Principles and Priorities: Federal Budget Overview

Jeffrey S. Thiebert, National Grassroots Director

presented by

THE CONCORD COALITION

www.concordcoalition.org

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THE CONCORD COALITION

About The Concord Coalition

The Concord Coalition is a nationwide, grassroots organization that

champions fiscal responsibility and realistic planning for the economic challenges facing our country in the years ahead. 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, we seek generational responsibility, economic growth, entitlement and tax reform, government accountability and budget process. Former Senator Bob Kerrey (D-Ne.) became co-chair of the Concord Coalition in January 2002.

www.concordcoalition.org THE CONCORD COALITION

Composition of Projected FY 2011 Federal Government Revenues and Outlays (Deficit: $1.4 Trillion)
Interest Domestic* Estate & Gift Taxes ($21 billion) Other Taxes Corporate Taxes Social Insurance Taxes Individual Income Taxes

Defense Other Entitlements Medicare & Medicaid Social Security

Outlays: $3.63 trillion

Source: Congressional Budget Office, March 2011. www.concordcoalition.org

Revenue: $2.23 trillion

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

Mandatory spending is consuming a growing share of the budget

1971
35% 58% 7%

1991
40% 45% 15%

2011*

2021*
28%

37% 6%

57% 14%

58%

Mandatory
*Projected Source: Congressional Budget Office, January 2011.

Net Interest

Discretionary

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Outlays of Select Mandatory Spending Programs (FY 2011 Projected)

Source: Congressional Budget Office, January 2011.

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Outlays of Select Non-Defense Discretionary Programs (FY 2011 Projected)

Education
*includes ground, air, and water

Transp.

Housing Veteran Energy & Nutrition Asst.

Foreign Aid Natural General Science, Agriculture Resources Government Space & Technology THE CONCORD COALITION

Source: Congressional Budget Office, January 2011.

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Federal Spending vs. Revenues as a Percent of GDP (FY 1980-2021)

CBO Baseline Compared to CBOs Analysis of the Presidents Budget

Actual Average outlays: 21.0%

Projected

Percentage of GDP

Average revenues: 18.3%

CBO March 2011 Baseline

Source: Congressional Budget Office, March 2011.

CBO Analysis of the Presidents Budget

THE CONCORD COALITION

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Current Policy Trends Lead to Large Sustained Deficits

Fiscal Years 2012-2021

-$6.7 Trillion Deficit

Billions of Dollars

-$13.4 Trillion Deficit

CBO March 2011 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 are extended with AMT relief.
Source: Congressional Budget Office, March 2011 and Concord Coalition analysis.

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THE LONG-TERM OUTLOOK: IT IS SOONER THAN YOU THINK!!!

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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 2010.

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Social Security, Medicare, Medicaid and Interest Consume All Federal Revenues in Less Than 15 Years

Percentage of Revenues

Year

Social Security, Medicare and Medicaid

Source: Government Accountability Office, Feb., 2011.

Interest
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Current Fiscal Policy is on an Unsustainable Path

Federal Outlays as a Percentage of GDP

Interest

All Other Medicaid Medicare Social Security

Historical tax revenue

Source: Government Accountability Office, Feb. 2011.

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THE CONCORD COALITION