CONCERNED ABOUT OUR NATION’S FISCAL FUTURE? COME SEE THE FISCAL WAKE-UP TOUR The Fiscal Wake-Up Tour is a public discussion about our nation’s fiscal future featuringUnited States Senator Susan Collins The Fiscal Wake-Up Tour is a joint public engagement initiative by The Concord Coalition, the Brookings Institution, the Heritage Foundation, and the Peter G. Peterson Foundation. For more information about the Fiscal Wake-Up, go to www.concordcoalition.org.
The Fiscal Wake-Up Tour presented byRobert L. Bixby, Executive DirectorTHE CONCORD COALITION www.concordcoalition.org
Social Security, Medicare, & Medicaid as a Percentage of the Federal Budget All other Federal Spending $1.88 Trillion 58% Social Security, Medicare and Medicaid $1.35 Trillion 42% CBO treatment of TARP, Fannie Mae and Freddie Mac: $627 billion Source: Congressional Budget Office, March 2009.
America’s Population is AgingPopulation age 65 and Over Percentage of Population Aged 65 and Over Year Source: Social Security and Medicare Trustees’ Report, May 2009.
Health Care Costs are Rising Faster Than the Economy Historic Level of Federal Spending Percentage of GDP Historic Level of Federal Revenues 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, June 2009.
Interest Domestic* Defense Other Entitlements Medicare & Medicaid Social Security Composition of Projected FY 2009 Federal Government Revenues and Outlays(Deficit: $1.67 Trillion) Estate & Gift Taxes ($22 billion) In Billions of Dollars Other Taxes Corporate Taxes Financial Rescue** Social Insurance Taxes Individual Income Taxes Outlays: $3.85 trillion Revenue: $2.19 trillion *Includes all appropriated domestic spending such as education, transportation, homeland security, housing assistance, and foreign aid. **CBO classification of funds allocated for TARP, Fannie Mae, and Freddie Mac. Source: CBO March 2009.
Federal Spending vs. Revenues as a Percent of GDP (FY 1980-2009)CBO March Baseline Compared to CBO Estimate of the President’s Budget Actual Projected Percentage of GDP Average outlays: 21.0% Average revenues: 18.3% CBO March 2009 Baseline CBO’s Estimate of the President’s Budget Source: Congressional Budget Office, June 2009.
Percent of Debt Held by the Public Owned by Foreigners(1987-2008) Source: United States Treasury Department, Treasury Bulletin, December 2008.
Current Low Interest Rates Mask the Rising Interest Costs of Borrowing Billions of Dollars Source: Congressional Budget Office, March 2009.
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.
Key Points of AgreementMembers 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.
- Portland, ME August 25, 2009 David M. Walker President and CEO The Peter G. Peterson Foundation and Former Comptroller General of the United States
Federal Spending for Mandatory and Discretionary Programs 1968 1988 2008 Discretionary Mandatory Net Interest Source: PGPF analysis of Office of Management and Budget data.
Major Fiscal Exposures($ trillions) Source: PGPF analysis of 2000 and 2008 Financial Report of the United States Government. Note: Estimates for Social Security and Medicare are at present value as of January 1 of each year and all other data are as of September 30. 2009 Social Security and Medicare Trustees’ reports show implicit exposures totaling $45.8 trillion
BURDEN per CAPITA $56.4Trillion =
Potential Fiscal Outcomes Under Alternative Simulation Revenues and Composition of Spending as a Share of GDP Percent of GDP Revenue Source: GAO March 2009 analysis.
Why this Matters to Me: The Walker Grandchildren Grace Christi Daniel
The Budget and Entitlements: Time to Take Action Stuart Butler The Heritage Foundation Portland, Maine August 2009
Entitlements crowd out everything at historical level of taxes Federal Spending and Tax Revenue as a Percentage of Gross Domestic Product Source: Congressional Budget Office and Office of Management and Budget
Here is today’s actual situation Deficits Federal Spending and Tax Revenue as a Percentage of Gross Domestic Product Source: Congressional Budget Office and Office of Management and Budget
Could let deficits climb to alarming levels Federal Deficit as a Percentage of GDP; assumes taxes at current law Source: Congressional Budget Office and Office of Management and Budget
Could raise taxes to balance the budget Federal Spending and Tax Revenue as a Percentage of Gross Domestic Product Source: Congressional Budget Office and Office of Management and Budget
Let’s look at the tax-raising choice Source: Congressional Budget Office
What would balancing mean for tax rates on our children? Source: Congressional Budget Office (assumes healthcare grows 1% faster than GDP for 2050 figures and 1.7% faster than GDP for 2082 figures)
How could we slow down entitlements? • Fix the way Washington spends your money • Show long-term obligations in the annual federal budget • Transform entitlements into 30-year budgeted programs, weighed against other needs • Make retirement programs fair but affordable • Strengthen guarantees for modest income Americans • Income-adjust Medicare and Social Security benefits and premiums • Raise the age for early/normal retirement benefits + No payroll tax on older workers
How could we slow down entitlements? • Encourage more savings/insurance for middle-income and low-paid workers • Build personal accounts within Social Security • Automatic enrolment for IRAs, 401(k)s • Encourage long-term care insurance