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Federal Spending Projected for 2023

Federal Spending Projected for 2023. Medicaid ( 10%). Social Security ( 23%). Medicare (15%). Other Health Programs (3%). Net Interest ( 14%). Other Mandatory Spending (10%) Domestic Discretionary (12%). Defense ( 12%).

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Federal Spending Projected for 2023

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  1. FY 2012 Budget

  2. FederalSpending Projected for 2023 Medicaid (10%) Social Security (23%) Medicare (15%) Other Health Programs (3%) NetInterest (14%) Other Mandatory Spending (10%) Domestic Discretionary (12%) Defense (12%) “Other Health Programs” includes: Health insurance subsidies, exchanges, and related spending; Department of Defense Medicare-Eligible Retiree Health Care Fund (including TRICARE for Life); Children’s Health Insurance Program, and other programs. Source: The Congressional Budget Office. The Budget and Economic Outlook: Fiscal Years 2013 to 2023. February 2013. WWW.BIPARTISANPOLICY.ORG

  3. Growth in Net Interest Average Annual Growth, 5-year periods (1965 – 2020) Nominal Growth Real Growth in 2005 $ % Growth Source: “The Budget and Economic Outlook Fiscal Years 2013 to 2023: Congressional Budget Office, February 2013” plus historical data.

  4. Major Components of the Budget FY 1980 – FY 2020 (Outlays in Billions of Dollars) $5,250.0 $4,105.0 $3,518.2 $3,523.5 $2,472.2 $1,789.2 $1,515.8 $1,253.1 $946.4 $590.9 Source: CBO, Budget & Economic Outlook:Projections: Fiscal Years 2013 to 2023. February 2013.

  5. Aging of Population and Rising Health Care Cost Impact on Federal Spending Explaining Projected Growth in Federal Spending on Major Health Care Programs and Social Security by 2037 (Percent) Source: The 2012 Long-Term Budget Outlook, Congressional Budget Office, June 2012. WWW.BIPARTISANPOLICY.ORG

  6. Fantasy 1: We can save enough in the rest of the budget to pay for the projected growth in entitlements. 4

  7. Fantasy 2: We can raise taxes enough to pay for the projected growth in entitlements. 5

  8. Absent reforms, debt is set to skyrocket in the coming decades % of GDP Debt breaches 100% of GDP in 2027 Note: Unlike current law, the Bipartisan Policy Center’s Plausible Baseline assumes that the 2001, 2003, and 2010 tax cuts are extended, the AMT is indexed to inflation, Medicare’s physician payment rates are maintained at their current rate (the “doc fix”), the looming sequester from the Budget Control Act of 2011 is lifted, and troops stationed overseas decline to 45,000 by 2015 Sources: Congressional Budget Office (January 2012) and Bipartisan Policy Center extrapolations

  9. Reaching the debt limit – What it means Layers of Defense Against Default The Treasury Department has multiple means that can be used to pay the nation’s bills. If the debt limit is reached and Congress does not act in time, however, all of these layers of defense will be breached and the nation will default on its obligations. ISSUE NEW DEBT TO THE PUBLIC IN TRADITIONAL MANNER Debt Limit Reached EXTRAORDINARY MEASURES EM Exhausted DAILY REVENUE AND CASH ON HAND The X Date DEFAULT ON FINANCIAL OBLIGATIONS

  10. The Appropriations & Budget Process • House & Senate Appropriations Committees • Views & estimates • Full committees make 302 (b) • suballocations to their respective • 12 subcommittees The White House President’s Budget • CBO • Reestimates President’s Budget • Baseline Senate Authorizing Committees: Agriculture, Nutrition & Forestry Armed Services Banking, Housing & Urban Affairs Commerce, Science & Transportation Energy & Natural Resources Environment & Public Works Finance Foreign Relations Health, Education, Labor & Pensions Homeland Security & Government Affairs Indian Affairs Judiciary Rules & Administration Select Intelligence Small Business Special Aging Veterans’ Affairs House Authorizing Committees: Agriculture Education and Labor Energy and Commerce Financial Services Foreign Affairs Government Reform Homeland Security House Administration Judiciary Natural Resources Science & Technology Select Intelligence Small Business Transportation & Infrastructure Veterans’ Affairs Ways & Means Select Energy Ind. & Global Warming House & Senate Appropriations Committees (12) Agriculture and Rural Development Food and Drug Administration, Commerce, Justice and Science Defense Energy & Water Development Financial Services Homeland Security Interior and Environment Labor, HHS and Education Legislative Branch Military Construction and Veterans Affairs State and Foreign Operations Transportation, Treasury and Housing & Urban Development • House & Senate Budget Committees • Hold Hearings • House & Senate Budget • Committees • Each Committee holds a markup • and reports out the concurrent • resolution on the budget • House & Senate Floors • Consider amendments • Votes to pass the Budget • Resolution • 12 House & Senate Appropriations • Subcommittees • Hold Hearings • Budget Resolution Conference Report • House & Senate vote to pass • conference report • Conference report includes: 302 (a) • spending allocations; reconciliation • instructions • 12 House & Senate Appropriations Subcommittees • Each holds a markup & reports • out appropriations legislation • 16 House & 16 Senate • Authorizing Committees • Hold hearings • House & Senate Budget Committees • Package Reconciliation language from • Authorizing Committees • Report Out reconciliation bill • House & Senate Floors • Consider amendments • Vote to adopt 12 appropriations • bills and send to conference • 16 House & 16 Senate • Authorizing Committees • Each holds a markup & reports out • authorization legislation • Appropriations bill Conference Reports • Adopt 12 conference reports • and send to President for signature • House & Senate Floors • Consider Amendments • Pass Reconciliation bill and • send to conference • White House • Signed by President or allowed • to become law without signature • White House • Vetoed by President Bill • Returned to House or origin • House and Senate Floors • Consider amendments • Votes to pass each authorization bill • and sent to conference • Reconciliation Bill Conference Report • House & Senate vote to adopt conference • report and send to President for signature • House & Senate • Requires 2/3 vote to override in each chamber • Authorization Bill Conference Report • House and Senate vote to adopt conference • report and send to President for signature • White House • Signed by President or • allowed to become law • without signature • White House • Vetoed by President Bill • Returned to House of • origin • Continuing Resolution (CR) Needed if: • Failure to pass 12 appropriations bills • Failure to overturn a veto • House & Senate Floors • Consider amendments • Vote to pass the CR and send to conference • White House • Signed by President or allowed • to become law without • signature • White House • Vetoed by President Bill • Returned to House of • origin • House & Senate • Requires 2/3 vote to override • veto in each chamber • CR Conference Committee • House & Senate vote to adopt conference • report and sent to President for signature Executive Branch Congressional Budget Office Authorizing Committees Budget Committees Appropriations Committees • House & Senate • Requires 2/3 vote to • override vote in each • chamber • Laws • Setting mandatory spending • revenue levels • Setting levels authorized to be • appropriated • White House • Signed by President or allowed • to become law without signature • White House • Vetoed by President Bill • Returned to House of origin • House & Senate • Requires 2/3 vote to override in each chamber

  11. IMPACT OF THE SEQUESTER: 2013 AND 2013 - 21 WWW.BIPARTISANPOLICY.ORG

  12. Non-Defense Spending Under Various Budget Paths % of GDP Fiscal Years Sources: Congressional Budget Office, Chairman Ryan’s FY 2014 Budget, Chairman Murray’s FY 2014 Budget, BPC Projections

  13. Economic Environment:Economic ForecastsCalendar Years 2012 - 2014 Sources: Congressional Budget Office, February 2013; Blue Chip Economics Forecasts, January 2013; Federal Reserve December 12, 2012. * Federal Reserve projection of PCE inflation.

  14. House and Senate-Passed FY 2014 Budgets (Deficit Reduction: 2014-2023, billions of $s)(Reductions from Current Law Baseline*) * CBO Current Law Baseline assumes expiring provisions will expire including SGR “Doc” fix; sequester will not be canceled; war spending and disaster assistance will be maintained at current 2013 level inflation adjusted.

  15. Federal Spending: % GDP Current Policy Baseline, Chairman Ryan , Chairwoman Murray, the Administration: FY 2014 Budget Resolutions <-21% 40 year Historic Average WWW.BIPARTISANPOLICY.ORG

  16. Federal Revenues: % GDP Current Policy Baseline, Chairman Ryan , Chairwoman Murray, the Administration: FY 2014 Budget Resolutions <-18% 40 year Historic Average WWW.BIPARTISANPOLICY.ORG

  17. Federal Debt Held by the Public: % GDP Current Policy Baseline, Chairman Ryan , Chairwoman Murray, the Administration: FY 2014 Budget Resolutions <-40% 40 year Historic Average WWW.BIPARTISANPOLICY.ORG

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