presented by Jeffrey S. Thiebert, National Grassroots Director THE CONCORD COALITION www.concordcoalition.org

1. Federal Budget Briefing—ASMC PDI 2010 presented byJeffrey S. Thiebert, National Grassroots Director THE CONCORD COALITIONwww.concordcoalition.org

2. About The Concord Coalition The Concord Coalition is a nationwide, non-partisan, grassroots organization advocating generationally responsible fiscal policy. The Concord Coalition was 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. Former Senator Bob Kerrey (D-Ne.) became co-chair of the Concord Coalition in January 2002.

3. Current Fiscal Policy $1,800 $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 $0 In billions of 1996 constant (chain) dollars 1980 1984 1988 1992 1996 2000 2004 2008 2012 2016 Fiscal Years

4. Federal Revenue and SpendingFiscal Year 2009

5. Americans Want to Cut Spending – But Not on the Programs That Cost the Most Source: The Economist/YouGov Poll, April 2010 and Congressional Budget Office, January 2010.

6. Interest Domestic* Defense Other Entitlements Medicare & Medicaid Social Security Composition of Projected FY 2010 Federal Government Revenues and Outlays(Deficit: $1.35 Trillion) Estate & Gift Taxes ($21 billion) Other Taxes Corporate Taxes Social Insurance Taxes Individual Income Taxes Outlays: $3.52 trillion Revenue: $2.18 trillion *Includes all appropriated domestic spending such as education, transportation, homeland security, housing assistance, and foreign aid. Source: CBO January 2010.

7. Social Security, Medicare, & Medicaid as a Percentage of the Federal Budget All other Federal Spending $2.09 Trillion 59% Social Security, Medicare and Medicaid $1.43 Trillion 41% Source: Congressional Budget Office, January 2010.

8. Net Interest Discretionary Mandatory Mandatory spending is consuming a growing share of the budget 1970 1990 2010 62% 31% 40% 45% 39% 55% 7% 15% 6% Source: Congressional Budget Office, January 2010.

9. Outlays of Select Mandatory Spending Programs (FY 2010 Projected) Source: Congressional Budget Office, January 2010.

10. Change in Composition of Discretionary Spending 32% 40% 50% 50% 68% 60% Defense Non-defense Source: Congressional Budget Office, January 2010.

11. Outlays of Select Non-Defense Discretionary Programs (FY 2010 Projected) Education Transportation Housing, Natural Veterans Foreign Aid General Science, Energy & Resources Government Space & Nutrition Asst. Technology *includes ground, air, and water Source: Congressional Budget Office, January 2010.

12. Non-Defense Discretionary Spending as a Percentage of GDP As a Percentage of GDP Source: Congressional Budget Office, January 2010.

13. Defense Discretionary Spending as a Percentage of GDP As a Percentage of GDP Source: Congressional Budget Office, January 2010.

14. Projected Growth in Entitlement Spending far Greater than Defense Spending Source: Government Accountability Office and Congressional Budget Office. 2010.

15. Federal Spending vs. Revenues as a Percent of GDP (FY 1980-2020)CBO March Baseline Compared to the President’s Budget Actual Projected Percentage of GDP Average outlays: 21.0% Average revenues: 18.3%  CBO March 2010 Baseline CBO’s Estimate of the President’s Budget Source: Congressional Budget Office, March 2010..

16. Current Policy Trends Lead to Large Sustained DeficitsFiscal Years 2011-2020 -$6.0 Trillion Deficit Billions of Dollars -$14.6 Trillion Deficit CBO March 2010 Baseline The Concord Coalition Plausible Baseline adds in the effects of the new Health Care Reform law and 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 (including those from the 2009 stimulus package) are extended with AMT relief. Source: Congressional Budget Office, March 2010 and Concord Coalition analysis.

17. Why Deficits Matter • Reduce national savings • Increase dependence on foreign lenders • Increase burden on future generations: • Through rising debt service costs; • By reducing productivity-enhancing investments • Weakened ability to meet contingencies or new challenges

18. Debt Held by the Public as a Percent of GDP 1940-2040 As a Percentage of GDP Source: OMB Historical Tables 2009.

19. Debt Held by the Public as a Percent of GDP 1940-2040 Actual Projected As a Percentage of GDP World War II 108.6% 2010 63.6% Source: GAO Analysis, 2010 and OMB Historical Tables 2010.

20. Percent of Debt Held by the Public Owned by Foreigners(1987-2009) Source: United States Treasury Department, Treasury Bulletin, December 2009.

21. Interest Costs Go Through The Roof Billions of Dollars Source: Congressional Budget Office, Analysis of the President’s Budget, March 2010.

22. Interest Costs Skyrocket Because of Recent Borrowing The simulations assume that discretionary spending grows with the economy and that all expiring tax provisions are extended. Source: Government Accountability Office, April 2008 and Feb. 2010.

23. Americans are living longer and having fewer children Consequently, fewer workers are available to support each Social Security recipient 2029: 2.2 to 1 Today: 3.1 to 1 1960: 5.1 to 1 Source: Social Security Administration, May 2009.

24. America’s Population is AgingPopulation age 65 and Over Percentage of Population Aged 65 and Over Year Source: Social Security and Medicare Trustees’ Report, May 2009.

25. 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 2009.

26. Social Security Cash Deficits Billions of Dollars Source: Congressional Budget Office, March 2010.

27. Social Security and Medicare Part A Cumulative Cash Surpluses and DeficitsIn Constant 2009 Dollars — 2009 through 2085 $147 Billion: Cumulative Social Security Cash Surplus -$28 Trillion: Cumulative Social Security Cash Deficits -$58 Trillion: Cumulative Medicare Part A Cash Deficits In Billions of Constant 2009 Dollars -86 Trillion: Cumulative Social Security and Medicare Part A Cash Deficits 2010 2020 2030 2040 2050 2060 2070 2080 Calendar Year Source: Social Security Trustees’ Report—May 2009 (Intermediate Projections)

28. Medicare Costs Soar in the Coming Decades As a Percentage of GDP Calendar Year General Revenues required to fund the program Income from dedicated taxes, premiums, and state transfers Source: Medicare Trustees’ Report, May 2009.

29. Social Security, Medicare and Medicaid Cost GrowthOutlays as a Percentage of GDP Medicaid Medicare Social Security Source: Government Accountability Office, Feb. 2010.

30. Social Security, Medicare, Medicaid and Interest Consume All Federal Revenues in Less Than 15 Years Percentage of Revenues Year Social Security, Medicare and Medicaid Interest Source: Government Accountability Office, February 2010.

31. Current fiscal policy is on an unsustainable pathFederal Outlays as a Percentage of GDP Interest All Other Spending Medicaid Average tax revenue Medicare Social Security Source: Government Accountability Office, Feb. 2010.

32. Policy Changes Matter Projected Debt Held by the Public as a Percent of GDP Under Alternative Scenarios (2010-2045) Source: Government Accountability Office, Feb. 2010 .