Setting the Record Straight
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Setting the Record Straight on Our Nation’s Finances
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Transcript of Setting the Record Straight
Setting the Record Straight on Our Nation’s Finances
Putting The National Debt Into Perspective
The Public Debt Today = 40% of GDP
National High: 1946 = 108% of GDP
National Low: 1974 = 24% of GDP
Sources: Department of the Treasury and Office of Management and Budget
The National Debt Relative to GDP
0
20
40
60
80
100
120
140
1930 1940 1950 1960 1970 1980 1990 2000 2010 2020
% o
f GD
P
Gross Federal Debt Debt Held By the Public
We can’t reduce the debt by starving the nation.
Only by investing in our social and physical infrastructure can we achieve sustained economic growth and as a result reduce the debt
But it Can’t All Be Paid for with Debt The U.S. has one of the lowest tax rates of any industrialized country, but in
recent years it has been spending more than countries with similarly low tax rates.
Source: OECD, http://www.oecd.org/document/61/0,3343,en_2649_34573_2483901_1_1_1_1,00.html
Government Revenues and Spending 2007
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60
70
% o
f G
DP
General government total tax and non-tax receipts General government total outlays
Due to huge tax cuts and wartime spending, the U.S. transformed from one of the most fiscally healthy countries to one of the least.
Fiscal Deficits
-14
-12
-10
-8
-6
-4
-2
0
2
4
6
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
% o
f G
DP
Sw itzerland Canada Italy Japan France Germany United Kingdom United States Euro area Total OECD
Source: OECD, http://www.oecd.org/document/61/0,3343,en_2649_34573_2483901_1_1_1_1,00.html
What is mistakenly called an “entitlements crisis” is actually a genuine health care crisis.
Rapidly rising medical costs, a large uninsured population, and highly uneven care are all urgent, severe problems.
Social Security’s projected shortfall over the next 75 years is just 0.38 Percent of GDP.0.38 Percent of GDP.
That is not a crisis.
The Social Security System
The Projected Shortfall is Less than the Cost of Extending the Tax Cuts of 2001 and 2003
Source: CBPP, http://www.cbpp.org/3-31-08socsec.htm
0.56% 0.60%
1.95%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
Social Security Shortfall Cost of Tax Cuts for theTop 1%
Total Cost of Tax Cuts
Pe
rce
nt o
f G
DP
75-Year Social Security Shortfall and Cost of Making the Bush Tax Cuts Permanent
(as share of GDP)
The aging of the population will cause social insurance programs to grow—but nowhere nearly as much as rising health care costs, if left unchecked.
Source: CBO, http://www.cbo.gov/doc.cfm?index=8877
Effect of Health Care Cost Growth on Future Federal Non-interest Spending
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5.0
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35.0
2000 2010 2020 2030 2040 2050 2060 2070 2080 2090
% o
f G
DP
Social Security Adding Other Non-healthcare, Non-interest Spending
Total Spending, Baseline (Adding Medicare and Medicaid) Total Spending with Healthcare Cost Stabilization
The United States spends a lot more on health care than other advanced nations.
And we still have 46 million people with no health insurance.
Source: OECD, http://www.oecd.org/document/16/0,3343,en_2649_34631_2085200_1_1_1_1,00.html
0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0
Australia
Belgium
Czech Republic
Finland
Germany
Hungary
Ireland
Japan
Luxembourg
Norway
Portugal
Spain
Switzerland
United States
2006 Total expendit. on health % gross domestic product
2006 Medical Spending as a Percent of GDP
Health care spending has also grown much faster in the U.S. than it has in other countries over the past few decades.
0 1 2 3 4 5 6 7 8 9
Ireland
Sw eden
Finland
Canada
Japan
Greece
United Kingdom
Luxembourg
Norw ay
Iceland
Germany
Austria
Spain
France
Sw itzerland
Belgium
Portugal
United States
Increase as percent of GDP
Increase in Health Care Cost as a Percent of GDP, 1970 to 2006
Source: OECD, http://www.oecd.org/document/16/0,3343,en_2649_34631_2085200_1_1_1_1,00.html
If trends continue, health care will absorb about half of all spending in the economy within 75 years.
This is not a Medicare or Medicaid problem—it is a system-wide problem.
Source: CBO, http://www.cbo.gov/doc.cfm?index=8758
0.0
10.0
20.0
30.0
40.0
50.0
60.0
Year
Medicare Medicaid All Other Health Care
Projected Health Care Spending as Percent of GDP
Private employers and families are suffering from rapidly rising health care costs.
119% increase
Source: Kaiser Family Foundation, http://facts.kff.org/chart.aspx?ch=706
117% increase
$5,791
$12,680
Those who say Medicare spending increases are not sustainable are right. In recent years, the nation’s Medicare bill has been growing by 6-7% annually—far faster than workers’ wages.
The same is true for private health care spending.
Source: CMS, http://www.cms.hhs.gov/NationalHealthExpendData/downloads/tables.pdf
0
5
10
15
20
25
Per
en
rolle c
han
ge (
%)
Medicare Private Insurance
Changes in Spending per Enrollee, Medicare and Private Insurance
Peter Orszag, director of the Office of Management and Budget, says, “The gains from higher health care spending are not clear…Substantial evidence exists that more expensive care does not always mean higher quality care.”
The Relationship Between Quality and Medicare Spending, by State, 2004
Source: Congressional Budget Office, http://www.cbo.gov/ftpdocs/90xx/doc9016/03-03-2008-NABE.pdf
