• Share
  • Email
  • Embed
  • Like
  • Save
  • Private Content
Tom Campbell Budget Presentation 5 04 09 Color 1
 

Tom Campbell Budget Presentation 5 04 09 Color 1

on

  • 701 views

Presentation by Tom Campbell, former US Congressman, current Candidate for Governor of California

Presentation by Tom Campbell, former US Congressman, current Candidate for Governor of California

Statistics

Views

Total Views
701
Views on SlideShare
701
Embed Views
0

Actions

Likes
0
Downloads
2
Comments
0

0 Embeds 0

No embeds

Accessibility

Upload Details

Uploaded via as Adobe PDF

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

    Tom Campbell Budget Presentation 5 04 09 Color 1 Tom Campbell Budget Presentation 5 04 09 Color 1 Presentation Transcript

    • Tom Campbell CURRENT U.S. ECONOMIC CONDITIONS & CALIFORNIA'S FISCAL SITUATION Director of Finance, State of California, 2004-5 United States Congressman, 1989-1993; 1995-2001 Member, Joint Economic Committee Member, Banking and Housing Committee Member, International Relations Committee California State Senator, 1993-1995 Chairman, Housing Committee Vice-Chairman, Budget Committee Subcommittee on Education Professor of Law, Stanford University, 1987-2002 Professor of Business, University of California, Berkeley, 2002-present Dean, Haas School of Business, University of California, Berkeley, 2002-2008 Director, Bureau of Competition, Federal Trade Commission, 1981-1983 White House Fellow, Office of the Chief of Staff, 1980-1981 Ph.D., economics, University of Chicago, 1980 (Milton Friedman, advisor), 1980 J.D., magna cum laude, Harvard University, 1976 Law clerk, Judge George E. MacKinnon, U.S. Court of Appeals, Washington, D.C. ('76-'77) Justice Byron R. White, U.S. Supreme Court ('77-'78) Presidential Scholar and Visting Professor, Chapman University, Orange, California, 2008-9 Economic Advisor, Gibson, Dunn & Crutcher tom@campbell.org Tom Campbell 090429.xlsm © 2009 Lucidity™ (fair use permitted) — http://www.painting-with-numbers.com 4/29/2009 3:03 PM p. 1/9
    • COMPARISON OF RECENT RECESSIONS GDP Growth Rates 10% GDP Growth Rate (ann. %) 8% 6% 4% Apr '80 2% Oct '90 0% Oct '01 (2%) -1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 (4%) Apr '08 (6%) (8%) Quarters into Recession Unemployment Rates Unemployment Rate (%) 10.0% Apr '80 8.0% Oct '90 6.0% Oct '01 4.0% Apr '08 CA '08-'09 2.0% 0.0% -3 0 3 6 9 12 15 18 21 24 27 30 33 36 39 Months into Recession Sources: http://www.bls.gov/data/home.htm http://www.lao.ca.gov/laoapp/laomenus/lao_menu_economics.aspx Tom Campbell 090429.xlsm © 2009 Lucidity™ (fair use permitted) — http://www.painting-with-numbers.com 4/29/2009 3:03 PM p. 2/9
    • U.S. HOUSING PRICE TRENDS National Average Home Prices vs. CPI (2000-present) 200 '06q2, 189.93 '08q4, 139.14 Index Value ('00q1 = 100) 150 '08q4, 125.39 100 Case-Shiller Home Price Index 50 Consumer Price Index 0 Quarter Home Prices for Selected U.S. Metropolitan Areas 272 278 Case-Shiller Home Price 250 233 228 215 216 Index ('00q1 = 100) 190 200 167 178 173 145 139 141 150 124 120 134 Jan-00 100 Jun-06 Oct-08 50 0 Dallas New York Chicago Los Angeles San Francisco Miami Las Vegas Phoenix Metropolitan Area Source: http://www2.standardandpoors.com (Case-Shiller Index) Tom Campbell 090429.xlsm © 2009 Lucidity™ (fair use permitted) — http://www.painting-with-numbers.com 4/29/2009 3:03 PM p. 3/9
    • U.S. PRODUCTIVITY & OIL PRICES U.S. Productivity Trends 5.0% Productivity (% chg. vs. previous year) 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% Definition: Productivity = annual output / worker Source: http://www.bls.gov/data/home.htm Price of Oil: Fall in price of oil: 6/30/08 -- $4.06/gal. ─→ 4/20/09 -- $2.06/gal US gasoline consumption: 320.5 million gals./day Annualized savings due to fall in price: $234 billion Compare with June 2008 tax rebate quot;stimulusquot;: $160 billion Source: http://www.eia.doe.gov/ Tom Campbell 090429.xlsm © 2009 Lucidity™ (fair use permitted) — http://www.painting-with-numbers.com 4/29/2009 3:03 PM p. 4/9
    • U.S. GDP & FEDERAL BUDGET OVERVIEW ($ in billions) 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 (E) GDP 10,060 10,378 10,804 11,504 12,245 13,023 13,670 13,807 14,413 14,701 Deficit(Surplus) (86) 32 317 538 568 494 435 344 455 1,800 % of GDP (0.9%) 0.3% 2.9% 4.7% 4.6% 3.8% 3.2% 2.5% 3.2% 12.2% Total Debt 5,792 6,213 6,783 7,379 7,618 8,170 8,680 9,229 10,700 12,000 % of GDP 58% 60% 63% 64% 62% 63% 63% 67% 74% 82% Annual debt service, 2007: $184B Years to pay back federal debt, at current rate, if NO NEW BORROWING: 293 Mandatory part of federal budget: 61% Five-year growth in Medicare: 54% Medicaid: 53% Social Security: 28% Unfunded liabilities (in addition to debt): $58.6 trillion Annualized Growth Rates 2007 2008 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 GDP 0.1% 4.8% 4.8% (0.2%) 0.9% 2.8% (0.5%) (6.2%) Personal consumption 3.9% 2.0% 2.0% 1.0% 0.9% 1.2% (3.8%) (4.3%) Exports 0.6% 8.8% 23.0% 4.4% 5.1% 12.3% 3.0% (23.6%) Residential investment (16.2%) (11.5%) (20.6%) (27.0%) (25.1%) (13.3%) (16.0%) (22.2%) Sources: http://www.treasurydirect.gov.govt/govt.htm http://www.treasurydirect.gov/govt/reports/pd/pd_debtposactrpt_0907.pdf http://www.cbo.gov/ftpdocs/89xx/doc8917/01-23-2008_BudgetOutlook.pdf http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm Tom Campbell 090429.xlsm © 2009 Lucidity™ (fair use permitted) — http://www.painting-with-numbers.com 4/29/2009 3:03 PM p. 5/9
    • THE MONEY SUPPLY -- AN EXERCISE IN BASIC ECONOMICS The Basic Principle: MV = PQ where M = money supply V = velocity of money (i.e., how often money changes hands in a year) P = price level Q = GDP So. . . If the money supply (M) increases, some combination of the following must occur: Comments a. V decreases Significant change very unlikely b. P increases c. Q increases Coming out of a recession, 5% would be tremendous In other words, most of a large increase in the money supply must be absorbed through inflation (P). What has happened to the money supply lately? In the last year, Federal spending not offset by revenue sources has included ($ in billions): Mar-09 1,000 Federal Reserve announces additional spending to purchase mortgages and bonds Mar-09 200 Additional amounts in Federal Budget, not offset Feb-09 280 Federal assistance to Freddie, Mac, Fannie Mae, and individual mortgage holders Feb-09 789 Federal stimulus package Aug-08 350 Federal quot;TARPquot; (another $350 authorized but not yet spent) Jul-08 160 Tax rebate quot;stimulusquot; checks 2,779 Total increase in money supply 8,275 Money supply before the above additions Increase ÷ Current Supply = 34% . . . In other words, the Federal spending listed above will increase the money supply by one-third! Source: http://www.federalreserve.gov/releases/h6/hist/h6hist1.txt Tom Campbell 090429.xlsm © 2009 Lucidity™ (fair use permitted) — http://www.painting-with-numbers.com 4/29/2009 3:03 PM p. 6/9
    • CALIFORNIA'S FISCAL SITUATION California State Gov't Revenues & Expenditures (in $ billion) 102.6 103.6 104.5 101.4 100.0 93.5 91.6 95.5 93.2 80.6 82.2 81.8 78.1 76.8 77.5 76.9 76.3 80.0 71.4 72.3 60.0 Revenue 40.0 Expenditures Surplus(Deficit) 20.0 3.1 0.5 0.4 1.9 0.0 (1.0) (6.6) (4.5) (5.9) (20.0) (11.3) 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 (E) Annual debt service: $3.4 billion Total debt: $63 billion. Years to pay off, at current rate, IF NO NEW BORROWING: 84 years Mandatory part of California budget: 60% Unfunded liabilities (in addition to debt): $99 billion (low estimate) If we adjusted Gov. Gray Davis' First Budget for Inflation and Population since then—and spent no more – we'd be balanced today! 1998 2008 Expenditures in CA state budget $57.8 $103.6 Population 33.3MM 38.0MM Take $57.8 billion. Express it in 2009 dollars: $74.9 billion. Increase it by percentage growth of population since 1998: $85.5 billion Total revenue est. 2008-09: $93.2 billion! ($87.5 excl. transfers/carryforwards) Sources: http://www.lao.ca.gov/laoapp/laomenus/lao_menu_economics.aspx http://www.taxfoundation.org/taxdata/show/228.html http://articles.moneycentral.msn.com/Taxes/Advice/PropertyTaxesWhereDoesYourStateRank.aspx Tom Campbell 090429.xlsm © 2009 Lucidity™ (fair use permitted) — http://www.painting-with-numbers.com 4/29/2009 3:03 PM p. 7/9
    • CALIFORNIA STATE TAXES, COMPARED TO OTHER STATES State Tax Levels, by type of tax CA MA 10.0% 9.6% 9.5% 5,000 CA OR CA 9.0% CA 8.8% AZ NY 8.3% NV 8.0% 7.7% 4,000 AZ NY OR 7.0% OR 7.1% NV 6.5% TX 6.6% NY MA TX 6.3% 3,076 AZ 2,974 6.0% MA 5.6% 3,000 NY AZ 5.3% MA 5.0% 5.0% CA MA NY 2,278 OR TX 4.0% 1,910 1,926 4.0% 2,000 NV 1,445 AZ 1,133 2.0% 1,000 NV TX OR NV TX 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% - Income Tax State Sales Tax Business Tax Property Tax (top rate) (excl. cities) (median $ pmt.) California ranks . . . -- among -- Type the 7 All of states 50 Tax shown States Income #1 #1 Sales #1 #1 Business #2 #8 Property #3 #10 Note: California's property tax rate ranks 45th, but its median property tax paid ranks 10th, because of the higher cost of real estate Sources: http://www.lao.ca.gov/laoapp/laomenus/lao_menu_economics.aspx http://www.taxfoundation.org/taxdata/show/228.html http://articles.moneycentral.msn.com/Taxes/Advice/PropertyTaxesWhereDoesYourStateRank.aspx http://www.taxfoundation.org/files/bp58.pdf (Table 8) Tom Campbell 090429.xlsm © 2009 Lucidity™ (fair use permitted) — http://www.painting-with-numbers.com 4/29/2009 3:03 PM p. 8/9
    • DISTRIBUTION OF U.S. INCOME & TAX PAYMENTS Share of Individual Income & Taxes Paid (2000 Data) 100.0% 80.0% Cumulative Share (%) 60.0% U.S. Income Federal Taxes Paid CA Taxes Paid 40.0% quot;Uniformquot; 20.0% 0.0% 0% 20% 40% 60% 80% 100% Percentile of Income (e.g., 5% means top 5% of earners) California state personal income taxes: 50% is paid by the top 3% of households 70% is paid by the top 9% 93% is paid by the top one-third Sources: “Effective Federal Tax Rates 1997 to 2000,” CBO (August 2003) p. 27 (data for 2000) quot;California's Tax System: A Primer,quot; LAO (2001) chapter 2, p. 3 Tom Campbell 090429.xlsm © 2009 Lucidity™ (fair use permitted) — http://www.painting-with-numbers.com 4/29/2009 3:03 PM p. 9/9