01.06.2009 Tom Presentation

House Budget Committee

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009-$1,000

-$800

-$600

-$400

-$200

$0

$200

$400

History of Budget DeficitsSince 1989

Bush I Clinton Bush II

Budget Deficits/Surpluses in Billions

11/01/2009

A

Debt Held by the Public Nearly Doubled under Bush Administration

Source: U.S. Treasury 01/06/2009

$6.3 Trillion

$3.4 Trillion

B


2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 20192%

3%

4%

5%

6%

7%

8%

9%

10%

11%

10.0%9.6%

7.3%

5.2%

4.7% 4.6% 4.8% 4.8% 4.8%5.3%

5.8%

Realistic Scenario

Latest CBO Estimates Confirm Troubling Fiscal Picture

% of GDP

C


2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 201930%

40%

50%

60%

70%

80%

90%

40.8%

53.4%

61.5%

66.4%68.5% 69.5%

71.3%73.0%

74.8%76.5% 77.5%

79.7%

Realistic Scenario

Projected Deficits Lead to an Ever Rising Public Debt

% of GDP

D


1940

1941

1942

1943

1944

1945

1946

1947

1948

1949

1950

1951

1952

1953

1954

1955

1956

1957

1958

1959

1960

1961

1962

1963

1964

1965

1966

1967

1968

1969

1970

1971

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

0.0

20.0

40.0

60.0

80.0

100.0

120.0

108.6%

79.7%

Realistic Scenario

Debt Held by the Public Is Projected to Reach Levels Not Seen Since World War II

Est

imate

s

% of GDP

E

Net Interest Expenditure Reaches 16.7% of Federal Spending by 2019

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 20193%

5%

7%

9%

11%

13%

15%

17%

5.4% 5.4%

6.7%

8.4%

10.5%

12.9%

14.3%15.0%

15.8%16.4% 16.7%

Percent of Federal Spending

Based on Realistic Scenario

F

Even Very Strong Economic Growth Not Sufficient to Return to Balance in 2019

2019 CBO + 0.5%

Reagan Era CBO + 1.0%

Clinton Era CBO + 2.0%

$0

$200

$400

$600

$800

$1,000

$1,200 $1,110.0

$145.9

$271.0 $295.1

$427.4

$604.0

Note: These are GDP growth scenarios. "CBO + 0.5%" means the real GDP growth CBO has forecasted, plus an added 0.5 percent of real GDP growth in each year after 2013. "Clinton Era" is real GDP growth of 3.7 percent per year over 2010-19; "Reagan Era" is 3.4% real GDP growth per year while "Bush Era" ('01-'06 average only) is 2.4% real growth per year. Scenarios of +2.0% or more additional real growth each year are considered highly unlikely, however.

Amount of Deficit Reduction Needed to

Reach Balance in 2019

Billions of Nominal Dollars

Deficit Reduction From Alternative Economic Growth Paths

G


19401944

19481952

19561960

19641968

19721976

19801984

19881992

19962000

20042008

20122016

20202024

20282032

20362040

20442048

0%

50%

100%

150%

200%

250%

300%

ActualCBPP

Projections

Under Current Policies Debt Will Reach Almost 300% of GDP by2050

Source: CBPP Projections based on CBO Data

Debt as a Share of GDP, 1940-2050

H


0%

5%

10%

15%

20%

25%

30%

35%

205023.5%

Big 3 Programs Plus Net Interest Would Consume All Federal Revenue by 2050

Source: CBO The Long-Term Budget Outlook, June 2009

Net Interest

All Other

Spending

Medicaid

Medicare

Social Security

Program Spending and Revenues as a Share of GDP

I

Revenues


2010 20500%

2%

4%

6%

8%

10%

12%

14%

1.9%3.2%

3.1%

9.0%

Medicare

Fed Medicaid

Program Spending as a Share of GDP

Growth in Health Care Spending Almost Triples Over 40 Years

J


Tax revenues among Organization for Economic Co-operation and Development Countries

K

01.06.2009 Tom Presentation

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Transcript of 01.06.2009 Tom Presentation