The Federal Budget Now and In the Future presented by Joshua Gordon, Policy Director THE CONCORD COALITION www.concordcoalition.org
America is on an Unsustainable Fiscal Path Debt Held by the Public, as a Percent of GDP, 1790-2050 250 Historical Projected 200 As a Percentage of GDP 150 100 World War II 106% 2016 77% 50 0 1790 1800 1810 1820 1830 1840 1850 1860 1870 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 Source: Congressional Budget Office.
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 2016. Revenues: $3.25 trillion
Deficits Are Projected to Grow Annual Deficits, in Billions of Dollars, 2016-2026 $0 2015 (Actual) 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 -$200 -$400 -$600 -$800 -$1,000 The next President s first budget. -$1,200 -$1,400 Source: Congressional Budget Office, August 2016.
AutomaMc Expenditures Are Consuming a Growing Share of the Budget 1966 1991 2016* 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.
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.
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.
DiscreMonary Spending Will Decline to Record Low Levels Percentage of GDP 7 6 5 4 Defense DiscreHonary Spending Defense 40-year average Defense 40-year low Percentage of GDP 6 5 4 Non-Defense DiscreHonary (NDD) Spending NDD 40-year average NDD 40-year low 3 3 2 1976 1981 1986 1991 1996 2001 2006 2011 2016 2021 2026 2 1976 1981 1986 1991 1996 2001 2006 2011 2016 2021 2026 Source: Congressional Budget Office, January 2016.
Tax Expenditures Are Larger than Major Spending Programs 10 9 8 Percentage of GDP 7 6 5 4 3 2 1 0 Individual Income Tax Revenues Tax Expenditures Social Security Defense Medicare Tax expenditures, individual income tax revenue and selected components of spending, Fiscal 2015. Source: Joint CommiMee on TaxaDon, x-141-15, December 7, 2015 & Congressional Budget Office Budget Office, January 2016.
Interest Costs Are Fastest Growing Spending Category Small Increases in Rates Lead to Significantly Larger Payments. Billions of Dollars 1100 1000 900 800 700 600 500 400 300 200 100 0 AddiHonal Costs With Just a 1% Increase in Rates Projected Interest Costs 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Source: Congressional Budget Office, January 2016.
The Sources of Growth in Federal Spending Change in Outlays as a Percentage of GDP, 2016-2046 5 Growth as a Percentage of GDP 4 3 2 1 0-1 -2 Social Security Medicaid, CHIP, Exchange Subsidies Medicare Interest All Other Spending Source: CBO Long-Term Outlook Extended Baseline, July 2016.
America s PopulaMon is Aging Percentage Change Increase in PopulaHon 90% 80% 70% 60% 50% 40% 30% 20% 10% Age 20-64 Age 65 & Over Increase in Working Age PopulaHon 10% 82% Increase in Over-65 0% Source: 2015 CBO Long-Term Outlook & Concord CoaliDon Analysis 2010-2030
Americans are Living Longer and Having Fewer Children Consequently, fewer workers are available to support each Social Security and Medicare recipient 1960: 5 to 1 2010: 3 to 1 2030: 2 to 1 Source: Social Security Trustees, July 2016.
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 2014 2019 2024 2029 2034 2039 2044 2049 2054 2059 2064 2069 2074 2079 2084 2089 Calendar Year Source: Social Security Trustees, June 2016 (Intermediate ProjecDons).
More Beneficiaries Drive Growth in Federal Health Care Spending 9 8 Outlays for Medicare, Medicaid, CHIP and exchange subsidies Percentage of GDP 7 6 5 4 3 Federal Health Care Spending Aiributable to Health Care InflaHon Federal Health Care Spending on Projected Beneficiaries 2 1 0 2016 2020 2026 2030 2036 2040 2046 Source: CBO 2016 Long-Term Outlook & Concord CoaliDon Analysis.
U.S. an Outlier on Spending Vs. Life Expectancy
America is on an Unsustainable Fiscal Path Debt Held by the Public, as a Percent of GDP, 1940-2050 250 Historical Projected As a Percentage of GDP 200 150 100 World War II 106% 2016 77% 50 0 2050 2045 2040 2035 2030 2025 2020 2015 2010 2005 2000 1995 1990 1985 1980 1975 1970 1965 1960 1955 1950 1945 1940 Source: Congressional Budget Office.
Real GNP Per Person (In Thousands of Dollars) 85 80 75 70 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 82 78 74 65 60 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 Source: Congressional Budget Office Long-Term Outlook, June 2015.