The FY 2015 "Budget": The Proposals and Real Reform
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Transcript of The FY 2015 "Budget": The Proposals and Real Reform
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The FY 2015 “Budget”
The Proposals and Real Reform
Dr. Jason J. Fichtner
Senior Research Fellow
Mercatus Center
April 15, 2014
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What we’re going to discuss today:
• Where we are: CBO baseline – past, present and future
• FY15 “budgets”
• What’s driving our fiscal condition
• The real bottom line
• Let’s discuss budget process reform
Overview
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CBO’s Baseline Projection - 2012
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CBO’s Baseline Projection - 2013
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FY 2014 Budget Deal
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CBO’s Baseline Projection - 2014
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1974 1979 1984 1989 1994 1999 2004 2009 2014 2019 2024
perc
en
tag
e o
f G
DP
Total Revenues and Outlays, 1974–2024
Actual Projected
Outlays
Revenue
Source: CBO ( February 2014).
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FY 2015 “Budgets”
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U.S. Government Debt
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The True Picture of U.S. Debt - Unfunded Liabilities
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The Real Source of the Problem
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Defense and Non-Defense Spending Squeezed as
Autopilot Programs Explode
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Medicare/Medicaid and Social Security
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Medicare Costs Over Time
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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
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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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Can We Grow Our Way Out of Debt
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How Can We Balance the Budget
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Budget Policy is Backwards – Opposite of Family Budgeting – Policy drives Budget; Not Budget drives Policy
Entitlements take up 2/3 of Budget – not much discretionary budgeting left
If Congress wants to spend…it will spend
Budget Games: PAYGO / CUTGO – 2nd best solutions
Scorecard to Zero
Emergency Spending
Phase-In, Phase-Out, Expiration
Earmarks
Balanced Budget Amendment?
Need for 2-Year Budget?
Truth in Accounting?
Bring Back Earmarks?
Sunsets?
Budget for Entitlements?
Revisit 1974 Budget Act?
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Observations and Possible Reforms
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Previous Capitol Hill Campus Events on the Budget by Dr. Fichtner
2011: http://mercatus.org/video/making-federal-budget
2012: http://mercatus.org/video/behind-numbers-understanding-presidents-fy-2013-budget-submission-congress
2013: http://mercatus.org/podcast/2013/04/30/fy-2014-budget-proposals-and-where-we-go-here (podcast)
All Videos: http://mercatus.org/video/author/1000998
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Any Questions???
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