Transcript Averting a Fiscal Crisis PowerPoint

Averting a Fiscal Crisis
Why America Needs Comprehensive
Fiscal Reforms Now
Deficit Projections
(Percent of GDP)
12%
10%
1992-2012 Average Deficit: 2.9%
2012-2022 Average Current Policy Deficit: 4.3%
8%
6%
4%
2%
0%
-2%
-4%
Note: Estimates based on CRFB Realistic Baseline.
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Gap Between Revenue and Spending
(Percent of GDP)
26%
Actual
Projected
24%
22%
Avg. Historical Spending (1972-2011): 21.0%
20%
18%
16%
14%
Avg. Historical Revenues (1972-2011): 17.9%
12%
10%
2000
2002
2004 2006 2008 2010
Current Law Spending
CRFB Realistic Spending
Note: Estimates based on CRFB Realistic Baseline.
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2012 2014 2016 2018 2020
Current Law Revenues
CRFB Realistic Revenues
2022
Surpluses Turning Into Growing Deficits…
Spending and Revenues (Billions of Dollars)
$860B
Interest
Deficit
$220B
Surplus
Interest
Deficit
$1.1T
What Debt Is Likely
toPrimary
Reach
$5.1T
$236B
$233B
$1.6T
Revenues
Primary
Spending
Spending
$3.3T
Interest
$2.0T
Revenues
Primary
Spending
2000
$2.4T
Revenues
2012
Interest Costs Will Reach $1 Trillion By 2024
Source: Congressional Budget Office, Alternative Fiscal Scenario
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$1.4T
2022
$4.6T
Components of Revenue and Spending
Revenues and Financing
Outlays
Interest
6%
Borrowing
32%
Individual Income
Tax
27%
Corporate Tax
5%
Other
6%
Social Insurance
Taxes
24%
Total Revenues = $2.435 Trillion
Total Financing = $3.563 Trillion
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Medicare
14%
Non-Defense
15%
Medicaid &
Other Health
8%
2012
Social Security
22%
Defense
19%
Other Mandatory
16%
Total Outlays = $3.563 Trillion
Debt Projections
(Percent of GDP)
400%
350%
300%
250%
Realistic Projections
2010: 63%
2025: 88%
2040: 140%
2080: 365%
200%
150%
What the Debt Will
Realistically Look Like
100%
50%
0%
-50%
Note: Estimates based on CRFB Realistic Baseline.
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Current Law
Growth in Mandatory Spending
(Percent of GDP)
25%
Actual
Projected
20%
Historical Average
15%
10%
5%
0%
1972 1982 1992 2002 2012 2022 2032 2042 2052 2062 2072 2082
Social Security
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Health Care
Other Entitlements
Revenue
Consequences of Debt
 “Crowding Out” of private sector
investment, leading to slower economic
growth
 Higher Interest Payments displacing other
government priorities and investments
 Intergenerational Inequity as future
generations pay for current government
spending
 Unsustainable Promises of high spending
and low taxes
 Uncertain Environment for businesses to
invest and households to plan
 Eventual Fiscal Crisis if changes are not
made
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The Risk of Fiscal Crisis
“Rising Debt increases the likelihood of a fiscal crisis during which investors would
lose confidence in the government's ability to manage its budget and the
government would lose its ability to borrow at affordable rates.
-Doug Elmendorf, Director of the Congressional Budget Office
“Our national debt is our biggest national security threat.”
-Admiral Mike Mullen (ret.), Chairman of the Joint Chiefs of Staff
“One way or another, fiscal adjustments to stabilize the federal budget must occur
… [if we don’t act in advance] the needed fiscal adjustments will be a rapid and
painful response to a looming or actual fiscal crisis.”
-Ben Bernanke, Chairman of the Federal Reserve
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Debt Drivers
Short-Term
 Economic Crisis
(lost revenue and increased spending on
safety net programs like Food Stamps)
 Economic Response
(stimulus spending/tax breaks and
financial sector rescue policies)
 Tax Cuts
(in 2001, 2003, and 2010)
 War Spending
(in Iraq and Afghanistan)
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Long-Term
 Rapid Health Care Cost Growth
(causing Medicare and Medicaid costs
to rise)
 Population Aging
(causing Social Security and Medicare
costs to rise, and revenues to fall)
What the
Debt Will
 Growing Interest
Costs
Realistically Look Like
(from continued debt accumulation)
 Insufficient Revenue
(to meet the costs of funding government)
How Did We Get Here?
Drivers of the Debt Since 2001
Increases in Debt:
 Technical & Economic Changes: 27%
 Tax Cuts: 27%
 Spending Increases: 41%
 Other Means of Financing: 6%
Note: Estimates from The Pew Charitable Trusts based on CBO data.
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Growing Entitlement Spending
Federal Spending and Revenues (Percent of GDP)
50%
Actual
45%
40%
35%
30%
Average Historical
Revenues
Projected
Interest
Revenues
25%
20%
15%
10%
Social Security
5%
Other Spending
0%
Note: Estimates based on CRFB Realistic Baseline.
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Health Care
Why Is Entitlement Spending Growing?
Drivers of Entitlement Spending Growth (Percent of GDP)
26%
24%
22%
20%
56%
18%
16%
14%
12%
10%
8%
Source: CBO Long-term Budget Outlook, 2011.
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36%
64%
Excess Health Care
Cost Growth
Aging
44%
Why Is Federal Health Spending Increasing?
 The Population Is Aging due to increased life
expectancy and retirement of the baby boom
generation, adding more beneficiaries to Medicare
and Medicaid
 Per Beneficiary Costs Are Growing faster than the
economy in both the public and private sector.
Causes of this excess cost growth include:
 Americans Are Unhealthy when compared to
populations in similar economies
 Americans Are Wealthy and Willing to Pay More
 Fragmentation and Complexity among insurers,
providers, and consumers make normal market
competition difficult
 Incentives Are Backwards by hiding true costs of care
through insurance and by hiding costs of insurance
enrollment through employer sponsorship,
incentivizing overspending
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Health Care Spending by Country
Percent of GDP (2008)
18%
16%
14%
12%
10%
8%
6%
4%
36%
2%
0%
64%
Public
Private
Source: 2008 Data from the Organization for Economic Cooperation and Development.
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Number of Workers for Every Social Security Retiree is Falling
1950
1960
2012
2035
36%
16:1
5:1
Source: 2012 Social Security Trustees Report.
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64%
3:1
2:1
Living Longer, Retiring Earlier
90
85
80
Average Age of Retirement
75
Normal Retirement Age
70
65
60
55
50
Early Retirement Age
Life Expectancy
45
40
Source: Social Security Administration and U.S. Census Bureau.
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Looming Social Security Insolvency
Social Security Costs and Revenues (Percent of Taxable Payroll)
Scheduled Benefits
20%
Payable Benefits
18%
16%
14%
12%
10%
8%
6%
Source: 2011 Social Security Trustees Report.
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Revenues
Interest as a Share of the Budget
(Percent of GDP)
2010
Primary
Spending
94%
2030
Primary
Spending
82%
Interest
6%
Total Spending = 24% of GDP
Interest
18%
Total Spending = 27% of GDP
Note: Estimates based on CRFB Realistic Projections.
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2050
Primary
Spending
74%
Interest
26%
Total Spending = 34% of GDP
Insufficient Revenue
 Unpaid for Tax Cuts in 2001, 2003, and
2010 lowered revenue collection without
making corresponding spending cuts or
tax increases to offset the budgetary
effect
 Spending in the Tax Code Costs Over $1
Trillion annually in lost revenues through
so called "tax expenditures," which make
the tax code more complicated, less
efficient, and force higher rates
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Excessive Spending Through the Tax Code (Tax Expenditures)
TaxIn
Expenditures
as a Percent
Large
Tax Expenditures
order to stabilize
DebtofatPrimary
60% of the economy by
2021:
Spending if Included in the Budget
and Their 2011 Costs (billions)
Employer Health Insurance Exclusion
Defense
Discretionary
16%
Tax
Expenditures
24%
Non-Defense
Discretionary
15%
Health Spending
17%
Social Secutity
16%
Other Mandatory
12%
Source: Joint Committee on Taxation.
Source: Office of Management and Budget.
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$174
Mortgage Interest Deduction
$89
401(k)s and IRAs
$77
Earned Income Tax Credit
$62
Special Rates for Capital Gains and
Dividends
$61
State & Local Tax Deduction
$57
Charitable Deduction
$49
Child Tax Credit
$45
How Much Do We Need to Save?
In order to stabilize debt at 60% of the economy by 2022:
(2012-2022 Savings)
Current Policy
Current Policy
Current Law
Baseline Assuming Baseline Assuming
Baseline Assuming
Upper-Income Tax
All Tax Cuts
No Trigger Savings
Cuts Expire*
Continued*
Debt in 2022 w/ No
Savings
(% GDP)
63%
77%
81%
Required Savings to
Stabilize Debt at 60%
$0.8 Trillion
$4.2 Trillion
$5.3 Trillion
*Estimates based on CRFB Realistic Baseline.
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How Much Do We Need to Save? (cont’d)
In order to stabilize debt at 65% of the economy by 2022:
(2012-2022 Savings)
Current Policy
Current Policy
Current Law
Baseline Assuming Baseline Assuming
Baseline Assuming
Upper-Income Tax
All Tax Cuts
No Trigger Savings
Cuts Expire*
Continued*
Debt in 2022 w/ No
Savings
(% GDP)
63%
77%
81%
Required Savings to
Stabilize Debt at 65%
$0.7 Trillion
$3.0 Trillion
$4.1 Trillion
*Estimates based on CRFB Realistic Baseline.
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How Much Do We Need to Save? (cont’d)
In order to stabilize debt at 70% of the economy by 2022:
(2012-2022 Savings. Negative numbers reflect increase in deficits.)
Current Policy
Current Policy
Current Law
Baseline Assuming Baseline Assuming
Baseline Assuming
Upper-Income Tax
All Tax Cuts
No Trigger Savings
Cuts Expire*
Continued*
Debt in 2022 w/ No
Savings
(% GDP)
63%
77%
81%
Required Savings to
Stabilize Debt at 70%
-$0.6 Trillion
$1.7 Trillion
$2.8 Trillion
*Estimates based on CRFB Realistic Baseline.
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How Much Do We Need to Save? (cont’d)
So even if lawmakers were to stabilize debt at 70% of the
economy in 2022—a level higher than the internationally
recognized threshold of 60%—they would have to enact at
least $2.8 trillion in savings beyond the $920 billion enacted in
the Budget Control Act, compared to realistic assumptions of
future debt.
That calls for a Go Big approach to debt reduction.
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We Can’t Inflate or Grow Our Way Out
Inflation
 An unexpected increase in inflation
could temporarily reduce the real value
of debt and federal interest payments
to investors
 However, higher inflation would prompt
investors to demand higher interest
payments, increasing the costs of
financing new debt
 Higher inflation would also push up
spending for all inflation-indexed
programs, including Social Security, food
stamps, military pensions, veterans’
benefits.
Growth
 Strong economic growth is a necessary
but not sufficient condition for debt
reduction
 Many spending programs grow as the
economy does, and would outpace
revenue growth
 Social Security payments would
increase as wages and, thus,
benefits grew over time
 Health care spending would grow
even faster, given that costs
continually grow notably faster
than the overall economy
 The levels of growth needed to
significantly reduce medium-term debts
would be way above historical norms
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Debt Reduction and Economic Growth
Real Output Growth (Percent)
4.0%
3.5%
CBO studied the economic
impact of an illustrative $2.4
trillion debt reduction plan
and found that real output
would be between 0.6% and
1.4% higher, depending on
the magnitude of the effects.
3.0%
2.5%
2.0%
1.5%
1.0%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
CBO Baseline Growth
Medium Output Effect
Small Output Effect
Large Output Effect
*Estimates from CBO, “The Macroeconomic and Budgetary Effects of an Illustrative Policy for Reducing the Federal Budget Deficit.”
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How to Reduce the Deficit
 Domestic Discretionary Cuts
 Defense Spending Cuts
 Health Care Cost Containment
 Social Security Reform
 Other Spending Cuts
 Tax Reform and Tax Expenditure
Cuts
 Budget Process Reform
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“Go Small”: Lots of Pain for Little Gain
 A smaller package would offer some
improvement to our fiscal situation, but
it would not offer the benefits of a
declining debt path
 The public would see a package of tough
choices and a debt burden that continues
to grow. In essence, it would deliver
political pain with not so much gain
 Would leave in place considerable policy
uncertainty, affecting businesses and
markets
 A smaller package and an incremental
approach to debt reduction would not
offer the political tradeoffs necessary to
solve our fiscal challenges
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What Could “Go Small” Look Like?
Possible Policy Changes
Savings
Government-Wide
$250 billion from chained CPI
Social Security
$100-200 billion from modestly
slower growth in BCA caps
Negligible savings
$150-250 billion from farm
subsidies, federal civilian and
military retirement and benefits,
Fannie and Freddie, and others
Negligible savings
Revenues
Negligible savings
Net Interest
Total
$100 billion
$600-800 billion
Discretionary
Health Care
Other Mandatory
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 Without addressing
health care reforms or
revenues, it will be very
difficult to achieve
significant savings
 And even then, there is
no guarantee that
significant savings in
other areas of the budget
could be agreed on
Adding Serious Entitlement Reforms and Revenues
Pushes You into “Go Big”
 Democrats will only agree to serious
entitlement reforms if there are revenues
 Republicans will only agree to revenues in
the context of comprehensive tax reform
 Democrats will only agree to a
comprehensive tax reform that replaces the
Bush tax cuts if it raises at least the $800
billion they would get if President Obama
vetoes extension of upper income tax cuts
 Republicans will not agree to revenues
anywhere near that amount without health
savings that go beyond the amount proposed
by the President
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Advantages of “Go Big”
 Debt stabilized and falling as a share of
the economy later in the decade, and
all the benefits associated with a
declining debt burden:
 Less “crowding out” of private sector






31
investment
Stronger confidence in businesses and
markets
Greater certainty and stability
Stronger economy over the long-term
Lower interest payments and increased
fiscal space
Intergenerational equity
Reduced or eliminated risk of fiscal
crisis
Advantages of “Go Big” (cont’d)
 Increased chances of enacting a
comprehensive debt solution of at
least $3 - $4 trillion in savings:
 Political trade offs necessary to address
entitlement growth and revenues
 Shared sacrifice in Go Big approach
 Realize the gains of debt reduction by
stabilizing and reducing the debt, and
not just making difficult decisions that
solve only part of the problem
 Restore America’s faith in the political
system
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The Announcement Effect
 Just announcing the adoption of a debt reduction
plan can provide a boost in confidence, aiding the
recovery
 Prominent lawmakers, government officials,
economists, and experts have reiterated the
benefits of the announcement effect, including:









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Ben Bernanke, Fed Chairman
Erskine Bowles and Alan Simpson
The International Monetary Fund
Glenn Hubbard, former Chair of the President’s CEA
Mark Zandi, Chief Economist, Moody’s Analytics
Michael Bloomberg, Mayor of New York City
Alan Blinder, former Fed Vice Chairman
Larry Summers, former Director, NEC
Various editorial boards and magazines, including the
Washington Post, Financial Times, and The Economist
Note: For more information on the “announcement effect,” see CRFB at
http://crfb.org/blogs/announcing-announcement-effect-club
“Go Big”: Shared Sacrifice
 Expanding the size and scope of a package can promote a sense of shared
sacrifice on behalf of the American public and key interest groups, making it more
likely that they would accept changes if everyone was contributing to the solution.
 An incremental approach would allow advocates for parts of the budget to argue
that they are bearing an unfair burden. A Go Big approach which achieves savings
in all parts of the budget neutralizes that argument.
 In a recent Washington Post op-ed, Fiscal Commission co-chairs Erskine Bowles
and Alan Simpson highlighted this lesson from the Fiscal Commission
deliberations:
“The more comprehensive we made it, the easier our job became. The tougher
our proposal, the more people came aboard. Commission members were
willing to take on their sacred cows and fight special interests — but only if they
saw others doing the same and if what they were voting for solved the
country’s problems.”
34
What Could “Go Really Big” Look Like?
Including serious entitlement reforms and revenues pushes the
overall savings well above the $1.2 trillion mandate
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Possible Policy
Changes
Government-Wide
$600 - $800 Billion
Plan
$250 billion
Discretionary
$3 Trillion Plan
$4 Trillion Plan
$250 billion
$250 billion
$100- 200 billion
$300 billion
$400 billion
Health Care
Negligible savings
$650 billion
$900 billion
Other Mandatory
$150 - $250 billion
$350 billion
$350 billion
Social Security
Negligible savings
$150 billion
$300 billion
Revenues
Negligible savings
$850 billion
$1.2 trillion
Net Interest
Total
$100 billion
$600 - $800 billion
$450 billion
$3 trillion
$600 billion
$4 trillion
Note: $4 trillion plan is a more ambitious version of the types of reforms in
the $2.8 trillion plan.
The Bowles-Simpson Fiscal Commission Plan
Discretionary Spending
 Cuts to defense and non-defense programs,
totaling an additional $400 billion over ten
years [on top of the savings already enacted].
Social Security
 Progressive benefit changes, retirement
age increase, tax increase for high earners
totaling $300 billion.
Health Care Spending
 Cuts to providers, lawyers, drug companies, &
beneficiaries totaling $400 billion.
Other Mandatory Programs
 Reforms to farm, civilian/military retirement, &
other programs saving $290 billion.
Tax Reform and Revenue
 Comprehensive reform to lower tax rates,
broaden the base, and raise $1.2 trillion.
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The Bowles-Simpson Fiscal Commission Plan
(Deficits as Percent of GDP)
10%
18%
9%
16%
8%
14%
7%
12%
6%
10%
5%
8%
4%
6%
3%
2%
4%
1%
2%
0%
0%
Plausible Baseline
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Commission Plan
Illustrative Tax Rates
2012 Rates, Expiration of the Tax Cuts, and Fiscal Commission’s Illustrative Plan
Bottom Rates
Current Rates for
2012
Scheduled Rates for
2013
Eliminate All Tax
Expenditures
Keep Child Tax
Credit and EITC
Fiscal Commission’s
Illustrative Tax Plan
10%
15%
15%
Middle Rates
Top Rates
Corporate
Rate
25%
28%
33%
35%
35%
28%
31%
36%
39.6%
35%
8%
14%
23%
26%
9%
15%
24%
26%
12%
22%
28%
28%
Fiscal Commission’s illustrative tax plan would reduce or eliminate
most tax expenditures and use the savings to reduce tax rates and
reduce the deficit.
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What’s in the Fiscal Cliff?
At the end of 2012, the following is scheduled to occur:
 All of the 2001/2003/2010 tax cuts will expire at once
 The “sequester” will immediately cut defense by 10%, non-defense






39
discretionary by 8%, and other spending across-the-board
The payroll tax holiday and extended unemployment benefits will
expire
The AMT will hit 30 million taxpayers instead of 4 million
All the tax extenders will expire
Physicians will see a 30% cut in their Medicare payments
Tax increases from the Affordable Care Act will begin
The country will once again hit the debt celling
Components of the Fiscal Cliff
The Sequester
 Enacted in the 2011 BCA to pressure the Super Committee to enact a
plan, the sequester would cut spending across the board in January 2013.
% Reduction in 2013
(Budget Authority)
2012-2022 Cuts
(Budget Authority)
Defense Spending
10%
$550 billion
Non-Defense Disc. Spending
8%
$360 billion
Medicare
2%
$125 billion
Other Non-Exempt Spending
8%
$45 billion
Interest
N/A
$170 billion
+$100 billion
$1,250 billion
Total Cuts
Source: Congressional Budget Office. Numbers are rounded.
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Components of the Fiscal Cliff
Other Policies Set to Activate or Expire
 Jobs Measures
 2% payroll tax holiday
 Extended duration for unemployment benefits
 Annual Doc Fixes
 Affordable Care Act Tax Increases
 0.9% increase in HI tax for higher earners and applying the full 3.8% tax to net
investment income
 2.3% tax on medical devices
 Other measures
 Various “Tax Extenders”




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R&E tax credit
Alcohol fuel tax credit
Subpart F for active financing income
Other extenders
How Big Is the Fiscal Cliff?
Policy
2013
Fiscal Impact
2013-2022
Fiscal Impact
2001/2003/2010 Income and Estate Tax
Cuts
$110 billion
$4.3trillion
AMT Patches (w/ Tax Cut Interactions)
$105 billion
$1.7 trillion
Sequester
$55 billion
$1.1 trillion
Doc Fixes
$10 billion
$280 billion
Jobs Measures
$115 billion
$150 billion
Various “Tax Extenders”
$30 billion
$455 billion
Taxes from the Affordable Care Act
$25 billion
$420 billion
~$450 billion
$8.1 trillion
~3%
N/A
Total Fiscal Impact
Total Economic Impact (% GDP)
Note: Congressional Budget Office estimates and CRFB
calculations. 2013-2022 estimates include interest.
42
Budgetary and Economic Impact
Billions of Dollars
36%
64%
Source: Congressional Budget Office estimates and rough
CRFB calculations.
43
Short-Term Economic Impact of the Fiscal Cliff
 Expiring/activating measures will create a “fiscal shock” of
about 4 percent of GDP, which could take about 2 percent out
of the economy in the short-term and increase
unemployment by over 1 percent
 Under current law, CBO projects negative growth in the first
quarter of 2013 and negligible growth in the second quarter
Current Law vs. Current Policy
2013
2022
Difference in Real GDP Level
-2.1%
+1.0%
Difference in Real GDP Growth (Q4 to Q4)
-1.6%
+0.2%
Difference in Unemployment Rate
+1.1%
n/a
Source: Congressional Budget Office.
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Long-Term Economic Impact of the Fiscal Cliff
The Fiscal Cliff could improve the long-term, BUT:
 Savings in the Fiscal Cliff will not deal with the long-term debt
drivers – growing health and retirement costs
 Revenue will come largely from higher marginal rates, which
will reduce incentives to work, save, and invest
 Spending cuts will come from mindless across-the-board cuts
instead of cuts to low-priority and anti-growth spending
45
Lawmakers Face a Fiscal Cliff and a Mountain of Debt
 WORST CASE: A Mountain of Debt
If lawmakers waive or extend policies at the end of the year,
they could add more than $7.5 trillion to the debt over the
next ten years, compared to current law.
 BAD CASE: A Fiscal Cliff
If lawmakers allow all policy expirations and the sequester to
proceed as scheduled, the economy could take a 2 percent hit
over 2013-2014, while not addressing entitlement spending
growth or fundamental tax reform.
46
Is There a Smart Path Forward?
Instead of a Fiscal Cliff or Mountain of Debt, we should
enact a comprehensive and thoughtful plan which would:
 Go Big
 A plan must stabilize and reduce the debt relative to the economy
 A go big plan would make bipartisan compromise more likely by
allowing for the necessary tradeoffs
 Go Smart
 Replace mindless, abrupt deficit reduction with thoughtful changes
that reform the tax code and cut low-priority spending
 Go Long
 Enact gradual reforms that address the long-term costs of growing
entitlement spending
47
Is There a Smart Path Forward?
Deficit Projections as a Percent of GDP
10%
9%
8%
7%
6%
5%
4%
3%
2%
1%
0%
2010
2011
2012
2013
2014
2015
CBO Alternative Fiscal Scenario
Note: Illustrative plan loosely based on Fiscal Commission savings.
Current policy based on CRFB Realistic Baseline.
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2016
2017
2018
CBO Current Law
2019
2020
2021
Illustrative Plan
2022
Benefits of Replacing the Fiscal Cliff with a Go Big Plan
 Achieves long-term growth without short-term contraction
 Avoids both a double-dip recession and a potential
downgrade from credit rating agencies
 Allows for sensible policy decisions to make the tax code
more competitive, reform entitlement programs, and
eliminate wasteful spending
 Reduces market and public uncertainty over future tax and
spending policies
49
What Savings Have Lawmakers Enacted So Far?
(Billions of Dollars through 2021)
$2,000
Simpson-Bowles Recommendations
$1,500
$1,000
$500
$0
Note: Estimates based on realistic budget projections.
50
Enacted Savings
What Would the President and Governor Romney Do?
Debt Projections (Percent of GDP)
100%
90%
Romney w/o credit
for unspecified base
broadening
80%
70%
60%
50%
Current Policy
40%
Romney
30%
Obama
20%
10%
0%
2012
Note: Estimates based on CBO and CRFB calculations.
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2016
2021
It’s Time for a Fiscal Reform Plan
Reasons to Enact a Plan
Sooner Rather than Later
 Allows for gradual phase in
 Improves generational fairness
 Gives taxpayers businesses,
and entitlement beneficiaries
time to plan
 Creates “announcement
effect” to improve growth
 Reduces size of necessary
adjustment
Source: Congressional Budget Office
52
Size of Adjustment to Close 25-year Fiscal Gap,
Depending on Start Year (Percent of GDP)
2013
4.8%
2015
5.2%
2020
6.8%
2025
9.7%
0%
2%
4%
6%
8%
10%
12%
It’s Time for a Fiscal Reform Plan…Now
We Can’t Wait Until After the Election
 Every month and year that passes, the debt grows larger and larger and
the solutions become more difficult
 Elections can take policy options off the table and back candidates into
positions that make bipartisan solutions more difficult
 Addressing the fiscal situation as soon as possible would make
governing easier – not harder – after the election
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Who Supports “Go Big”?
Calls for a $4+ Trillion, Bipartisan Solution to the Debt
 45 Members of the Senate
 102 Members of the House of Representatives
 200 Business Groups, including the Chamber of Commerce, National
Association of Manufacturers, and Business Roundtable
 Other groups: Partnership for New York City, American Business
Conference, National Conference of State Legislatures
 60+ former government officials, business leaders, and experts
 Editorial boards and other outside experts
 Countless concerned citizens
54
Principles of Fiscal Responsibility
For the 2012 Campaign
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
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Make Deficit Reduction a Top Priority
Propose Specific Fiscal Targets
Recommend Specific Policies to Achieve the Targets
Do No Harm
Use Honest Numbers and Avoid Budget Gimmicks
Do Not Perpetuate Budget Myths
Do Not Attack Someone Else’s Plan Without Putting Forward an Alternative
Refrain from Pledges That Take Policies Off the Table
Propose Specific Solution for Social Security, Health Programs, and the Tax Code
Offer Solutions for Temporary and Expiring Policies
Encourage Congress to Come Up with a Budget Plan as Quickly as Possible
Remain Open to Bipartisan Compromise
The Time For Action Is Now
“If not addressed, burgeoning deficits
will eventually lead to a fiscal crisis, at
which point the bond markets will
force decisions upon us. If we do not
act soon to reassure the markets, the
risk of a crisis will increase, and the
options available to avert or remedy
the crisis will both narrow and
become more stringent.”
-Erskine Bowles and Sen. Alan Simpson, Former
co-chairs of the National Commission on Fiscal
Responsibility and Reform
56
Current Bipartisan Efforts
Fix the Debt
 The Fix the Debt Campaign
 100+ Members of the House of Representatives
 45+ Senators
 Hundreds of business leaders, associations, and other experts
calling for a broad, bipartisan plan to stabilize and reduce
debt
 Thousands of concerned citizens
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Useful Resources
The Committee for a Responsible Federal Budget
http://crfb.org
http://www.fixthedebt.org
Policy Papers:
Between a Mountain of Debt and a Fiscal Cliff
Primary Numbers: The GOP Candidates
Going Big Could Improve the Chances of Success
Slideshow on Our Fiscal Challenges: Averting a Fiscal Crisis
Congressional Budget Office
July 16, 2011 report: The Macroeconomic and Budgetary Effects of an
Illustrative Policy for Reducing the Federal Budget Deficit
58