Fiscal Solutions Tour:  The Challenges Ahead
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Fiscal Solutions Tour: The Challenges Ahead. presented by Robert L. Bixby, Executive Director THE CONCORD COALITION www.concordcoalition.org. Interest. Domestic*. Defense. Other Entitlements. Medicare & Medicaid. Social Security.

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Presented by robert l bixby executive director the concord coalition concordcoalition

Fiscal Solutions Tour: The Challenges Ahead

presented byRobert L. Bixby, Executive Director

THE CONCORD COALITIONwww.concordcoalition.org


Composition of projected fy 2010 federal government revenues and outlays deficit 1 34 trillion

Interest

Domestic*

Defense

Other

Entitlements

Medicare

& Medicaid

Social Security

Composition of Projected FY 2010 Federal Government Revenues and Outlays(Deficit: $1.34 Trillion)

Estate & Gift Taxes

($21 billion)

Other Taxes

Corporate Taxes

Social Insurance Taxes

Individual Income Taxes

Outlays: $3.49 trillion

Revenue: $2.14 trillion

*Includes all appropriated domestic spending such as education, transportation, homeland security, housing assistance, and foreign aid.

Source: CBO August 2010.


Current policy trends lead to large sustained deficits fiscal years 2011 2020

Current Policy Trends Lead to Large Sustained DeficitsFiscal Years 2011-2020

-$6.2 Trillion Deficit

Billions of Dollars

-$15.2 Trillion Deficit

CBO August 2010 Baseline

The Concord Coalition Plausible Baseline assumes that discretionary spending grows at the rate of nominal GDP, that war costs slow gradually, that Medicare physician payment cuts are postponed, and that all expiring tax provisions (including those from the 2009 stimulus package) are extended with AMT relief.

Source: Congressional Budget Office, August 2010 and Concord Coalition analysis.


Presented by robert l bixby executive director the concord coalition concordcoalition

Federal Spending vs. Revenues as a Percent of GDP (FY 1980-2020)CBO August Baseline Compared to the President’s Budget

Actual

Projected

Percentage of GDP

Average outlays: 21.0%

Average revenues: 18.3%

 CBO August 2010 Baseline CBO’s Estimate of the President’s Budget

Source: Congressional Budget Office, August 2010..


Percent of debt held by the public owned by foreigners 1987 2010

Percent of Debt Held by the Public Owned by Foreigners(1987-2010)

Percentage of Ownership of Publicly-Held Debt

Source: United States Treasury Department, Treasury Bulletin, September 2010.


Interest costs go through the roof

Interest Costs Go Through The Roof

Billions of Dollars

Source: Congressional Budget Office August 2010 and CBO’s Analysis of the President’s Budget, March 2010.


Factors explaining future federal spending on medicare medicaid and social security

Factors Explaining Future Federal Spending on Medicare, Medicaid, and Social Security

Source: Congressional Budget Office, June 2010.


Debt held by the public as a percent of gdp 1940 2040

Debt Held by the Public as a Percent of GDP 1940-2040

Actual

Projected

As a Percentage of GDP

World War II

108.6%

2010

63.6%

Source: GAO Analysis, 2010 and OMB Historical Tables 2010.


Mandatory spending is consuming a growing share of the budget

Net Interest

Discretionary

Mandatory

Mandatory spending is consuming a growing share of the budget

1970

1990

2010

62%

31%

40%

45%

39%

55%

7%

15%

6%

Source: Congressional Budget Office, August 2010.


Outlays of select non defense discretionary programs fy 2010 projected

Outlays of Select Non-Defense Discretionary Programs (FY 2010 Projected)

Education Transportation Housing, Natural VeteransForeign Aid General Science,

Energy & Resources Government Space &

Nutrition Asst.Technology

*includes ground, air, and water

Source: Congressional Budget Office, January 2010.


Non defense discretionary spending as a percentage of gdp

Non-Defense Discretionary Spending as a Percentage of GDP

As a Percentage of GDP

Source: Congressional Budget Office, August 2010.


Defense discretionary spending as a percentage of gdp

Defense Discretionary Spending as a Percentage of GDP

As a Percentage of GDP

Source: Congressional Budget Office, August 2010.


Sources of growth in the federal budget over the next 30 years

Sources of Growth in the Federal Budget Over the Next 30 Years

Individual Income Taxes = 6.5%

Current Defense Spending = 4.7%

Source: Government Accountability Office and Congressional Budget Office. 2010.


Shortcomings of the current system

Shortcomings of the Current System

  • There is no fiscal goal

  • PAYGO has large and confusing exemptions

  • PAYGO does not apply to automatic spending growth

  • Annual appropriations have no enforceable cap

  • Long-term costs are not accounted for

  • Inadequate oversight


Possible changes

Possible Changes

  • Set a fiscal goal such as debt-to-GDP ratio

  • Eliminate PAYGO exemptions

  • Set targets for major entitlement programs enforced by automatic triggers

  • Set multi-year enforceable spending caps

  • Require long-term cost estimates in the budget resolution and for major initiatives

  • Adopt biennial budgeting and/or “base closing” approach


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