Where We Were 1
Trump Entered Office With Debt At Post WWII Record-High Levels 120% 100% Percent of GDP Truman 103% 80% Trump 77% 60% Bush Obama 40% 20% Eisenhower JFK Johnson Nixon Ford Carter Reagan Clinton Bush 0% 1940 1950 1960 1970 1980 1990 2000 2010 2020 Axis Title Sources: Congressional Budget Office, Office of Management and Budget, and the Committee for a Responsible Federal Budget. 4
Deficits Were Already High and Rising $1,600 $1,400 Billions 2009, $1,413 2027, $1,463 $1,200 $1,000 $800 $600 2016, $585 2017, $666 2022, $1,027 $400 2004, $413 $200 $0 2002 2007 2012 2017 2022 2027 3 Sources: CBO June Baseline, CRFB calculations.
Major Trust Funds Were Heading Toward Insolvency Trust Fund Exhaustion Date (CBO Est)* Highway Trust Fund (combined) 2021 Medicare Hospital Insurance Trust Fund Social Security Disability Insurance Fund Social Security Old Age & Survivors Insurance Trust Fund Addendum: Theoretical Combined Social Security Trust Funds 2025 2023 2031 2030 Annual Deficit In Exhaustion Year $18 billion (0.1% of GDP) $62 billion (0.2% of GDP) $31 billion (0.1% of GDP) $530 billion (1.6% of GDP) $510 billion (1.6% of GDP) Percent Cut At Insolvency 32% 13% 17% 29% 25% *The Social Security and Medicare Trustees project similar but somewhat later exhaustion dates 4
Fiscal Space Was Diminishing Fiscal Space Until Debt Reaches Record Set in WWII (Percent of GDP) 5 Sources: CBO, CRFB calculations.
We Just Passed a YUGE Tax Cut 6
Where We Are Now & Where We re Headed 7
Billions of Dollars $1,200 Projected Annual Budget Deficits (Pre- Tax Cuts) $1,000 $800 $600 $666 billion $781 billion $400 $200 $0 2017 2018 2019 2020 Sources: CRFB calculations based on Congressional Budget Office and Joint Tax Committee data.
Billions of Dollars $1,200 Projected Annual Budget Deficits (Post- Tax Cuts) $1,000 $1.05 trillion $800 Tax Cuts and Jobs Act $600 $400 $200 $0 2017 2018 2019 2020 Sources: CRFB calculations based on Congressional Budget Office and Joint Tax Committee data.
Projected Annual Budget Deficits (Post-Tax Cuts, Assuming New Spending) Billions of Dollars $1,200 $1.08 trillion $1,000 Sequester & Disaster Relief $800 $600 $400 $200 $0 2017 2018 2019 2020 Sources: CRFB calculations based on Congressional Budget Office and Joint Tax Committee data.
Billions of Dollars $1,200 $1,000 Projected Annual Budget Deficits (Post-Everything) Tax Extenders, Obamacare Taxes, etc. $1.11 trillion $800 $600 $400 $200 $0 2017 2018 2019 2020 Sources: CRFB calculations based on Congressional Budget Office and Joint Tax Committee data.
IN OTHER WORDS: TRILLION DOLLAR DEFICITS MAY RETURN NEXT YEAR 12
Billions of Dollars Projected Annual Budget Deficits (Post-Everything) $2,100 $1,800 $1,500 $1,200 $900 $600 $300 $1.1 Trillion $1.5 Trillion $0 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Sources: CRFB calculations based on Congressional Budget Office and Joint Tax Committee data.
Billions of Dollars $2,100 $1,800 $1,500 $1,200 $900 $600 $300 Projected Annual Budget Deficits (Post-Everything, With Extensions) Make All Policies Permanent $2.1 trillion $0 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Sources: CRFB calculations based on Congressional Budget Office and Joint Tax Committee data.
IN OTHER WORDS: WE MAY HIT TWO TRILLION DOLLAR DEFICITS BY 2027 15
Percent of GDP 110% Debt-to-GDP Will Rise to Record Levels 108% 100% 90% 98% 97% 96% 91% 80% 70% 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Sources: CRFB calculations based on Congressional Budget Office and Joint Tax Committee data.
Dynamic Scoring Doesn t Change the Picture Much Percent of GDP 110% 105% 100% 90% 97% 96% 95% 91% 80% 70% 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Sources: CRFB calculations based on Congressional Budget Office and Joint Tax Committee data.
Dynamic Scoring Doesn t Change the Picture Much
Deficit Reduction Just Got WAY Harder 60% of GDP 70% of GDP 77% of GDP 90% of GDP Pre-Tax Bill $8.8 trillion $6.0 trillion $4.1 trillion $0.4 trillion Post-Tax Bill $10.1 trillion $7.3 trillion $5.4 trillion $1.7 trillion Post-Everything, All Policies Enacted and Extended $13.4 trillion $10.6 trillion $8.7 trillion $5.0 trillion Total Spending Cuts in President s FY2018 Budget: $3.6 Trillion ($2.9 Trillion, Net) Total Spending Cuts in FY2018 Budget Resolution: ~$4 Trillion (most unspecified) Total Spending Cuts Reconciled in House FY2018 Budget Resolution: $203 Billion Total Spending Cuts & Tax Increases in Final Obama Budget: $4.1 Trillion ($2.4 Trillion, Net) Note: estimates exclude Obamacare changes, which included spending cuts and tax cuts
Percent of GDP 25% Spending and Revenue Are Diverging, Rapidly 24.3% 22% Spending 7.5% 19% 3.5% 16% Revenue 16.8% 13% Pre-TCJA Post-TCJA All Policies Enacted and Extended 10% 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Sources: CRFB calculations based on Congressional Budget Office and Joint Tax Committee data.
Entitlements Are Growing Fast, Interest Costs Are Exploding Percent of GDP 10% 8% 6% Health Care Social Security Discretionary 4% 2% Other Mandatory 0% 2010 2015 2020 2025 2030 2035 2040 Sources: Congressional Budget Office.
Percent of GDP 180% 160% 140% 120% Long-Term Debt Could Get Much Worse Actual Projected All Policies Enacted and Extended Post-TCJA 100% 80% Pre-TCJA 60% 40% 20% 0% 2010 2015 2020 2025 2030 2035 2040 Sources: CRFB calculations based on Congressional Budget Office and Joint Tax Committee data.
We Need a Fiscal Turn-Around 23
Percent of GDP 180% 160% 140% 120% 100% 80% 60% 40% 20% The First Step is to Stop Digging Actual Projected All Policies Enacted and Extended Post-TCJA Pre-TCJA 35% 0% 2010 2015 2020 2025 2030 2035 2040 Sources: CRFB calculations based on Congressional Budget Office and Joint Tax Committee data.
20.0% 19.0% 18.0% 17.0% 16.0% 15.0% 14.0% 13.0% 12.0% 11.0% Revenue as a Percent of GDP We Need WAY More Revenue Current Law Current Law, Tax Cuts Extended Pre-Tax Cuts Revenue Level in Simpson-Bowles "Bipartisan Path Forward" 19.2% 18.4% 17.2% 10.0% 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
Entitlement Reform Is As Important as Ever 120 100 80 Population 65 or Older (in Millions) Actual Projected 95 or Older 85 to 94 60 75 to 84 40 20 65 to 74 0 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070
We re Running Out of Time