Steuerle-Roeper Back-Up Data


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Steuerle-Roeper Back-Up Data

  1. 1. Fiscal Days of Reckoning National Tax Association – 102nd Annual Conference on Taxation Denver, Colorado November 12, 2009 Eugene Steuerle Richard B. Fisher Institute Fellow The Urban Institute To receive Gene’s regular column, “The Government We Deserve,” send an email to: Gene’ Deserve,” Outline The current fiscal mess The health and retirement squeeze Removal of all “give” or “slack” Budget for a declining nation (even if deficits=0) A cautionary note of optimism on projections Some possible solutions
  2. 2. The U.S. Federal Debt (Percentage of GDP) 250 Past Future 200 World War II 150 Great 100 Depression World Civil War War I 50 0 1800 1850 1900 1950 2000 3 SOURCE: PGPF compilation. Projections based upon official government sources. CBO/Elmendorf Slide on Revenues and Outlays Under Policy Alternative to Extend Tax Cuts and Index Alternative Minimum Tax Percentage of GDP 28 Actual Projected 26 Extend Tax Cuts and 24 Index AMT 22 Baseline Outlays 20 Extend Tax Cuts and 18 Index AMT 16 Revenues 14 0 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 3
  3. 3. Federal Debt Held by the Public 120 Percentage of GDP 120 Actual Projected 100 100 Extend Tax Cuts and Index AMT 80 80 60 60 Baseline 40 40 20 20 0 0 1940 1950 1960 1970 1979 1989 1999 2009 2019 4 Effect of Health Reform on the Budget New Revenues and New Spending as a Percent of GDP 2019 Revenues 1.2% Spending 1.0% 0.8% 0.6% 0.4% 0.2% 0.0% House Democrats Senate Finance House Republicans Committee Source: C. Eugene Steuerle and Stephanie Rennane. Calculations based on data from the CBO Budget and Economic Outlook (August 2009) and the US Budget Watch Updated Charts Comparing the Health Reform Bills: Displaying the Fiscal Implications of Reform Plan, November 5, 2009.
  4. 4. Source: Gene Steuerle and Tim Roeper based on A Preliminary Analysis of the President’s Budget and Update of 7 CBO’s Budget and Economic Outlook CBO (March 2009) President Obama’s Budget and Our National Priorities Source: Gene Steuerle and Tim Roeper based on A Preliminary Analysis of the President’s Budget and an Update of CBO’s Budget and Economic Outlook CBO March 2009 8
  5. 5. Federal Social Security, Medicare, and Medicaid Outlays, FY 1940-2080 26.0% 24.0% 22.0% 20.0% P e rc e n ta g e o f G D P 18.0% Medicaid 16.0% 14.0% 12.0% 10.0% Medicare 8.0% 6.0% 4.0% 2.0% Social Security 0.0% 1940 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 Note: Authors used January 2007 CBO data for Social Security, Medicare, and Medicaid through 2017, and grew Social Security and Medicare levels with 2006 Trustees data and Medicaid with 2005 CBO data. 9 Source: C. Eugene Steuerle, Adam Carasso, Gillian Reynolds, The Urban Institute, 2007. 10
  6. 6. 11 Source: PGPF calculations based on data from the Congressional Budget Office and the U.S. Census. 12
  7. 7. Steuerle-Roeper Fiscal Democracy Index Percent of Revenues not Allocated by Previously Elected Officials to Mandatory Programs Officials (Including Interest) Source: Calculations based on data from OMB and CBO. The 2009 data point excludes TARP spending. 13 Real Per Capita Federal Spending Historical Growth: Projected Growth: With and Without Gov’t Expansion 2008- Legislative and Economic 1930-2008 2086 *Assumes 2% real per capita GDP growth, based on the average historical rate from 1977 to 2007. Note: Current and projected government spending excludes the currently debated stimulus package. 14 Source: Gene Steuerle and Tim Roeper. Authors' estimates, based on the Budget of the U.S. Government FY 2009 and past years and the U.S. Census.
  8. 8. A Budget for a Declining Nation? Less saving (long-run) Less work Reduced investment Increased dependence upon foreign lenders Reduced investment in our children 15 Poor Allocation of Retirement & Health Dollars – Regardless of Cost Social Security Increasingly to younger & healthier Threatens elderly well-being later in retirement Health Acute over preventative care Specialization over primary care Chronic care over cures Both Gains in health & longevity shifted into higher costs for younger generations
  9. 9. Why Projections Might be Wrong Health: Constant rates of excess health cost growth Mean constantly DECLINING rates of growth in non-health consumption Retirement Projections generally ignore demand for labor Re-interpreting postwar labor history Is government policy “exogenous” to irresistible pressures? Source: Bureau of Labor Statistics (2008)
  10. 10. Some Solutions Additional work less drop in employment Bundling and voucher-izing health movement away from fee for service Placing budgets on each government program to provide incentives for improvement Reallocating budgets to needs, such as greater anti-poverty protection removal of discrimination against single heads of household relatively more for prevention and primary care