1. Budget Planning, Implementation and Monitoring Last Step: Budget Implementation and Monitoring – Government Approach Chris Droussiotis September 2011 Lecture Series #4

2. 2 Table of Contents Distinguish Mandatory Spending Vs Discretionary Discipline on Discretionary – The IRR/Payback approach Implement and Revaluate – Set up Performance Ratios Moody’s Rating Approach These slides could be obtain via the Instructor’s Web page at www.celeritymoment.com www.celeritymoment.com

3. 3 Spending Drives Revenues Can the U.S. outgrow the problem?

4. 4 Spending Drives Revenues

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6. 6 Revenue Discretion

7. 7 The 2011 U.S Budget – Case Study - Lessons Learned 2011 Budget of the United States federal government Submitted February 1, 2010 by Barack Obama to the Congress Congress Passed Public Law 112-10Public Law 112-10 Total revenue $2.17 trillion (estimated) Total expenditures $3.82 trillion (estimated) Deficit $1.65 trillion (estimated) Deficit

8. 8 The 2011 U.S Budget – Case Study - Lessons Learned President Barack Obama proposed his 2011 budget during February 2010.Barack Obama – He has indicated that jobs, health care, clean energy, education, and infrastructure will be priorities.

9. 9 The 2011 U.S Budget – Case Study - Lessons Learned It was widely anticipated that a government shutdown on April 8, 2011 was possible if a budget resolution or a seventh continuing resolution was not passed by the expiration of the sixth continuing resolution on April 8, 2011, which would have caused the furlough of 800,000 out of 2 million civilian federal employees.government shutdown on April 8, 2011furlough However, a deal was reached with just hours remaining before the deadline, averting the shutdown. The deal included $38.5 billion in cuts from what had been budgeted for 2010, in addition to another $10 billion in cuts that had been imposed in some of the continuing resolution. However, the April 13 Congressional Budget Office estimate showed that, compared with then-current spending rates, the spending bill would cut federal outlays from non-war accounts by just $352 million through Sept. 30. About $8 billion in immediate cuts to domestic programs and foreign aid were offset by nearly equal increases in defense spending

10. 10 The 2011 U.S Budget – Case Study - Lessons Learned

11. 11 The 2011 U.S Budget – Case Study - Lessons Learned

12. 12 The Moody’s Rating Approach  Moody’s general obligation bond ratings are forward-looking assessments of an entity’s relative credit strength, and reflect our analysis of four rating factors – Economic Condition and Outlook, Financial Position and Performance, Debt Profile, and Management – as measured against a combination of qualitative and quantitative criteria.  The rating outcome reflects a weighting of these assessments according to the following weighting system :  Economic Strength 40%  Financial Strength 30%  Management and Governance 20%  Debt Profile 10%