The FY 2014 Budget Proposals and Where Do We Go from Here

Dr. Jason J. Fichtner Senior Research Fellow Mercatus Center April 30, 2013

What  we’re  going  to  discuss  today:  •  Where  we  are:  CBO  baseline  –  past,  present  and  future  

•  What’s  driving  our  fiscal  condi?on  •  Comparison  of  FY14  budgets    •  The  real  boFom  line  

Overview

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CBO’s Baseline Projection - 2012

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CBO’s Baseline Projection - 2013

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CBO’s 2013 Outlook: Budget Surplus and Deficit

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U.S. Government Debt

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The Real Source of the Problem

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Medicare/Medicaid and Social Security

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Defense and Non-Defense Spending Squeezed as Autopilot Programs Explode

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Medicare Costs Over Time

State and Federal Medicaid Spending

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Social Security Trust Funds Annual Cash Flows

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Social Security Trust Fund Exhaustion

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Interest Costs Crowd Out Other Government Spending

Source: Peter G. Peterson Foundation http://www.pgpf.org/Special-Topics/Spending-primer.aspx Constant 2009 Dollars based on OMB , GAO and OMB data Author’s Calculations for FY2011

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A Huge Deficit Would Remain, Even If Any One of These Steps Were Taken:

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Source: Office of Management and Budget, The New York Times Based on fiscal year 2010 appropriations and disclosure reports from members of Congress who received spending earmarks for special projects.

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2,000  

2,500  

3,000  

3,500  

4,000  

4,500  

5,000  

5,500  

2010   2011   2012   2013   2014   2015   2016   2017   2018   2019   2020   2021   2022   2023  

$  Billion

s  

Balancing  the  Budget  with  Spending  Restraint  

CBO  Baseline  Revenues  

Revenues  19%  GDP  

Revenues  18%  GDP  

Revenues  17%  GDP  

Spending  Freeze  

1%  Reduc?on  

1%  Spending  

2%  Spending  

Author's  Calcula?ons  based  on  CBO  February  2013  Budget  and  Economic  Outlook.  Revenues  for  2010  -­‐  2012  are  Actual;  Revenues  for  2013  on  based  on  CBO  GDP  figures  are  Author's  Calcula?ons  

 Any  Ques?ons???  

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