Federal Spending Projected for 2023
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Transcript of Federal Spending Projected for 2023
FY 2012 BUDGET
Medicare + Med-icaid21%
Social Security21%
Other Mandatory
15%Interest
7%Defense Discretionary
19%
Non-Defense Discretionary
17%
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Federal Spending Projected for 2023
“Other Health Programs” includes: Health insurance subsidies, exchanges, and related spending; Department of Defense Medicare-Eligible Retiree Health Care Fund (including TRICARE for Life); Children’s Health Insurance Program, and other programs.
Medicare(15%)
Defense(12%)
Medicaid(10%)
Social Security(23%)
Other Mandatory Spending(10%)Domestic Discretionary(12%)
NetInterest(14%)
Other Health Programs(3%)
Source: The Congressional Budget Office. The Budget and Economic Outlook: Fiscal Years 2013 to 2023. February 2013.
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10.8 10.0
17.719.8
7.3
4.7
-0.8
-3.8 -3.8
1.3
19.7
6.0
3.3
9.4
13.5
4.12.1
-2.4
-6.0 -6.2
-1.1
17.3
-8
-4
0
4
8
12
16
20
1965-70 1970-75 1975-80 1980-85 1985-90 1990-95 1995-00 2000-05 2005-10 2010-15 2015-20
Source: “The Budget and Economic Outlook Fiscal Years 2013 to 2023: Congressional Budget Office, February 2013” plus historical data.
Nominal Growth Real Growth in 2005 $% Growth
Growth in Net InterestAverage Annual Growth, 5-year periods (1965 – 2020)
FY 1980 – FY 2020(Outlays in Billions of Dollars)
Major Components of the Budget
$590.9$946.4
$1,253.1$1,515.8
$1,789.2
$2,472.2
$3,518.2 $3,523.5
$4,105.0
$5,250.0
Source: CBO, Budget & Economic Outlook:Projections: Fiscal Years 2013 to 2023. February 2013.
AGING OF POPULATION AND RISING HEALTH CARE COST IMPACT ON FEDERAL SPENDING• Explaining Projected Growth in Federal Spending on Major Health Care Programs
and Social Security by 2037 (Percent)
• Aging Excess Cost Growth
Extended Baseline Scenario
Health Care and Social Security
75 25
Health Care 60 40
Extended Alternative Fiscal Scenario
Health Care and Social Security
68 32
Health Care 52 48
Source: The 2012 Long-Term Budget Outlook, Congressional Budget Office, June 2012.
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Fantasy 1: We can save enough in the rest of the budget to pay for the projected growth in entitlements.
2012 2020 2030 2040 20500%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%Major Entitlement Programs*Discretionary Spending
Entitlements and Discretionary Spending, as a Percent of GDP, If the Projected Growth in Entitlement Spending Is Paid for Entirely by Cutting Discretionary Spending, 2012-2050
*Social Security, Medicare, Medicaid, CHIP, and exchange subsidiesSource: CBO Alternative Fiscal Scenario (CBO, 2012) and CSIS calculations
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Fantasy 2: We can raise taxes enough to pay for the projected growth in entitlements.
Series10%
20%
40%
60%
80%
100%
120%
140%
160%
180%
65%
102%
169%
Required Percentage Increase in the Income Tax Burden for Different Groups of Taxpayers If the Pro-jected Growth in Entitlements from 2010 to 2030 is Paid for Entirely by Raising Income Taxes
Source: CBO Alternative Fiscal Scenario (2012) and CSIS calculations
Increase If Taxes Are Raised for Everyone
Increase for the Top 5 Percent of Taxpayers If Taxes Are Only Raised for the Top 5 Percent
Increase for the Top 1 Percent of Taxpayers If Taxes Are Only Raised for the Top 1 Percent
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ABSENT REFORMS, DEBT IS SET TO SKYROCKET IN THE COMING DECADES
19721975
19781981
19841987
19901993
19961999
20022005
20082011
20142017
20202023
20262029
20322035
20382041
20442047
20500%
50%
100%
150%
200%
250%
% o
f GDP
Note: Unlike current law, the Bipartisan Policy Center’s Plausible Baseline assumes that the 2001, 2003, and 2010 tax cuts are extended, the AMT is indexed to inflation, Medicare’s physician payment rates are maintained at their current rate (the “doc fix”), the looming sequester from the Budget Control Act of 2011 is lifted, and troops stationed overseas decline to 45,000 by 2015
Debt breaches 100% of GDP in 2027
Sources: Congressional Budget Office (January 2012) and Bipartisan Policy Center extrapolations
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REACHING THE DEBT LIMIT – WHAT IT MEANS 9
Layers of Defense Against DefaultThe Treasury Department has multiple means that can be used to pay the nation’s bills. If the debt limit is reached and Congress does not act in time, however, all of these layers of defense will be breached and the nation will default on its obligations.
ISSUE NEW DEBT TO THE PUBLIC IN TRADITIONAL MANNER
EXTRAORDINARY MEASURES
DAILY REVENUE AND CASH ON HAND
DEFAULT ON FINANCIAL OBLIGATIONS
Debt Limit Reached
EM Exhausted
The X Date
The Appropriations & Budget Process
House Authorizing Committees:AgricultureEducation and LaborEnergy and CommerceFinancial ServicesForeign AffairsGovernment ReformHomeland SecurityHouse AdministrationJudiciaryNatural ResourcesScience & TechnologySelect IntelligenceSmall BusinessTransportation & InfrastructureVeterans’ AffairsWays & MeansSelect Energy Ind. & Global Warming
Senate Authorizing Committees:Agriculture, Nutrition & ForestryArmed ServicesBanking, Housing & Urban AffairsCommerce, Science & TransportationEnergy & Natural ResourcesEnvironment & Public WorksFinanceForeign RelationsHealth, Education, Labor & PensionsHomeland Security & Government AffairsIndian AffairsJudiciaryRules & AdministrationSelect IntelligenceSmall BusinessSpecial AgingVeterans’ Affairs
16 House & 16 SenateAuthorizing Committees•Hold hearings
16 House & 16 SenateAuthorizing Committees•Each holds a markup & reports out authorization legislation
House and Senate Floors•Consider amendments•Votes to pass each authorization bill and sent to conference
Authorization Bill Conference Report•House and Senate vote to adopt conference report and send to President for signature
White House•Signed by President or allowed to become law without signature
Laws•Setting mandatory spending revenue levels•Setting levels authorized to be appropriated
The White HousePresident’s Budget
House & Senate Appropriations Committees (12)Agriculture and Rural DevelopmentFood and Drug Administration,Commerce, Justice and ScienceDefenseEnergy & Water DevelopmentFinancial ServicesHomeland Security Interior and Environment Labor, HHS and EducationLegislative BranchMilitary Construction and Veterans AffairsState and Foreign Operations Transportation, Treasury andHousing & Urban Development
House & Senate Budget Committees•Hold Hearings
House & Senate Appropriations Committees•Views & estimates•Full committees make 302 (b) suballocations to their respective 12 subcommittees
Executive Branch Congressional Budget Office Authorizing Committees Budget Committees Appropriations Committees
CBO•Reestimates President’s Budget•Baseline
House & Senate BudgetCommittees•Each Committee holds a markup and reports out the concurrent resolution on the budget
Budget Resolution Conference Report•House & Senate vote to pass conference report•Conference report includes: 302 (a) spending allocations; reconciliation instructions
House & Senate Floors•Consider amendments•Votes to pass the Budget Resolution
House & Senate Budget Committees•Package Reconciliation language from Authorizing Committees•Report Out reconciliation bill
House & Senate Floors•Consider Amendments•Pass Reconciliation bill and send to conference
Reconciliation Bill Conference Report•House & Senate vote to adopt conference report and send to President for signature
White House•Signed by President or allowed to become law without signature
White House•Vetoed by President Bill Returned to House of origin
House & Senate•Requires 2/3 vote to override vote in each chamber
White House•Vetoed by President Bill Returned to House of origin
House & Senate•Requires 2/3 vote to override veto in each chamber
12 House & Senate AppropriationsSubcommittees•Hold Hearings
12 House & Senate Appropriations Subcommittees•Each holds a markup & reports out appropriations legislation
House & Senate Floors•Consider amendments•Vote to adopt 12 appropriations bills and send to conference
Appropriations bill Conference Reports•Adopt 12 conference reports and send to President for signature
White House•Signed by President or allowed to become law without signature
White House•Vetoed by President Bill Returned to House or origin
House & Senate•Requires 2/3 vote to override in each chamber
Continuing Resolution (CR) Needed if:•Failure to pass 12 appropriations bills•Failure to overturn a veto
House & Senate Floors•Consider amendments•Vote to pass the CR and send to conference
CR Conference Committee•House & Senate vote to adopt conference report and sent to President for signature
White House•Signed by President or allowed to become law without signature
White House•Vetoed by President Bill Returned to House of origin
House & Senate•Requires 2/3 vote to override in each chamber
$85.3 Billion Sequester 2013
Defense Non-Defense
Discretionary $ 42.6 bn (7.8% reduction)
$ 26.5 bn(5.0% reduction)
Mandatory $ 0.1 bn(7.9% reduction)
$16.2 bn(5.1% /2.0% Medicare reduction)
Total $42.7 bn $42.7 bn
IMPACT OF THE SEQUESTER: 2013 AND 2013 - 21
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2014 2015 2016 2017 2018 2019 2020 2021 2022 20231.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
Historical Av-erage since 1970
Lowest Level since 1970
BCA Caps / Domenici-Rivlin
Chairman Mur-ray's FY14 Budget
Sequester
Chairman Ryan's FY14 Budget
NON-DEFENSE SPENDING UNDER VARIOUS BUDGET PATHS
Fiscal Years
Sources: Congressional Budget Office, Chairman Ryan’s FY 2014 Budget, Chairman Murray’s FY 2014 Budget, BPC Projections
% o
f GDP
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Economic Environment:Economic ForecastsCalendar Years 2012 - 2014
2012Forecast
2013Forecast
2014Real GDP Growth
– Federal Reserve– CBO– Blue Chip–Administration
+ 1.7-1.8%+ 1.9%+1.9%+2.3%
+ 2.3-3.0%
+1.4%+ 2.2%+2.3%
+3.0-3.5%+3.4%+ 2.8%+3.2%
Inflation (CPI)– CBO– Blue Chip– Federal Reserve*–Administration
+1.9%+1.9%
+1.6 – 1.7%+2.1%
+ 1.5%+ 1.9%
+1.3 – 2.0%+2.1%
+2.0%+ 2.2%
+1.5 – 2.0%+2.2%
Unemployment Rate–CBO– Blue Chip– Federal Reserve–Administration
7.8%7.8%
7.8 – 7.9%8.1%
8.0%7.5%
7.4 – 7.7%7.7%
7.6%7.0%
6.8 – 7.3%7.2%
10 Year Note–CBO–Blue Chip–Administration
1.7%1.7%1.8%
2.3%2.2%2.0%
2.9%2.7%2.6%
Sources: Congressional Budget Office, February 2013; Blue Chip Economics Forecasts, January 2013; Federal Reserve December 12, 2012.* Federal Reserve projection of PCE inflation.
House and Senate-Passed FY 2014 Budgets (Deficit Reduction: 2014-2023, billions of $s)
(Reductions from Current Law Baseline*)
House Senate
Sequester $0 ($995)
War & Sandy Hurricane Draw-Downs
$931 $1,230
Taxes $0 $833
Other Mandatory $962 $76
Discretionary $249 $382
Repeal Health Care Law $1,837 $0
Medicare/Medicaid $885 $137
Job Measures $0 ($100)
Subtotal $4,864 $1,536Interest $869 $193
Total $5,733 $1,756
* CBO Current Law Baseline assumes expiring provisions will expire including SGR “Doc” fix; sequester will not be
canceled; war spending and disaster assistance will be maintained at current 2013 level inflation adjusted.
2014 2015 2016 2017 2018 2019 2020 2021 2022 202317.00%
18.00%
19.00%
20.00%
21.00%
22.00%
23.00%
24.00%
Baseline Ryan Murray Administration
<-21% 40 year Historic
Average
Federal Spending: % GDP
Current Policy Baseline, Chairman Ryan , Chairwoman Murray, the Administration: FY 2014 Budget Resolutions
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2014 2015 2016 2017 2018 2019 2020 2021 2022 202316.50%
17.00%
17.50%
18.00%
18.50%
19.00%
19.50%
20.00%
20.50%
Baseline Ryan Murray Administration
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Federal Revenues: % GDP
Current Policy Baseline, Chairman Ryan , Chairwoman Murray, the Administration: FY 2014 Budget Resolutions
<-18% 40 year Historic
Average
2014 2015 2016 2017 2018 2019 2020 2021 2022 202320.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
90.00%
Baseline Ryan Murray Administration
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Federal Debt Held by the Public: % GDP
Current Policy Baseline, Chairman Ryan , Chairwoman Murray, the Administration: FY 2014 Budget Resolutions
<-40% 40 year Historic
Average