Transcript detailed financial information

Fiscal Responsibility
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Where are we now?
The U.S. Government’s Assets and Liabilities As of
September 30, 2010
American Institute of CPAs
Source: A Citizen’s Guide to the 2010 Financial Report of the U.S. Government
Social Insurance Net Expenditures:
Dollars in Billions
Sept. 30, 2011
Social
Security
$9,157
Medicare
$24,572
Other
$101
Estimated expenditures for future scheduled benefits
over a 75-year period, net of revenues that support these
programs (i.e. Payroll taxes)
Analysis of Federal Debt
Federal liabilities
2011
Publicly held debt *
$10,174
$9,060
Federal employee & VA benefits
5,792
5,720
Other
1,526
1,576
Intergovernmental debt — owed to Social
Security, Medicare, other trusts
4,711
4,577
Federal social insurance obligations
Social Security
Medicare — Parts A, B and D
Other
Total liabilities, intragovernmental debt and
social insurance obligations
2011
2010
2010
9,157
7,947
24,572
22,813
101
97
$56,033
$51,790
A National Debt of $14 Trillion? Try $211 Trillion
Lawrence J. Kotkoff :
Courtesy of Boston
University
Lawrence J. Kotkoff
Senior Economists,
Reagan Administration
“If you add up all the promises that
have been made for spending
obligations including defense
expenditures, and you subtract all the
taxes that we expect to collect, the
difference is $211 trillion. That’s the
fiscal gap,” he says. “That’s our true
indebtedness.”
Where are we going?
Source: 2010 Financial Report of United States Government, U.S. Treasury Department
Key Measures of State and Local
Government Intergovernmental
Financial Dependency
Dependency Measures — Select States
Key Dependency Measurement
VA
2010
NC
2010
MD
2010
FL
2010
Direct Federal Revenues to State
(billions)
$14.0
$24.3
$13.2
$40.4
Percentage of Total State Revenues —
All Sources
31.2
39.9
35.9
41.0
Direct Federal Grants to Local
governments (billions) (2008)
$1.1
$2.3
$1.1
$3.9
Federal Purchases from State
Businesses (billions)
$58.3
$6.1
$26.5
$18
Federal Payments to Individuals: wages,
pensions, S.S., Medicare (billions)
$62.9
$62.8
$51.7
$137.7
Total Direct and Indirect Federal Flows
(billions)
$136.3
$95.5
$92.5
$200.0
Real GDP by State Inflation Adjusted to
2005 (billions)*
$380.6
$380.6
$264.9
$673.4
Percentage Total Federal Flows
Gross State Product
35.7
25.1
34.9
29.7
Potential slide on state
financial statements
Key Dependency Measures
for Select Localities – FY 2011
thousands)
Fairfax
County
Alexandria
City
Prince
William
County
Norfolk
City
Virginia Beach
City
Federal
Allocation
to Locality
$306,380
$46,164
$130,848
$110,341
$139,303
State
Allocation
to Locality
$853,908
$105,212
$486,155
$309,262
$497,053
Federal/State
Percentage
of Total
Revenues
26 percent
23 percent
44 percent
46 percent
42 percent
Key Dependency Measures
for Select Localities – FY 2011
(thousands)
Richmond
City
Henrico
County
Chesterfield
County
Hanover
County
New Kent
County
Federal
Allocation
to Locality
$143,302
$69,472
$62,111
$18,993
$3,019
State
Allocation
to Locality
$264,431
$338,714
$357,331
$109,706
$17,318
Federal/State
Percentage
of Total
Revenues
45 percent
43 percent
45 percent
43 percent
41 percent
Key Dependency Measures
for Select Localities – FY 2011
(thousands)
Lynchburg
City
Bedford
County
Roanoke
County
Danville
City
Pittsylvania
County
Federal
Allocation
to Locality
$26,948
$15,101
$49,891
$20,867
$18,987
State
Allocation
to Locality
$86,776
$61,173
$132,152
$71,852
$73,612
43 percent
50 percent
48 percent
60 percent
67 percent
Federal/State
Percentage
of Total
Revenues
Local Revenues
From Stimulus Package - FY 2011
(thousands)
Fairfax
County
Alexandria
City
Prince
William
County
Federal
Allocation
to Locality
$324,572
$45,818
$136,679
$110,341
$139,303
Stimulus
Allocation
to Locality
$10,248
$6,905
$48,743
$19,862
$50,401
Percentage of
Federal
Allocation
From Stimulus
3 percent
15 percent
36 percent
18 percent
36 percent
Norfolk
City
Virginia Beach
City
Local Revenues
From Stimulus Package - FY 2011
(thousands)
Richmond
City
Henrico
County
Chesterfield
County
Hanover
County
New Kent
County
Federal
Allocation
to Locality
$110,682
$84,309
$68,517
$19,553
$4,649
Stimulus
Allocation
to Locality
$17,642
$13,851
$23,596
$7,923
$2,556
16 percent
16 percent
34 percent
41 percent
55 percent
Percentage of
Federal
Allocation
From Stimulus
Local Revenues
From Stimulus Package - FY 2011
(thousands)
Lynchburg
City
Bedford
County
Roanoke
City
Danville
City
Pittsylvania
County
Federal
Allocation
to Locality
$36,611
$15,396
$26,162
$20,867
$18,987
Stimulus
Allocation
to Locality
$12,146
$4,428
$3,894
$71,852
$73,612
33 percent
29 percent
15 percent
60 percent
67 percent
Percentage of
Federal
Allocation
From Stimulus
Assessing
Risks
Assessing Risks
Informed and Proactive
vs. Reactive
Become informed and proactive or
3 Components
reactive
of Being
Proactive
Communicate with Leaders
Explore Reporting Options
Support Shared Leadership
The story of
The Fed Family
26
Judy
Johnny
Sally
Joe
and Max!
27
THE SITUATION
• Joe has a good job and
plans to retire in 5 years.
• Judy stays home with
the children.
• Johnny and Sally attend
private school.
• Grandma had a stroke
last year and is in a
coma.
28
Joe has a nice income of $129,000
per year. However, the Fed Family
is living beyond their means.
• 2010 Gross Domestic Product
They have no cash and had to add
over $12,000 to their credit card debt
• The Fed Family share of the 2010 deficit
29
They have $79,473 in credit card debt
• Fed Family share of publicly held debt
In order to make ends meet,
Joe borrowed all the money from
Grandma’s trust account: $40,149
• Fed Family share of amount “borrowed”
from Social Security trust fund
30
Grandma’s estimated care at the
Park Avenue Nursing Home over the next
several years is: $200,000
• Fed Family share of obligation
to Social Security and Medicare
But Joe doesn’t think he’s signed a
contract, so he isn’t worried….
• Some say this estimated
obligation is not a liability…
31
... so the Fed Family got together
and had a family meeting …
32
Why do we
have to pay
for Grandma?
The latest plan to privatize Medicare. Or is it?
33
Great idea!
But that will only
save $263!
Let’s not
visit Aunt Frieda
this Saturday!
The value of $30 billion in cuts toward deficit reduction
34
I know, I’ll go to the
bank and extend our
credit card limits!
Unfortunately Joe’s bank is now a
subsidiary of the Bank of China and
won’t extend more credit until the
Fed Family gets its act together!
As of May 2011, China holds 36
percent of all foreign-owned
Treasury Securities (16 percent of
total public debt)
35
No, we all need to
chip in to get out of
the mess your
father got us into!
36
THE PLAN
Joe ― resigns himself to working 5 more years
Johnny and Sally ― go to public school
Max ― gets dry dog food
Judy ― takes a part-time job
Grandma ― moves to a more suitable nursing home
Bank extends credit after approving a payment plan
that begins to reduce the outstanding balance
37
Historical & Current Policy Projections for
the Composition of Non-interest Spending
38
Analysis of Federal Liabilities, Intragovernmental
Debt and Social Insurance Obligations
(in trillions)
2010
2009
Publicly held debt
9,060
7,583
Federal employee and VA benefits
5,720
5,284
Other
1,576
1,257
Intragovernmental debt (owed to trust funds)
4,577
4,391
7,949
7,677
22,813
38,107
97
94
Total liabilities, intragovernmental obligations and Social Insurance
51,792
64,393
Current dollar GDP (3rd quarter 2010 and 4th quarter 2009)
14,750
14,119
61
54
351
456
FEDERAL LIABILITIES
FEDERAL SOCIAL SERVICES OBLIGATIONS
Social security
Medicare (Parts A,B & D)
Other
Publicly-held debt as a percentage of GDP
Liabilities and obligations as a percentage of GDP
39
Components of the Solution
Communication & Education
Sustainability
Transparency
Ideas for Consideration
• Sustainability
• Transparency
• Stewardship
Resources
• www.vscpa.com/FiscalResponsibility
• www.aicpa.org/WhatsAtStake
• http://tinyurl.com/2011CitizensGuide
(PDF)
• http://www.fms.treas.gov/fr/index.html
• http://datapoint.apa.virginia.gov/