THE CONCORD COALITION presented by Robert L. Bixby, Executive Director THE CONCORD COALITION Fiscal Solutions Tour: The Challenges Ahead
THE CONCORD COALITION Estate & Gift Taxes ($21 billion) Composition of Projected FY 2010 Federal Government Revenues and Outlays (Deficit: $1.34 Trillion) Interest Domestic* Social Security Medicare & Medicaid Other Entitlements Defense Other Taxes Corporate Taxes Social Insurance Taxes Individual Income Taxes Outlays: $3.49 trillionRevenue: $2.14 trillion *Includes all appropriated domestic spending such as education, transportation, homeland security, housing assistance, and foreign aid. Source: CBO August 2010.
THE CONCORD COALITION Current Policy Trends Lead to Large Sustained Deficits Fiscal Years 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. Billions of Dollars -$15.2 Trillion Deficit -$6.2 Trillion Deficit
THE CONCORD COALITION CBO August 2010 Baseline CBO’s Estimate of the President’s Budget Federal Spending vs. Revenues as a Percent of GDP (FY ) CBO August Baseline Compared to the President’s Budget Source: Congressional Budget Office, August Average outlays: 21.0% Average revenues: 18.3% Percentage of GDP ActualProjected
THE CONCORD COALITION Percent of Debt Held by the Public Owned by Foreigners ( ) Source: United States Treasury Department, Treasury Bulletin, September Percentage of Ownership of Publicly-Held Debt
THE CONCORD COALITION Interest Costs Go Through The Roof Source: Congressional Budget Office August 2010 and CBO’s Analysis of the President’s Budget, March Billions of Dollars
THE CONCORD COALITION Factors Explaining Future Federal Spending on Medicare, Medicaid, and Social Security Source: Congressional Budget Office, June Percent of Growth Attributed to: Health Care Cost Growth37%56% Aging63%44%
THE CONCORD COALITION Debt Held by the Public as a Percent of GDP Source: GAO Analysis, 2010 and OMB Historical Tables As a Percentage of GDP ActualProjected World War II 108.6% %
THE CONCORD COALITION 62%31% 7% 40% 15% 45%39% 6% 55% MandatoryDiscretionaryNet Interest Source: Congressional Budget Office, August Mandatory spending is consuming a growing share of the budget
THE CONCORD COALITION Outlays of Select Non-Defense Discretionary Programs (FY 2010 Projected) Source: Congressional Budget Office, January *includes ground, air, and water Education Transportation Housing, Natural VeteransForeign Aid General Science, Energy & Resources Government Space & Nutrition Asst.Technology
THE CONCORD COALITION Non-Defense Discretionary Spending as a Percentage of GDP Source: Congressional Budget Office, August As a Percentage of GDP
THE CONCORD COALITION Defense Discretionary Spending as a Percentage of GDP Source: Congressional Budget Office, August As a Percentage of GDP
THE CONCORD COALITION Sources of Growth in the Federal Budget Over the Next 30 Years Source: Government Accountability Office and Congressional Budget Office Individual Income Taxes = 6.5% Current Defense Spending = 4.7%
THE CONCORD COALITION 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
THE CONCORD COALITION 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