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Congressional Budget Office
Overview of the Federal Budget
April 25, 2014
Barry Blom
Principal Budget Analyst, Projections...
1C O N G R E S S I O N A L B U D G E T O F F I C E
CBO’s History and Mission
■ Formed under the Congressional Budget and I...
2C O N G R E S S I O N A L B U D G E T O F F I C E
CBO’s Organization and Staffing
■ CBO has about 225 full-time employees...
3C O N G R E S S I O N A L B U D G E T O F F I C E
CBO’s Responsibilities
CBO Helps Congress to:
■ Develop a budget plan
■...
4C O N G R E S S I O N A L B U D G E T O F F I C E
CBO’s Products
■ Annual baseline
■ Analysis of the President’s budget
■...
5C O N G R E S S I O N A L B U D G E T O F F I C E
What CBO Does Not Do
■ Make policy recommendations
– Strictly nonpartis...
6C O N G R E S S I O N A L B U D G E T O F F I C E
Budget Totals, 2009, 2013 - 2015
Billions of Dollars Percentage of GDP
...
7C O N G R E S S I O N A L B U D G E T O F F I C E
Total Deficits or Surpluses
(Percentage of gross domestic product)
1974...
8C O N G R E S S I O N A L B U D G E T O F F I C E
Total Revenues and Outlays
(Percentage of gross domestic product)
1974 ...
9C O N G R E S S I O N A L B U D G E T O F F I C E
GDP and Potential GDP
(Trillions of 2009 dollars)
10C O N G R E S S I O N A L B U D G E T O F F I C E
Actual Values and CBO’s Projections of Key Economic
Indicators (as of ...
11C O N G R E S S I O N A L B U D G E T O F F I C E
Revenues, by Major Source
(Percentage of gross domestic product)
1974 ...
12C O N G R E S S I O N A L B U D G E T O F F I C E
Revenues, Tax Expenditures, and Selected
Components of Spending in 201...
13C O N G R E S S I O N A L B U D G E T O F F I C E
Projected Spending in Major Budget Categories
(Percentage of gross dom...
14C O N G R E S S I O N A L B U D G E T O F F I C E
Spending and Revenues Projected in CBO’s Baseline,
Compared with Level...
15C O N G R E S S I O N A L B U D G E T O F F I C E
Projected Debt Held by the Public and Net Interest
Outlays
(Billions o...
16C O N G R E S S I O N A L B U D G E T O F F I C E
Federal Debt Held by the Public
(Percentage of gross domestic product)...
17C O N G R E S S I O N A L B U D G E T O F F I C E
Why Does Rising Federal Debt Matter?
■ High interest costs boost budge...
18C O N G R E S S I O N A L B U D G E T O F F I C E
Population Age 65 or Older as a Share of the Population
Ages 20 to 64
...
19C O N G R E S S I O N A L B U D G E T O F F I C E
Spending for Social Security Under CBO’s
Extended Baseline
(Percentage...
20C O N G R E S S I O N A L B U D G E T O F F I C E
Federal Spending on Major Health Care Programs, by
Category, Under CBO...
21C O N G R E S S I O N A L B U D G E T O F F I C E
Conclusion
Given the aging of the population and rising costs for heal...
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Overview of the Federal Budget

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Presentation by Barry Blom, CBO Analyst, to the Maryland Association of CPAs, Inc.

Transcript of "Overview of the Federal Budget"

  1. 1. Congressional Budget Office Overview of the Federal Budget April 25, 2014 Barry Blom Principal Budget Analyst, Projections Unit This presentation provides 10-year budget projections published in Updated Budget Projections: 2014 to 2024 (April 2014), www.cbo.gov/publication/45229, economic forecasts from The Budget and Economic Outlook (February 2014), www.cbo.gov/publication/45010, and longer term budget projections based on 10-year budget projections from May 2013 from The 2013 Long-Term Budget Outlook (September 2013), www.cbo.gov/publication/44521. Presentation to the Maryland Association of CPAs, Inc.
  2. 2. 1C O N G R E S S I O N A L B U D G E T O F F I C E CBO’s History and Mission ■ Formed under the Congressional Budget and Impoundment Control Act of 1974 ■ Provides objective, timely, and nonpartisan analysis for budget and economic decisions ■ Most work supports the activities of committees rather than individual Members of Congress
  3. 3. 2C O N G R E S S I O N A L B U D G E T O F F I C E CBO’s Organization and Staffing ■ CBO has about 225 full-time employees. ■ The director is appointed by the Speaker of the House and the President pro tempore. ■ The director appoints all CBO staff based solely on professional competence, not political affiliation. ■ Over 70 percent of CBO’s professional staff have advanced degrees in economics, public policy, or a related field.
  4. 4. 3C O N G R E S S I O N A L B U D G E T O F F I C E CBO’s Responsibilities CBO Helps Congress to: ■ Develop a budget plan ■ Stay within its budget plan ■ Assess the impact of federal mandates ■ Consider issues related to the budget and to economic policy
  5. 5. 4C O N G R E S S I O N A L B U D G E T O F F I C E CBO’s Products ■ Annual baseline ■ Analysis of the President’s budget ■ Cost estimates ■ Scorekeeping tabulations ■ Long-term budget outlook ■ Budget options ■ Reports and testimony on budget and economic issues
  6. 6. 5C O N G R E S S I O N A L B U D G E T O F F I C E What CBO Does Not Do ■ Make policy recommendations – Strictly nonpartisan; no judgments about a legislative proposal’s merits ■ Write legislation – Instead evaluates different proposals and options ■ Implement programs and regulations and enforce budget rules – The executive branch does that ■ Audit spending or receipts – GAO does that
  7. 7. 6C O N G R E S S I O N A L B U D G E T O F F I C E Budget Totals, 2009, 2013 - 2015 Billions of Dollars Percentage of GDP Actual, 2009 Actual, 2013 Baseline Actual, 2009 Actual, 2013 Baseline 2014 2015 2014 2015 Total Revenues 2,105 2,775 3,032 3,305 14.6 16.7 17.6 18.2 Total Outlays 3,518 3,455 3,523 3,774 24.4 20.8 20.4 20.8 _______________________________________ _______________________________________ _______________________________________ _______________________________________ _______________________________________ _______________________________________ _______________________________________ _______________________________________ Total Deficit -1,413 -680 -492 -469 -9.8 -4.1 -2.8 -2.6
  8. 8. 7C O N G R E S S I O N A L B U D G E T O F F I C E Total Deficits or Surpluses (Percentage of gross domestic product) 1974 1979 1984 1989 1994 1999 2004 2009 2014 2019 2024 -10 -8 -6 -4 -2 0 2 4 Surpluses DeficitsAverage Deficit, 1974 to 2013 (-3.1%) Actual Projected
  9. 9. 8C O N G R E S S I O N A L B U D G E T O F F I C E Total Revenues and Outlays (Percentage of gross domestic product) 1974 1979 1984 1989 1994 1999 2004 2009 2014 2019 2024 0 4 8 12 16 20 24 28 0 4 8 12 16 20 24 28 Outlays Revenues Average Outlays, 1974 to 2013 (20.5%) Average Revenues, 1974 to 2013 (17.4%) Actual Projected
  10. 10. 9C O N G R E S S I O N A L B U D G E T O F F I C E GDP and Potential GDP (Trillions of 2009 dollars)
  11. 11. 10C O N G R E S S I O N A L B U D G E T O F F I C E Actual Values and CBO’s Projections of Key Economic Indicators (as of February 2014)
  12. 12. 11C O N G R E S S I O N A L B U D G E T O F F I C E Revenues, by Major Source (Percentage of gross domestic product) 1974 1979 1984 1989 1994 1999 2004 2009 2014 2019 2024 0 2 4 6 8 10 0 2 4 6 8 10 Social Insurance (Payroll) Taxes Other Revenue Sources Individual Income Taxes Corporate Income Taxes Actual Projected
  13. 13. 12C O N G R E S S I O N A L B U D G E T O F F I C E Revenues, Tax Expenditures, and Selected Components of Spending in 2014 (February 2014 baseline) (Percentage of gross domestic product) Individual Income Tax Revenues Social Insurance Tax Revenues All Other Revenues All Tax Expenditures Medicare Spending Net of Offsetting Receipts Defense Spending Social Security Spending 0 2 4 6 8 10 Corporate Income Tax Expenditures Social Insurance Tax Expenditures Individual Income Tax Expenditures
  14. 14. 13C O N G R E S S I O N A L B U D G E T O F F I C E Projected Spending in Major Budget Categories (Percentage of gross domestic product) 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 0 1 2 3 4 5 6 7 0 1 2 3 4 5 6 7 Major Health Care Programs Social Security Other Mandatory Spending Defense Discretionary Spending Nondefense Discretionary Spending Net Interest
  15. 15. 14C O N G R E S S I O N A L B U D G E T O F F I C E Spending and Revenues Projected in CBO’s Baseline, Compared with Levels in 1974 (Percentage of gross domestic product) 2024 2014 1974 3.7 4.9 5.6 1.0 4.8 5.9 2.7 2.5 2.2 17.7 17.6 18.3 -0.4 -2.8 -3.7 Social Security Major Health Care Programs Total Revenues Deficit 2024 2014 1974 1.4 1.3 3.3 Net Interest Other Mandatory Spending 5.4 3.4 2.7 Defense Discretionary Spending 3.9 3.4 2.5 Nondefense Discretionary Spending 18.1 20.4 22.1 Total Outlays
  16. 16. 15C O N G R E S S I O N A L B U D G E T O F F I C E Projected Debt Held by the Public and Net Interest Outlays (Billions of dollars) 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 0 100 200 300 400 500 600 700 800 900 0 5,000 10,000 15,000 20,000 25,000 Net Interest Outlays (Left scale) Debt Held by the Public (Right scale)
  17. 17. 16C O N G R E S S I O N A L B U D G E T O F F I C E Federal Debt Held by the Public (Percentage of gross domestic product) 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 0 20 40 60 80 100 120 0 20 40 60 80 100 120 Actual Projected
  18. 18. 17C O N G R E S S I O N A L B U D G E T O F F I C E Why Does Rising Federal Debt Matter? ■ High interest costs boost budget deficits and make it more difficult to meet any chosen targets for budget deficits and debt. ■ Crowding out of saving and investment lowers future output and income relative to what would otherwise occur. ■ The ability of the government to respond to future challenges is reduced. ■ The risk of a sharp jump in interest rates (perhaps related to flight from U.S. Treasuries or U.S. assets more generally) is heightened.
  19. 19. 18C O N G R E S S I O N A L B U D G E T O F F I C E Population Age 65 or Older as a Share of the Population Ages 20 to 64 (Percent) 2000 2005 2010 2015 2020 2025 2030 2035 0 10 20 30 40 0 10 20 30 40 Actual Projected
  20. 20. 19C O N G R E S S I O N A L B U D G E T O F F I C E Spending for Social Security Under CBO’s Extended Baseline (Percentage of gross domestic product) 2000 2005 2010 2015 2020 2025 2030 2035 0 1 2 3 4 5 6 7 0 1 2 3 4 5 6 7 Actual Projected
  21. 21. 20C O N G R E S S I O N A L B U D G E T O F F I C E Federal Spending on Major Health Care Programs, by Category, Under CBO’s Extended Baseline (Percentage of gross domestic product)
  22. 22. 21C O N G R E S S I O N A L B U D G E T O F F I C E Conclusion Given the aging of the population and rising costs for health care, attaining a sustainable federal budget will require the United States to deviate from the policies of the past 40 years in some combination of the following ways: ■ Letting revenues rise more than they would under current law ■ Reducing spending for large benefit programs below the projected amounts Changes in spending for other federal activities could affect the magnitude of the changes needed in taxes or large benefit programs, but would not eliminate the need to make such changes.
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