- The Role of the Public Sector in Financial Stability IFAC Annual Council Seminar November 17, 2009...
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Transcript of - The Role of the Public Sector in Financial Stability IFAC Annual Council Seminar November 17, 2009...
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IFAC Annual Council Seminar
November 17, 2009
David M. WalkerPresident and CEO
The Peter G. Peterson Foundationand
Former Comptroller General of the United States
1969 1989 2009
Source: PGPF analysis of Office of Management and Budget data.
Composition of Federal SpendingComposition of Federal Spending
Defense Social Security Medicare & Medicaid
2
Interest All Other Spending
1969 1989 2009
Source: PGPF analysis of Office of Management and Budget data.
Federal Spending for Mandatory and Federal Spending for Mandatory and Discretionary ProgramsDiscretionary Programs
Net Interest Discretionary Mandatory
3
Major Fiscal Exposures($ trillions)
2000 2008
Explicit liabilities $6.9 $12.2 Publicly held debt Military & civilian pensions & retiree
health Other
Commitments & contingencies 0.5 1.3 E.g., PBGC, undelivered orders
Implicit exposures 13.0 42.9 Future Social Security benefits 3.8 6.6
Future Medicare Part A benefits 2.7 12.7
Future Medicare Part B benefits 6.5 15.7
Future Medicare Part D benefits -- 7.9
Total $20.4 $56.4Source: PGPF analysis of 2000 and 2008 Financial Report of the United States Government.Note: Estimates for Social Security and Medicare are at present value as of January 1 of each year and all other data are as of September 30. 2009 Social Security and Medicare Trustees’ reports show implicit exposures totaling $45.8 trillion
4
Potential Fiscal Outcomes Potential Fiscal Outcomes Under Alternative Simulation Under Alternative Simulation
Revenues and Composition of Spending as a Share of GDPRevenues and Composition of Spending as a Share of GDP
Revenue
Source: GAO Fall 2009 analysis.
Percent of GDP
7
Common DenominatorsCommon Denominators
The parallels between our current financial crisis and the federal government’s finances:
–Disconnect between those who benefit and those who pay the price
–Inadequate transparency regarding the nature and magnitude of risks
–Too much leverage, not enough focus on cash flow,and over-reliance on credit ratings
–Failure of normal oversight and risk management mechanisms