The Federal Budget Now and In the Future THE CONCORD COALITION. presented by Joshua Gordon, Policy Director.

Transcription

1 The Federal Budget Now and In the Future presented by Joshua Gordon, Policy Director THE CONCORD COALITION

2 America is on an Unsustainable Fiscal Path Debt Held by the Public, as a Percent of GDP, Historical Projected 200 As a Percentage of GDP World War II 106% % Source: Congressional Budget Office.

3 Billions of Dollars $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 ComposiMon of Fiscal Year 2015 Federal Budget Deficit: $438 Billion Interest DomesHc** Defense Other Mandatory Major Health Care Programs* Social Security $223 $583 $582 $481 $936 $882 $280 $344 $1,065 $1,541 Estate & GiQ Taxes ($19 billion) Other Taxes Corporate Taxes Social Insurance Taxes Individual Income Taxes $0 Outlays: $3.69 trillion *Includes Medicare, Medicaid, CHIP, and exchanges subsidies spending net of offsebng receipts. **Includes all appropriated domesdc spending such as educadon, transportadon, homeland security, housing assistance and foreign aid. Source: Congressional Budget Office, January Revenues: $3.25 trillion

4 Deficits Are Projected to Grow Annual Deficits, in Billions of Dollars, $ (Actual) $200 -$400 -$600 -$800 -$1,000 The next President s first budget. -$1,200 -$1,400 Source: Congressional Budget Office, August 2016.

5 AutomaMc Expenditures Are Consuming a Growing Share of the Budget * 2026* 67% 26% 7% 40% 15% 45% 6% 31% 63% 23% 11% 66% Mandatory Spending AutomaHc Net Interest DiscreHonary *Projected Source: Congressional Budget Office, August 2016.

6 Outlays of Select Mandatory Spending Programs Fiscal Year 2016 Projected $1,000 $900 $910 $800 In Billions of Dollars $700 $600 $500 $400 $300 $200 $100 $591 $381 $165 $87 $110 $75 $32 $31 $23 $15 $0 Social Security Medicare Medicaid Federal Civilian & Military ReMrement Earned Income & Child Tax Credits Veterans Support (Pensions & EducaMon Subsidies) Food Stamps Unemployment Comp. Family Support Child NutriMon Agriculture Source: Congressional Budget Office, January 2016.

7 Outlays of Select Non-Defense DiscreMonary Spending Programs Fiscal Year 2016 Projected $100 $90 $94 $89 In Billions of Dollars $80 $70 $60 $50 $40 $30 $72 $67 $55 $55 $37 $31 $20 $18 $18 $10 $0 EducaMon TransportaMon Veterans (Health Care) Income Security (Housing) Forgeign Aid JusMce Environment Science-Space- Technology Community and Regional Development General Government Source: Congressional Budget Office, January 2016.

8 DiscreMonary Spending Will Decline to Record Low Levels Percentage of GDP Defense DiscreHonary Spending Defense 40-year average Defense 40-year low Percentage of GDP Non-Defense DiscreHonary (NDD) Spending NDD 40-year average NDD 40-year low Source: Congressional Budget Office, January 2016.

9 Tax Expenditures Are Larger than Major Spending Programs Percentage of GDP Individual Income Tax Revenues Tax Expenditures Social Security Defense Medicare Tax expenditures, individual income tax revenue and selected components of spending, Fiscal Source: Joint CommiMee on TaxaDon, x , December 7, 2015 & Congressional Budget Office Budget Office, January 2016.

10 Interest Costs Are Fastest Growing Spending Category Small Increases in Rates Lead to Significantly Larger Payments. Billions of Dollars AddiHonal Costs With Just a 1% Increase in Rates Projected Interest Costs Source: Congressional Budget Office, January 2016.

11 The Sources of Growth in Federal Spending Change in Outlays as a Percentage of GDP, Growth as a Percentage of GDP Social Security Medicaid, CHIP, Exchange Subsidies Medicare Interest All Other Spending Source: CBO Long-Term Outlook Extended Baseline, July 2016.

12 America s PopulaMon is Aging Percentage Change Increase in PopulaHon 90% 80% 70% 60% 50% 40% 30% 20% 10% Age Age 65 & Over Increase in Working Age PopulaHon 10% 82% Increase in Over-65 0% Source: 2015 CBO Long-Term Outlook & Concord CoaliDon Analysis

13 Americans are Living Longer and Having Fewer Children Consequently, fewer workers are available to support each Social Security and Medicare recipient 1960: 5 to : 3 to : 2 to 1 Source: Social Security Trustees, July 2016.

14 Social Security Promised Benefits Exceed Dedicated Tax Revenues 7 Social Security Outlays Percent of GDP 6 5 Cash Deficits Rise to 1.6% of GDP and stabilize 4 Payroll Tax & TaxaHon of Benefits Calendar Year Source: Social Security Trustees, June 2016 (Intermediate ProjecDons).

15 More Beneficiaries Drive Growth in Federal Health Care Spending 9 8 Outlays for Medicare, Medicaid, CHIP and exchange subsidies Percentage of GDP Federal Health Care Spending Aiributable to Health Care InflaHon Federal Health Care Spending on Projected Beneficiaries Source: CBO 2016 Long-Term Outlook & Concord CoaliDon Analysis.

16 U.S. an Outlier on Spending Vs. Life Expectancy

17 America is on an Unsustainable Fiscal Path Debt Held by the Public, as a Percent of GDP, Historical Projected As a Percentage of GDP World War II 106% % Source: Congressional Budget Office.

18 Real GNP Per Person (In Thousands of Dollars) Higher Debt Leads to Lower Incomes Per-person size of the economy grows with deficit reduchon. CBO IllustraHve Deficit ReducHon Plan Extended Baseline with Economic Feedback AlternaHve Scenario with Economic Feedback Source: Congressional Budget Office Long-Term Outlook, June 2015.