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Comeback America: The Nation’s Fiscal Challenge and A Way Forward

Comeback America: The Nation’s Fiscal Challenge and A Way Forward. November Luncheon The Real Estate Finance Association Stamford, CT November 10, 2011. Hon. David M. Walker Founder and CEO The Comeback America Initiative and Former Comptroller General of the United States.

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Comeback America: The Nation’s Fiscal Challenge and A Way Forward

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  1. Comeback America: The Nation’s Fiscal Challenge and A Way Forward November Luncheon The Real Estate Finance Association Stamford, CT November 10, 2011 Hon. David M. Walker Founder and CEO The Comeback America Initiative and Former Comptroller General of the United States
  2. Selected Key Founding Principles Limited but effective Government. Individual liberty and opportunity Personal responsibility and accountability Rule of law and equal justice under the law Fiscal responsibility and intergenerational equity
  3. Growth of Government 1800 2011 2040 Projected US GDP: $14.65Trillion(Constant 2010 Dollars) US GDP: $8.89Billion(Constant 2010 Dollars) Projected US GDP: $28.54 Trillion(Constant 2010 Dollars) Source: Historical Statistics of the United States, Millennial Edition On Line, Cambridge 2006; CBO, The Budget and Economic Outlook: An Update, August 2011; CBO, CBO’s Long-Term Budget Outlook, Supplemental Data, June 2011. Compiled by TCAII. Note: Federal Spending for 2040 is based on the Alternative Scenario Estimates.
  4. Composition of Federal Spending(% of Total Outlays) 307 % Growth in 2010 Dollars 1970
  5. Federal Spending &the Political Party in Power
  6. Federal Revenues &the Political Party in Power
  7. Historical Receipts and Outlays
  8. Fiscal Gap 2011(After Debt Ceiling Increase)
  9. Federal Debt Burdens
  10. Total Federal Debt Per Capita & the Political Party in Power
  11. Federal Financial Hole(For Fiscal 2000 and 2010) Source: Data from the Department of Treasury, 2010 Financial Report of the United States Government. Note: Estimates for the Actuary’s Alternative Scenario are found in note 26 of the 2010 Financial Report of the United States. Future liabilities are discounted to present value based on a real interest rate of 2.9% and CPI growth of 2.8%. The totals do not include liabilities on the balance sheets of Fannie Mae, Freddie Mac, and the Federal Reserve. Assets of the U.S. government not included. Actuary 2011 alternative scenario estimates for unfunded Medicare liabilities are $37 Trillion (Part A: $8.5; Part B: $21; Part D: $7.5)
  12. Our Fiscal Future
  13. CBO’s Public Debt Projections
  14. America’s Changing Demographics 1960 Total U.S. Population: 179.3 Million 2010 Total U.S. Population: 308.7 Million 2050 Total U.S. Population: 439 Million Source: U.S. Census Bureau, Age and Sex Composition: 2010, 2010 Census Briefs, May 2011; U.S. Census Bureau, Population Division, 2008.
  15. Comparative Debt Burdens
  16. Growing Foreign Depends
  17. Fiscal Fitness Index: Overall Results(Best to Worst) Mexico Israel Slovenia Austria Finland France Spain Germany Belgium Italy United States Hungary Ireland Japan Iceland Portugal Greece Australia New Zealand Estonia Sweden China Luxembourg Chile Denmark United Kingdom Brazil Canada India Poland Netherlands Norway Slovakia Korea Source: CAI & Stanford University’s Schools of International Policy Studies and Public Policy Program, Sovereign Fiscal Responsibility Index. Compiled by TCAII.
  18. Comparative Health Costs
  19. Relative Defense Spending
  20. 2011 Federal Revenue Composition
  21. Progressive Tax System
  22. Effective Tax Rates
  23. State Pension and Health Costs
  24. Taxpayer’s Burden by State (Thousands of Dollars) Wyoming North Dakota Nebraska Utah South Dakota Iowa Montana Arkansas Tennessee Alaska Minnesota Indiana Florida Oregon Arizona Colorado Idaho $ 4.2 $ 4.6 $ 4.7 $ 4.8 $ 5.1 $ 5.7 $ 5.8 $ 6.5 $ 8.2 $ 8.9 $ 9.0 $ 9.7 $ 10.0 $ 11.2 $ 11.6 $ 12.5 $ 12.9 $15.1 $ 6.4 $ 2.5 $ 2.2 $ 0.3 $ 0.4 $ 0.7 $ 0.7 $ 1.2 $ 1.4 $ 1.9 $ 2.3 $ 2.5 $ 2.6 $ 2.6 $ 2.8 $ 2.9 Nevada Missouri Ohio Virginia Wisconsin Texas Kansas Washington Pennsylvania Georgia New Mexico South Carolina Oklahoma North Carolina New Hampshire Vermont Alabama New York Maine Mississippi Rhode Island Michigan California Delaware Maryland Louisiana West Virginia Massachusetts Kentucky Hawaii Illinois New Jersey Connecticut $ 13.7 $ 14.3 $ 14.3 $ 14.3 $ 14.7 $ 15.1 $ 15.9 $ 16.5 $ 16.8 $ 18.9 $ 20.1 $ 23.8 $ 25.0 $ 26.8 $ 34.6 $ 41.2 Source: 2009, Institute for Truth in Accounting Numbers in red denote burden per taxpayer, Numbers in black denote a surplus per taxpayer
  25. Key Systemic Challenges Expansion of government at all levels Health Care Costs Retirement Income Costs Disability and Welfare Related Costs Critical Infrastructure Needs Education Costs Corrections Costs Outdated and Inadequate Revenue Systems Myopia, Tunnel Vision, Special Interests and Self-Interest.
  26. 4 Myths There are a number of myths about how to solve the Nation’s fiscal problems. The 4 most common are: We can Grow our way out We can Inflateour way out We can Taxour way out We can Cutour way out The simple truth is that none of these by themselves will work and all of them will play a role in order to restore our fiscal sanity. Compiled by TCAII
  27. CAI’s Fiscal Framework Scope of CAI’s Illustrative Fiscal Frameworks: Budget Controls and Process Reforms Social Security Medicare, Medicaid, and Healthcare Defense and Other Spending Comprehensive Tax Reforms Constitutional Amendments
  28. Transforming Government (Basic Questions for Policies & Programs) When & why was it created? Have conditions changed, and have we adapted? How are we measuring success, and are we achieving desired outcomes? Are there multiple programs, and if so are they working in an integrated manner? Are we using the experience of others (e.g., countries, states) to replicate success and avoid mistakes? Can we afford and sustain it in its present form? Compiled by TCAII.
  29. Baselines Matter Source: Congressional Budget Office, Budget and Economic Outlook August 2011. “Current law baseline with automatic cuts” assumes $1.2 in automatic cuts due to the Budget Control Act of 2011 provisions. “Current Policy” Baseline assumes a continuation of certain policies that are not written into current law, including the extension of expiring tax provisions from Bush/Obama tax cuts, indexing the Alternative Minimum Tax for Inflation, maintaining Medicare payment rates, and a reduction in troops deployed for overseas in Afghanistan to 45,000 by 2015. President’s “Adjusted CBO August Baseline” is from “Living Within Our Means and Investing in the Future: The President’s Plan for Economic Growth and Deficit Reduction” September 2011.
  30. The Super Committee The Super Committee must first decide how it will keep score: Current Law Baseline, or Current Policy Baseline It should then focus its recommendations on the following: Meeting or exceeding the established deficit-reduction target Helping generate economic growth and reducing unemployment Facilitating greater deficit-reduction progress from 2012 through 2013
  31. Public Approval of Congress “Do you approve or disapprove of the way Congress is handling it’s job?” 84% Disapproval in August after Debt Ceiling Debate Source: Gallup/Newsweek. Compiled by TCAII.
  32. What Can You Do? Educate others using the Fiscal Facts prepared presentation and notes For further information about: Non-partisan facts and possible solutions on fiscal sustainabilitySign up at The Comeback America Initiative’s websitewww.TCAII.org Providing progress over partisanship sign up atNo Labels websitewww.NoLabels.org Encourage others to check out these sites and sign up Compiled by TCAII.
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