THE CONCORD COALITION presented by Jeffrey S. Thiebert, National Grassroots Director THE CONCORD COALITION Federal Budget Briefing—ASMC PDI 2010
THE CONCORD COALITION About The Concord Coalition The Concord Coalition is a nationwide, non-partisan, grassroots organization advocating generationally responsible fiscal policy. The Concord Coalition was founded in 1992 by the late former Senator Paul Tsongas (D-Mass.), former Senator Warren B. Rudman (R-N.H.) and former U.S. Secretary of Commerce Peter Peterson. Former Senator Bob Kerrey (D-Ne.) became co-chair of the Concord Coalition in January 2002.
THE CONCORD COALITION Current Fiscal Policy $1,800 $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 $0 In billions of 1996 constant (chain) dollars Fiscal Years
THE CONCORD COALITION Federal Revenue and Spending Fiscal Year 2009 RevenuesSpending Individual Income Taxes 26% Social Security 19% Corporate Income Taxes 4% Health Care 22% Payroll Taxes (SI, Medicare, & FICA) 25% International Affairs 1% Other Taxes 5% Income Security 15% Borrowed Funds 40% Education 2% Total Revenue 100% Interest on the National Debt 6% National Defense 19% Environment 1% Other Expenses 15% TOTAL 100%
THE CONCORD COALITION Americans Want to Cut Spending – But Not on the Programs That Cost the Most Source: The Economist/YouGov Poll, April 2010 and Congressional Budget Office, January 2010.
THE CONCORD COALITION Estate & Gift Taxes ($21 billion) Composition of Projected FY 2010 Federal Government Revenues and Outlays (Deficit: $1.35 Trillion) Interest Domestic* Social Security Medicare & Medicaid Other Entitlements Defense Other Taxes Corporate Taxes Social Insurance Taxes Individual Income Taxes Outlays: $3.52 trillionRevenue: $2.18 trillion *Includes all appropriated domestic spending such as education, transportation, homeland security, housing assistance, and foreign aid. Source: CBO January 2010.
THE CONCORD COALITION Social Security, Medicare, & Medicaid as a Percentage of the Federal Budget All other Federal Spending $2.09 Trillion 59% Social Security, Medicare and Medicaid $1.43 Trillion 41% Source: Congressional Budget Office, January 2010.
THE CONCORD COALITION 62%31% 7% 40% 15% 45%39% 6% 55% MandatoryDiscretionaryNet Interest Source: Congressional Budget Office, January Mandatory spending is consuming a growing share of the budget
THE CONCORD COALITION Outlays of Select Mandatory Spending Programs (FY 2010 Projected) Source: Congressional Budget Office, January 2010.
THE CONCORD COALITION Change in Composition of Discretionary Spending 68% 32% 60% 40% 50% DefenseNon-defense Source: Congressional Budget Office, January 2010.
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, January As a Percentage of GDP
THE CONCORD COALITION Defense Discretionary Spending as a Percentage of GDP Source: Congressional Budget Office, January As a Percentage of GDP
THE CONCORD COALITION Projected Growth in Entitlement Spending far Greater than Defense Spending Source: Government Accountability Office and Congressional Budget Office
THE CONCORD COALITION CBO March 2010 Baseline CBO’s Estimate of the President’s Budget Federal Spending vs. Revenues as a Percent of GDP (FY ) CBO March Baseline Compared to the President’s Budget Source: Congressional Budget Office, March Average outlays: 21.0% Average revenues: 18.3% Percentage of GDP ActualProjected
THE CONCORD COALITION Current Policy Trends Lead to Large Sustained Deficits Fiscal Years CBO March 2010 Baseline The Concord Coalition Plausible Baseline adds in the effects of the new Health Care Reform law and 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, March 2010 and Concord Coalition analysis. Billions of Dollars -$14.6 Trillion Deficit -$6.0 Trillion Deficit
THE CONCORD COALITION Why Deficits Matter Reduce national savings Increase dependence on foreign lenders Increase burden on future generations: –Through rising debt service costs; –By reducing productivity-enhancing investments Weakened ability to meet contingencies or new challenges
THE CONCORD COALITION Debt Held by the Public as a Percent of GDP Source: OMB Historical Tables As a Percentage of GDP
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 Percent of Debt Held by the Public Owned by Foreigners ( ) Source: United States Treasury Department, Treasury Bulletin, December 2009.
THE CONCORD COALITION Interest Costs Go Through The Roof Source: Congressional Budget Office, Analysis of the President’s Budget, March Billions of Dollars
THE CONCORD COALITION Interest Costs Skyrocket Because of Recent Borrowing The simulations assume that discretionary spending grows with the economy and that all expiring tax provisions are extended. Source: Government Accountability Office, April 2008 and Feb
THE CONCORD COALITION Americans are living longer and having fewer children Consequently, fewer workers are available to support each Social Security recipient 1960: 5.1 to 1 Today: 3.1 to : 2.2 to 1 Source: Social Security Administration, May 2009.
THE CONCORD COALITION America’s Population is Aging Population age 65 and Over Source: Social Security and Medicare Trustees’ Report, May Year Percentage of Population Aged 65 and Over
THE CONCORD COALITION Health Care Costs are Rising Faster Than the Economy Source: Congressional Budget Office, June Percentage of GDP Historic Level of Federal Revenues Historic Level of Federal Spending 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.
THE CONCORD COALITION Social Security Cash Deficits Source: Congressional Budget Office, March Billions of Dollars
THE CONCORD COALITION Social Security and Medicare Part A Cumulative Cash Surpluses and Deficits In Constant 2009 Dollars — 2009 through 2085 In Billions of Constant 2009 Dollars Calendar Year Source: Social Security Trustees’ Report—May 2009 (Intermediate Projections) $147 Billion: Cumulative Social Security Cash Surplus -$28 Trillion: Cumulative Social Security Cash Deficits -$58 Trillion: Cumulative Medicare Part A Cash Deficits -86 Trillion: Cumulative Social Security and Medicare Part A Cash Deficits
THE CONCORD COALITION Medicare Costs Soar in the Coming Decades Calendar Year As a Percentage of GDP General Revenues required to fund the program Income from dedicated taxes, premiums, and state transfers Source: Medicare Trustees’ Report, May 2009.
THE CONCORD COALITION Social Security, Medicare and Medicaid Cost Growth Outlays as a Percentage of GDP Social Security Medicaid Medicare Source: Government Accountability Office, Feb
THE CONCORD COALITION Social Security, Medicare, Medicaid and Interest Consume All Federal Revenues in Less Than 15 Years Year Percentage of Revenues Social Security, Medicare and MedicaidInterest Source: Government Accountability Office, February 2010.
THE CONCORD COALITION Current fiscal policy is on an unsustainable path Federal Outlays as a Percentage of GDP Social Security Medicaid Medicare All Other Spending Interest Source: Government Accountability Office, Feb Average tax revenue
THE CONCORD COALITION Source: Government Accountability Office, Feb Policy Changes Matter Projected Debt Held by the Public as a Percent of GDP Under Alternative Scenarios ( )