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Robert Dacey, Chief Accountant Government Accountability Office USA - IFAC Sovereign Debt Seminar Presentation
Robert Dacey, Chief Accountant Government Accountability Office USA - IFAC Sovereign Debt Seminar Presentation
Robert Dacey, Chief Accountant Government Accountability Office USA - IFAC Sovereign Debt Seminar Presentation
Robert Dacey, Chief Accountant Government Accountability Office USA - IFAC Sovereign Debt Seminar Presentation
Robert Dacey, Chief Accountant Government Accountability Office USA - IFAC Sovereign Debt Seminar Presentation
Robert Dacey, Chief Accountant Government Accountability Office USA - IFAC Sovereign Debt Seminar Presentation
Robert Dacey, Chief Accountant Government Accountability Office USA - IFAC Sovereign Debt Seminar Presentation
Robert Dacey, Chief Accountant Government Accountability Office USA - IFAC Sovereign Debt Seminar Presentation
Robert Dacey, Chief Accountant Government Accountability Office USA - IFAC Sovereign Debt Seminar Presentation
Robert Dacey, Chief Accountant Government Accountability Office USA - IFAC Sovereign Debt Seminar Presentation
Robert Dacey, Chief Accountant Government Accountability Office USA - IFAC Sovereign Debt Seminar Presentation
Robert Dacey, Chief Accountant Government Accountability Office USA - IFAC Sovereign Debt Seminar Presentation
Robert Dacey, Chief Accountant Government Accountability Office USA - IFAC Sovereign Debt Seminar Presentation
Robert Dacey, Chief Accountant Government Accountability Office USA - IFAC Sovereign Debt Seminar Presentation
Robert Dacey, Chief Accountant Government Accountability Office USA - IFAC Sovereign Debt Seminar Presentation
Robert Dacey, Chief Accountant Government Accountability Office USA - IFAC Sovereign Debt Seminar Presentation
Robert Dacey, Chief Accountant Government Accountability Office USA - IFAC Sovereign Debt Seminar Presentation
Robert Dacey, Chief Accountant Government Accountability Office USA - IFAC Sovereign Debt Seminar Presentation
Robert Dacey, Chief Accountant Government Accountability Office USA - IFAC Sovereign Debt Seminar Presentation
Robert Dacey, Chief Accountant Government Accountability Office USA - IFAC Sovereign Debt Seminar Presentation
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Robert Dacey, Chief Accountant Government Accountability Office USA - IFAC Sovereign Debt Seminar Presentation

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Robert Dacey, Chief Accountant Government Accountability Office USA - IFAC Sovereign Debt Seminar

Robert Dacey, Chief Accountant Government Accountability Office USA - IFAC Sovereign Debt Seminar

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  • 1. Long-Term FiscalSustainability – U.S.CaseBob DaceyChief AccountantUS Government AccountabilityOffice
  • 2. Agenda Background Summary and illustrations of fiscal sustainability reporting in the U.S. 2
  • 3. Sustainability ReportingTimeline  1999 – Unaudited sustainability information on social insurance programs initially reported in financial statements (SFFAS 17)  Based on annual Trustee’s Reports  2004–guidance developed for auditing a proposed Statement of Social Insurance  AICPA Statement of Position 04-1 3
  • 4. Sustainability ReportingTimeline 2006 – Statement of Social Insurance becomes audited financial statement (SFFAS 25 and 26)  present value of future revenues and scheduled benefits for social insurance programs (principally Social Security and Medicare),  Unqualified opinions at the agency level in 2006  Unqualified opinions at consolidated level beginning in 2007 4
  • 5. Sustainability ReportingTimeline 2010 – Reporting on comprehensive long-term fiscal projections reporting begins, unaudited for three years (SFFAS 36)  essential to meet reporting objective  helps the reader to determine whether future budgetary resources will likely be sufficient to sustain public services and to meet obligations as they come due  includes all federal programs, including social insurance 5
  • 6. Sustainability ReportingTimeline 2009 and 2010 - Consolidated and Medicare SOSI receive disclaimers of opinion, primarily due to significant uncertainties concerning the achievement of projected reductions in Medicare cost growth 6
  • 7. SFFAS 36 - ComprehensiveLong-term Fiscal Projections Basic Information (RSI for 2010-2012, audited beginning in 2013)  basic financial statement, Long-Term Fiscal Projections for the U.S. Government  present value of projected receipts and non-interest spending  assuming current policy without change  in dollars and as a % of GDP  changes in the present value of projected receipts and non- interest spending from the prior year  fiscal gap - the change in non-interest spending and/or receipts that would be necessary to maintain public debt at or below a target percentage of gross domestic product (GDP). 7
  • 8. SFFAS 36 - ComprehensiveLong-term Fiscal Projections Basic Information (continued)  fiscal gap - the change in non-interest spending and/or receipts that would be necessary to maintain public debt at or below a target percentage of gross domestic product (GDP).  the significant assumptions underlying the projections  factors influencing trends  significant changes in the projections from period to period 8
  • 9. SFFAS 36 - ComprehensiveLong-term Fiscal Projections Disclosures should include an explanation of limitations on long-term fiscal projections, including:  Forward-looking projections require assumptions and estimates relating to future events, conditions, and trends; actual results may differ materially from those that are projected.  Projections are not forecasts or predictions;  Forward-looking projections may also encompass hypothetical future trends or events that are not necessarily deemed probable (for example, the assumed ability to continue issuing new public debt indefinitely). 9
  • 10. SFFAS 36 - ComprehensiveLong-term Fiscal Projections Required Supplemental Information  the projected trends in:  the relationship between receipts and spending  deficits or surpluses  Treasury debt held by the public as a share of GDP  possible results using alternative scenarios  the likely impact of delaying corrective action when a fiscal gap exists (“cost of delay”) 10
  • 11. Table 1: Long Range Projections of Federal Receipts and Spending 75-Year Present Values1 Dollars in Trillions % GDP2Receipts: 2011 2010 Change 2011 2010 Change Social Security Payroll Taxes 39.1 37.8 1.3 4.4 4.4 0.0 Medicare Payroll Taxes 13.0 12.4 0.6 1.5 1.4 0.0 Individual Income Taxes 93.5 90.6 2.9 10.5 10.5 0.0 Other Receipts 34.7 34.4 0.3 3.9 4.0 -0.1Total Receipts 180.2 175.2 5.0 20.3 20.2 0.0Non-interest Spending: Defense Discretionary 28.7 31.0 -2.3 3.2 3.6 -0.4 Nondefense Discretionary 15.4 30.7 -15.4 1.7 3.6 -1.8 Social Security 51.8 49.1 2.6 5.8 5.7 0.1 Medicare Part A3 17.6 17.3 0.4 2.0 2.0 0.0 Medicare Parts B&D4 21.1 20.4 0.7 2.4 2.4 0.0 Medicaid 24.0 24.2 -0.3 2.7 2.8 -0.1 Other Mandatory 28.1 18.8 9.3 3.2 2.2 1.0Total Non-interest Spending 186.7 191.6 -4.9 21.0 22.1 -1.2Non-interest Spending less Receipts 6.4 16.3 -9.9 0.7 1.9 -1.2 11
  • 12. Components of Change in Long-TermProjections (PV - $ trillions)Non-Interest Spending Less Receipts: FY 2010 $16.3Components of Change: Change due to Enacted Legislation (11.0) Change in Economic Assumptions 2.4 Change in Reporting Period 1.0 Change in Technical Assumptions (2.3) Total Change (9.9)Non-Interest Spending Less Receipts: FY 2011 $ 6.4 12
  • 13. Chart 1: History and Current Policy Projections for Receipts andPercent of GDP30 Non-interest Spending 1980-2086282624 Non-interest Spending22 Primary Deficit20 Receipts1816141210 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 13
  • 14. Chart 2: Historical and Current Policy Projections for thePercent of GDP Composition of Non-interest Spending25 Total Receipts20 + Other Non-interest15 + Medicaid + Medicare105 + Social Security Defense/Security0 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 14
  • 15. Chart 3: History and Current Policy Projections forPercent of GDP Debt Held By the Public, 1940-2086350300250200150100 50 Actual 0 1940 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 15
  • 16. Chart 4: History and Current Policy Projections for TotalPercent of GDP Spending, Net Interest, Non-interest Spending, and Total40 Receipts, 1980-208635 Total3025 Net Interest Non-interest Spending20 Total Receipts1510 5 0 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 16
  • 17. Costs of Delaying FiscalConsolidation on Fiscal GapPeriod of Delay Change in Average Primary SurplusNo Delay: Reform in 2012 1.8 percent of GDP between 2012 and 2086Ten Years: Reform in 2022 2.2 percent of GDP between 2022 and 2086Twenty Years: Reform in 2032 2.8 percent of GDP between 2032 and 2086 17
  • 18. Chart 5: The projected primary deficit becomes far deeper if health 10 care costs grow more rapidly than projected under current policy. 5 Current policy with thePrimary Deficit (-) and Surplus (+) as a percent of GDP effect of health reform on long-term Medicare and 0 Medicaid costs -5 -10 Assume Medicare and Medicaid costs rise 1 percentage point faster -15 Assume Medicare and Medicaid -20 costs rise 2 percentage point faster -25 2000 2010 2020 2030 2040 2050 2060 2070 2080 18
  • 19. Chart 6: Projected debt held by the public under varying 600 assumptions for long term interest rate 500 Assume long term interest rate rises byPrimary Deficit (-) and Surplus (+) as a percent of GDP 400 Assume long term interest rate 300 200 Current policy 100 Assume long term interest rate 0 2000 2010 2020 2030 2040 2050 2060 2070 2080 19
  • 20. Questions? 20

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