defense
2007
47%
53%
Non-defense
Source: Congressional Budget Office, January 2008
6
Defense Discretionary Spending as a
Percentage of GDP
10.0
8.0
7.0
6.0
5.0
4.0
2007
2005
2003
2001
1999
1997
1995
1993
1991
1989
1987
1985
1983
1981
1979
1977
1975
1973
1971
1969
2.0
1967
3.0
1965
As a Percentage of GDP
9.0
Source: Congressional Budget Office, January 2008
7
Outlays of Select Discretionary
Non-Defense Programs
(FY 2008 Projected)
$90
$80
$70
$ Billions
$60
$50
$40
$30
$20
$10
$0
Education
Transportation
*includes ground, air, and water
Income
Security
Natural
Resources
& Env.
Veterans
Foreign Aid Homeland
Security
Science,
Space, &
Technology
Source: Congressional Budget Office, January 2008
8
Federal Spending vs. Revenues as a
Percent of GDP (FY 1980-2007)
Percentage of GDP
24%
22%
Average outlays: 21%
20%
Average revenues: 18.3%
18%
16%
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
Fiscal Year
Revenues
Source: Congressional Budget Office, January 2008
Total Outlays
2000
2002
2004
2006
Current Policy Trends Lead to Large Sustained Deficits
Fiscal Years 2009-2018
$400
$270 Billion Surplus
Billions of Dollars
$200
$0
-$200
-$400
-$600
$6.5 Trillion Deficit
-$800
-$1,000
2008
2009
2010
CBO March 2008 Baseline
2011
2012
2013
2014
2015
2016
2017
2018
Fiscal Year
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, March 2008 and Concord Coalition analysis.
10
Debt Held by the Public as a Percent of GDP
1980-2007
50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
Source: Congressional Budget Office, January 2008
11
Percent of Debt Held by the Public
Owned by Foreigners
(1980-2006)
50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
1987
1990
1993
1996
1999
2002
2005
Source: United States Treasury Department
Automatic Growth in the Big Three Entitlements Swamps
Growth of Appropriations
10 Year Growth in Social Security, Medicare and Medicaid
Increase Over 2007 Level of Funding
In Billions of Dollars
$1,250
$1,000
$750
$500
$250
$0
2008
2009
2010
2011
2012
2013
2014
2015
Year
2016
2017
2009-2018
Spending for Social Security, Medicare and Medicaid.
$5.9 trillion
Discretionary Spending
$1.9 trillion
Source: Congressional Budget Office, January 2008.
2018
America’s Population is Aging
Percentage of Population Aged 65 and Over
Population age 65 and Over
25%
20%
15%
10%
5%
0%
2007
2012
2017
2022
2027
Year
Source: Social Security and Medicare Trustees’ Report, April 2007
2032
2037
2042
2047
Health Care Costs are Rising Faster
Than the Economy
25
All Federal Spending
In Fiscal Year 2007
Percentage of GDP
20
All Federal Revenues
In Fiscal Year 2007
15
10
5
0
2007
2012
2017
2022
2027
2032
2037
2042
2047
2052
2057
Year
Assumes that health care cost growth will not exceed GDP growth.
Assumes that health care cost growth continues at the average rate for the past 40 years (2.5
percentage points greater than GDP growth.)
Assumes that health care cost growth rate declines to 1.0 percentage point greater than GDP growth—
consistent with the assumption used by the Medicare Trustees.
Source: Congressional Budget Office, December 2007
Americans are living longer
and having fewer children
Consequently, fewer workers are available
to support each Social Security recipient
1960: 5.1 to 1
Today: 3.3 to 1
2040: 2.1 to 1
Source: Social Security Administration, April 2007
16
Benefits promised far exceed dedicated
tax revenues
20
Percent of Taxable Payroll
18
Social Security
16
Cash Deficits
14
Payroll Tax & Taxation of Benefits
12
10
2007
2013
2019
2025
2031
2037
2043
2049
Calendar Year
Source: Social Security Trustees’ Report—April 2007 (Intermediate Projections)
2055
2061
2067
2073
2079
2085
Medicare Costs Soar in the Coming Decades
12
10
8
6
4
2
0
2007
2010
2020
2030
2040
2050
2060
2070
2080
Calendar Year
General Revenues required to fund the program
Income from dedicated taxes, premiums, and state transfers
Source: Medicare Trustees’ Report, 2008
18
Social Security and Medicare Part A Cumulative Cash
Surpluses and Deficits
In Constant 2008 Dollars—2008 through 2085
In Billions of Constant 2008 Dollars
$500
$496 Billion: Cumulative
Social Security Cash Surplus
$0
-$27 Trillion: Cumulative
Social Security Cash Deficits
-$500
-$55 Trillion: Cumulative
Medicare Part A Cash Deficits
-$1,000
-$1,500
-$2,000
-$2,500
-$3,000
-82.6 Trillion: Cumulative Social Security
and Medicare Part A Cash Deficits
2008 2010
2020
2030
2040
2050
2060
2070
2080
Calendar Year
Source: Social Security Trustees’ Report—March 2008 (Intermediate Projections)
19
Current fiscal policy is on an unsustainable path
Interest
All Other
Medicaid
Average tax revenue
Medicare
Social Security
Source: Government Accountability Office, March 2008
Social Security, Medicare, Medicaid and Interest
Consume All Federal Revenues in Less Than 20 Years
125%
Percentage of Revenues
100%
75%
50%
25%
0%
2003
2008
2013
2018
2023
2028
Year
Social Security, Medicare and Medicaid
Source: GAO. 2008.
Interest
Policy Changes Matter
Projected Debt Held by the Public as a Percent of
GDP Under Alternative Scenarios (2007-2040)
300%
250%
200%
150%
100%
50%
0%
2007
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, August 2007
22
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.
23
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 easy solutions, such as cutting waste
fraud and abuse or growing our way out of the
problem.
• Finding solutions will require bipartisan
cooperation and a willingness to discuss all
options.
• Public engagement and understanding is vital in
finding solutions.
• This is not about numbers. It is a moral issue.