Comeback America: The Nation’s Fiscal Challenge and A Way Forward
EventOrganization
LocationDate
Hon. David M. WalkerFounder and CEO
The Comeback America Initiativeand
Former Comptroller General of the United States
2
Insert
3
19601962
19641966
19681970
19721974
19761978
19801982
19841986
19881990
19921994
19961998
20002002
20042006
20082010
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
U.S
. Per
cent
of W
orld
GD
P
U.S. Share of World GDP
Source: World Bank, In Current U.S. Dollars
4
Three Key Management Principles
Plan
Budget
Performance Metrics
Compiled by TCAII.
5
We the People of the United States, in Order to form a more
perfect Union, establish Justice, insure domestic Tranquility,
provide for the common defense, promote the general Welfare,
and secure the Blessings of Liberty to ourselves and our
Posterity, do ordain and establish this Constitution for the United
States of America.
The Federal Government’s Responsibilities
Compiled by TCAII.
6
“The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to
the States respectively, or to the people.”~ The U.S. Constitution
The 10th AmendmentReserved Powers
Compiled by TCAII.
7
• Establish– to institute (as a law) permanently by enactment or agreement
(substantiate) • Insure
– to make certain especially by taking necessary measures and precautions (assure)
• Provide– to take precautionary measures (deliver)
• Promote– To contribute to the growth or prosperity of (advance)
• Secure– Free from risk or loss (confident)
Quick Definitions & (Synonyms)
Compiled by TCAII.
8
• Limited but effective Government
• Individual liberty and opportunity
• Personal responsibility and accountability
• Rule of law and equal justice under the law
• Fiscal responsibility and intergenerational equity
• Stewardship
Selected Key Founding Principles
Complied by TCAII
9
From Projected Surplus to Actual Deficit
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011($2,000)
($1,500)
($1,000)
($500)
$0
$500
$1,000
$1,500
Impact on Baseline of Total Economic and Technical Changes Impact on Baseline of Total Legislative Changes2001 Projected Surplus
Fede
ral S
urpl
us o
r (D
efic
it) in
Bill
ions
of D
olla
rs
Source: Congressional Budget Office, Changes in CBO’s Baseline Projections Since January 2001, June 2012. Compiled by TCAII.
10
23%
Federal Spending
2%
37%
1912 2012 2040
US GDP: $866Billion
(Constant 2012 Dollars)
US GDP: $15.5Trillion
(Constant 2012 Dollars)
Projected US GDP: $30.8 Trillion
(Constant 2012 Dollars)Source: Historical Statistics of the United States, Millennial Edition On Line, Cambridge 2006; CBO, The Budget and Economic Outlook: Fiscal Years 2013 to 2023, Feb. 2013; CBO, CBO’s Long-Term Budget Outlook, Supplemental Data, June 2012; OMB, Historical Tables, Table 10.1. Compiled by TCAII. Note: Federal Spending for 2040 is based on the Alternative Scenario Estimates.
Growth of Government
11
We’ve Lost Control of the Budget
3% 97%
Controlled Yearly
1912
64%36%
Auto Pilot
2012Source: Historical Statistics of the United States, Millennial Edition On Line, Table Ea636–643 Federal government expenditure, by major function: 1789–1970. Congressional Budget Office, The Budget and Economic Outlook: fiscal Years 2013 to 2023, Feb. 2013. Compiled by TCAII.
12
Ability to Cover Mandatory Spending
Projected2013-2023
Source: OMB 2014 Budget, Historical Charts 1.1 and 8.5; CBO Long-Term Budget Projection May 2013
19621964
19661968
19701972
19741976
19781980
19821984
19861988
19901992
19941996
19982000
20022004
20062008
20102012
20142016
20182020
202220%
30%
40%
50%
60%
70%
80%
90%
100%
110%
13
Where the Money Goes1962
National Defense49.1%
International Affairs5.3%
Transporta-tion1.3%Other Dis-
cretionary 11.5%
Social Secu-rity
13.5%
Other Mandatory 12.7%
Net Interest6.5%
Source: OMB, Historical Tables, Table 8.5 & 8.7; BLS. Compiled by TCAII
Total Federal Spending 1962:
$812 Billionin 2012 Dollars
Mandatory28.7%
Discretionary 71.3%
14
Where the Money Goes2012
National De-fense19.1%
International Affairs1.3%
Transporta-tion2.6%
Other Discretionary 13.1%
Social Secu-rity
21.8%
Medicare13.3%
Medicaid7.1%
Other Mandatory
15.5%
Net Interest6.2%
Source: OMB, Historical Tables, Table 8.5 & 8.7. Compiled by TCAII
Total Federal Spending 2012:
$3.5 Trillion
Discretionary 36.1%
Mandatory63.9%
15
Where the Money Goes
National Defense49.1%
Inter-na-
tional Af-fairs5.3%
Transporta-tion1.3%
Other Dis-cre-
tionary
11.5%
So-cial
Secu-rity13.5%Other Mandatory
12.7%Net Interest6.5%
Source: OMB, Historical Tables, Table 8.5 & 8.7; BLS. Compiled by TCAII
Total Federal Spending 1962:
$812 Billionin 2012 Dollars
Mandatory28.7%
1962Discretionary
71.3%
Na-tional
De-fens
e19.1%
In-ter-na-tional
Af-fairs1.3% Other Discretionary
13.1% So-cial Se-cu-rity21.8%
Medi-
care13.3%Medicaid
7.1%
Other
Mandatory 15.5%
Net In-terest6.2%
Source: OMB, Historical Tables, Table 8.5 & 8.7. Compiled by TCAII
Total Federal Spending 2012:
$3.5 Trillion
2012Transporta-tion2.6%Discretionary
36.1%
Mandatory63.9%
16
Federal Spending by President(1977 – 2012)
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
-10%
-5%
0%
5%
10%
15%
20%
25%
30%Republican President Democrat President Growth in Spending
Spen
ding
as a
Per
cent
age
of G
DP
& Y
ear
Ove
r Y
ear
Perc
enta
ge C
hang
e in
Gro
wth
Carter Reagan H.W. Bush
Clinton W. Bush Obama
Source: The Office of Management and Budget, Historical Tables, Table 1.2.Compiled by TCAII.
17
Federal Spending and Revenue Trends
1912 1916 1920 1924 1928 1932 1936 1940 1944 1948 1952 1956 1960 1964 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008 2012$0.0
$500.0
$1,000.0
$1,500.0
$2,000.0
$2,500.0
$3,000.0
$3,500.0
Republican President Democrat President Revenues
Fede
ral G
over
nmen
t Spe
ndin
g In
Tri
llion
s of C
onst
ant 2
012
Dol
lars
Sources: Office of Management & Budget, Historical Tables; Bureau of Labor Statistics; Congressional Budget Office, Long-Term Budget Outlook, June 2012. Compiled by TCAII
18
Federal Revenues and Outlays(Control of Congress and the White House)
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
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000Democratic Controlled Congress Republican Controlled Congress Split CongressRepublican President Democratic President Revenues
Bill
ions
of C
onst
ant 2
010
Dol
lars
Source: OMB, Budget, Historical Tables, Table 1.3—Summary of Receipts, Outlays, and Surpluses or Deficits (−) in Current Dollars, Constant (FY 2005) Dollars, and as Percentages of GDP: 1940–2017; Bureau of Labor Statistics, Inflation Calculator. Compiled by TCAII. Note: 2012 revenues and outlays are based on OMB table estimates for consistency.
19
Spending and Taxes as a Percentage of GDP1970 - 2012
1970197119721973197419751976197719781979198019811982198319841985198619871988198919901991199219931994199519961997199819992000200120022003200420052006200720082009201020112012
15%
17%
19%
21%
23%
25%
Taxes Spending
Tax
es a
nd S
pend
ing
as a
Per
cent
age
of G
DP
Source: OMB, Historical Tables, Table 1.2. Compiled by TCAII.
20
Spending and Taxes as a Percentage of GDP1970 - 2023
19701972
19741976
19781980
19821984
19861988
19901992
19941996
19982000
20022004
20062008
20102012
20142016
20182020
202214.0
16.0
18.0
20.0
22.0
24.0
26.0
Spending Taxes
21
Federal Debt Burdens
September 30th 2000 September 30th 2012$0
$2
$4
$6
$8
$10
$12
$14
$16
$18
$3.4 Trillion35% of GDP
$11.3 Trillion72.5% of GDP
$2.3 Trillion 23% of GDP
$4.8 Trillion30.8% of GDP
Intragovernmental Held Debt Publicly Held Debt
In T
rilli
ons o
f U.S
. Dol
lars
$5.6 Trillion58% of GDP
$16.1 Trillion103.2% of GDP
SOURCE: U.S. Department of Treasury, Bureau of the Public Debt, Debt to the Penny; CBO, Budget and Economic Outlook: 2013-2023, Feb. 2012; OMB, Historical Tables, Table 1.2. Compiled by TCAII.
22
Historical Debt Burden(1800 through 2012)
1800 18081816 1824 1832 1840 1848 1856 1864 1872 1880 1888 1896 19041912 1920 1928 1936 1944 1952 1960 1968 1976 1984 1992 2000 20080%
20%
40%
60%
80%
100%
120%
140%Intragovernmental Debt Public Debt
Perc
enta
ge o
f GD
P
Source: Congressional Budget Office, Long Term Budgetary Outlook 2009, Supplemental Data; Office of Management and Budget, Historical Tables, Table 7.1- Federal Debt at the End of the Year 1940 through 2016. Compiled by TCAII.
23
Federal Debt Composition
1940
1943
1946
1949
1952
1955
1958
1961
1964
1967
1970
1973
1976
1979
1982
1985
1988
1991
1994
1997
2000
2003
2006
2009
2012
0%
20%
40%
60%
80%
100%
120%
140%
Other Debt Held by the Public Debt Held by the Federal Reserve Debt Held by Federal Government Accounts
U.S
. Fed
eral
Deb
t as a
Per
cent
age
of G
DP
Source: Office of Management and Budget, Historical Tables. Compiled by TCAII.
24
Interest on the Debt
1962
1964
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
$500,000
0%
2%
4%
6%
8%
10%
12%
14%
Interest Paid on the Public Debt Interest Paid to the Trust Funds 10 Year Average Annual Yield
Bill
ions
of 2
012
Dol
lars
Inte
rest
Rat
es
Source: Office of Management and Budget, Historical Tables, Table 8.5; Board of Governors of the Federal Reserve System , Federal Reserve Economic Data. Compiled by TCAII.
25
Interest Rate Risk
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
$2,000
$845$616
$430 $476 $535 $605 $710 $798 $854 $957 $978
CBO Feb. 2013 Baseline DeficitBlue Chip EstimateAdditional Interest Expense if Rates went to the 1981-2000 Historical Average
Proj
ecte
d Fe
dera
l Def
icits
in B
illio
ns o
f Dol
lars
Total$848
Total$639 Total
$488
Total$609
Total$764
Total$937
Total$1,127
Total$1,310
Total$1,464
Total$1,673
Total$1,804
Source: Congressional Budget Office, How Different Future Interest Rates Would Affect Budget Deficits, March 2013. Compiled by TCAII. Note: Average interest rate risk from 1981-2000 takes the average of the net interest expense as estimated by CBO for scenario 1 and 2.
26
In Trillions of Dollars 2000 2012
Explicit Liabilities $ 6.9 $18.8
• Publicly Held Debt 3.4 11.3
• Military & Civilian Pensions & Retiree Health 2.8 6.3
• Other Major Fiscal Exposures 0.7 1.2
Commitments & Contingencies 0.5 2.4E.g. Pension Benefit Guaranty Corporation, Undelivered Orders
Trustees’Estimates
Actuary's Alternative Scenario
Social Insurance Promises 13.0 38.5 48.5
• Future Social Security Benefits 3.8 11.3 11.3
• Future Medicare Benefits 9.2 27.2 37.2
Future Medicare Part A Benefits 2.7 5.6 9.9
Future Medicare Part B Benefits 6.5 14.8 20.5
Future Medicare Part D Benefits - 6.8 6.8
Total $20.4 $59.7 $69.7
SOURCE: Data from the Department of Treasury, 2012 Financial Report of the United States Government. Compiled by TCAII.NOTE: Estimates for the Actuary’s Alternative Scenario are found in note 26 of the 2012 Financial Report of the United States. Future liabilities are discounted to present value based on a real interest rate of 2.9% and CPI growth of 2.8%. The totals do not include liabilities on the balance sheets of Fannie Mae, Freddie Mac, and the Federal Reserve. Assets of the U.S. government not included.
Federal Financial Hole(For Fiscal 2000 and 2012)
27
Federal Financial Sink Hole
2000 2012$0
$10
$20
$30
$40
$50
$60
$70
$80
$6.9
$18.8$0.5
$2.4
$3.8
$11.3
$9.2
$37.2
Explicit Liabilities Commitments & Contingencies Social Security Medicare
Tri
llion
s of P
rese
nt V
alue
Dol
lars
SOURCE: Data from the Department of Treasury, 2012 Financial Report of the United States Government. Compiled by TCAII.Note: Actuary’s alternative estimates are used for 2012 Medicare projected benefits cost.
$69.7 Trillion(Your Share $221,400)
$20.4 Trillion(Your Share $72,500)
28
9.0%65+
20.3%45-64
34.8%18-44
35.9%Under 18
14.8%65+
26.1%45-64
35.9%18-44
23.2%Under
181960
Total U.S. Population: 179.3 Million
Source: U.S. Census Bureau, Age and Sex Composition: 2010 & 2012 , 2010 & 2012 Census Briefs, May 2011, Dec. 2012; U.S. Census Bureau, Population Division, 2008. Compiled by TCAII.
2015Total U.S. Population:
321.3 Million
20.9%65+
23.7%45-64
33.9%18-44
21.5%Under
182050
Total U.S. Population: 399.8 Million
Changing Demographics
29
1930
1933
1936
1939
1942
1945
1948
1951
1954
1957
1960
1963
1966
1969
1972
1975
1978
1981
1984
1987
1990
1993
1996
1999
2002
2005
2008
-15%
-10%
-5%
0%
5%
10%
15%
20%
Ann
ualiz
ed P
erce
nt C
hang
e in
Rea
l GD
P
Sources: St. Louis Federal Reserve, Federal Reserve Economic Data, Real Gross Domestic Product (GDPCA), Percent Change from Year Ago, Annual
Historic Annual Economic Growth
30
The Cost of Recession
1 4 7 105
7
9
11
13
15
17
19
Potential GDP GDP
Tri
llion
s of 2
005
Dol
lars
Lost GDP between 2008 and 2016 = $25.1 Trillion
Actual Potential
Source: CBO, The Budget and Economic Outlook, FY 2013 – 2023, Data 2-1
31
The American Workforce
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
61%
62%
63%
64%
65%
66%
67%
68%
0%
2%
4%
6%
8%
10%
12%Participation Rate Unemployment Rate
Lab
or F
orce
Par
ticip
atio
n R
ate
Nat
iona
l Une
mpl
oym
ent R
ate
Source: United States Department of Labor, Bureau of Labor Statistics, Seasonally Adjusted Labor Force Participation Rate, Seasonally Adjusted Unemployment Rate. Compiled by TCAII.
32
1970 1990 20100%
10%
20%
30%
40%
50%
60%
41.1% 40.0%
35.5%
40.1%
49.1%
56.9%
18.9%
10.9%
7.6%
Children under 18 People 18 to 64 People 65 and Older
Perc
enta
ge o
f Tot
al N
umbe
r of
Peo
ple
in P
over
ty
25.4 Million People in Poverty
33.6 Million People in Poverty
46.2 Million People in Poverty
Source: U.S. Bureau of the Census, Current Population Survey, Annual Social and Economic Supplements, Table 15. Compiled by TCAII.
Poverty in the United States
33
1 2 3 4 5 6 7 8 9 10 11 12 1335,000
37,000
39,000
41,000
43,000
45,000
47,000
49,000
51,000
53,000
55,000Periods of Rece...
Med
ian
U.S
. Hou
seho
ld In
com
eIn
201
0 do
llars
Source: U.S. Census Bureau, Current Population Survey, 1968 through 2011 Annual Social and Economic Supplements; National Bureau of Economic Research, U.S. Business Cycle Expansions and Contractions. Compiled by TCAII.
U.S. Median Household Income
34
Income Distribution
Bottom 20% 21-40% 41-60% 61-80% 81-99% Top 1%
7.1
12.2
16.2
22.0
35.1
7.7
5.1
9.2
14.0
19.9
35.6
17.1
1979 2007
Household Income Group Percentiles (Low to High)
Shar
e of
Inco
me
Am
ongs
t Hou
seho
lds
(Afte
r Fe
dera
l Tax
es a
nd T
rans
fers
)
Source: Congressional Budget Office, Trends in the Distribution of Household Income Between 1979 and 2007, October 2011. Compiled by TCAII.
35
Household Income Statement
Per Week
Household Income $ 966
Household Expenses $ 1,496
Household Deficit $ (536)
Overall Household Debt, Liabilities, & Unfunded Promises
Total Household Debt (as of Sept. 30, 2011) $ 314,234
Total Household Liabilities and Unfunded Promises (as of Sept. 30, 2011)
$ 1,391,605
Sources: U.S. Department of Treasury, 2011 Financial Report of the United States Government; U.S. Census Bureau, Quick Facts. Note: Household figures are calculated based proportionally on the Federal Government’s finances using median income. Numbers may not add due to rounding.
If The U.S. was a Household
36
Historical Receipts and Outlays
1914191619181920192219241926192819301932193419361938194019421944194619481950195219541956195819601962196419661968197019721974197619781980198219841986198819901992199419961998200020022004200620082010
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000Receipts per capita Outlays per Capita
Rea
l 201
0 D
olla
rs
SOURCES: OMB Historical Tables, Table 1.3 - Summary Receipts, Outlays, and Surpluses or Deficits (-) in Current Dollars;Bureau of Labor Statistics, and U.S. Census Bureau. Compiled by TCAII.
37
Total Federal Debt Per Capita & the Political Party in Power
1915
1918
1921
1924
1927
1930
1933
1936
1939
1942
1945
1948
1951
1954
1957
1960
1963
1966
1969
1972
1975
1978
1981
1984
1987
1990
1993
1996
1999
2002
2005
2008
2011
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
$45,000
$50,000
Democrat Controlled Congress
Republican Controlled Congress
Split Congress
Republican President
Democratic President
Con
stan
t 201
0 D
olla
rs P
er C
apita
SOURCES: U.S. Census Bureau, U.S. Department of Treasury, U.S. Bureau of Labor Statistics, U.S. House, and U.S. Senate. Compiled by TCAII NOTE: All amounts are adjusted for inflation and in 2010 Dollars. Federal Debt is the total public debt outstanding and intragovernmental holdings.
End of WW2 $ 22,183
As of 9/30/2011 $46,467
38
Comparative Government Debt Burdens
Germany Spain France United Kingdom
United States Portugal Italy Greece0%
20%
40%
60%
80%
100%
120%
140%
160%
82.0% 84.1% 90.3% 90.3%106.5%
123.0% 127.0%
158.5%
0.306
Gen
eral
Gov
ernm
ent G
ross
Deb
t as a
Per
cent
age
of G
DP
Source: IMF, World Economic Outlook, April 2013; U.S. Treasury, Debt to the Penny. Compiled by TCAII. Note: Additional data with dotted line represents intra-governmental holdings for the United States. All figures for 2012.
Total U.S. Debt137.1%
39
Comparative Debt Burdens
China Spain Germany United Kingdom
Canada France United States Italy Greece Japan0%
50%
100%
150%
200%
250%
25.8%
68.5%
81.5% 82.5% 85.0% 86.3%
102.9%
120.1%
160.8%
229.8%
0.312
Deb
t as a
Per
cent
age
of G
DP
Source: IMF, World Economic Outlook, April 2012; U.S. Treasury, Debt to the Penny; OMB, Historical Tables. Compiled by TCAIINote: Additional data with dotted line represents intra-governmental holdings for the United States. .
U.S. Total Debt134.1%
40
Learning from AbroadCanada
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
0%
20%
40%
60%
80%
100%
120%
-4%
-2%
0%
2%
4%
6%
8%
10%
General Government Deficit General Government Surplus General Government Gross Debt
Can
adia
n G
ener
al G
over
nmen
t Gro
ss D
ebt
as a
Per
cent
age
of G
DP
Can
adia
n G
ener
al G
over
nmen
t + D
efic
it or
- Su
rplu
s as
a P
erce
ntag
e of
GD
P
Source: IMF, World Economic Outlook, October 2012. Compiled by TCAII.Note: General Government Deficit is found by taking general government revenue and subtracting general government total expenditure.
1992: S&P cuts rating
1995: 7 to 1Spending Cuts to Revenue Increases
41
Learning from AbroadSweden
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
0%
10%
20%
30%
40%
50%
60%
70%
80%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
General Government Deficit General Government Surplus General Government Gross Debt
Swed
ish G
ener
al G
over
nmen
t Gro
ss D
ebt
as a
Per
cent
age
of G
DP
Swed
ish G
ener
al G
over
nmen
t + D
efic
it or
- Su
rplu
s as
a P
erce
ntag
e of
GD
P
Source: IMF, World Economic Outlook, October 2012; Reinhart, Camen M. and Kenneth S. Rogoff, “From Financial Crash to Debt Crisis,” NBER Working Paper 15795, March 2010. Compiled by TCAII.Note: General Government Deficit is found by taking general government revenue and subtracting general government total expenditure.
(Banking Crisis)1991-1993
42
Growing Foreign Dependency
5%
1970Total Public Debt
$283 Billion19%
Foreign Held Debt1990
Total Public Debt$2,412 Billion
Source: Office of Management and Budget, Historical Tables; Department of Treasury, Major Holders of Treasury Securities, January 16, 2013, Debt to the Penny. Compiled by TCAII.Note: 2012 public debt and foreign held public debt reflect data from September 2012.
49%
2012Total Public Debt$11,270 Billion
43
U.S. Public Debt Ownership
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012$1
$2,001
$4,001
$6,001
$8,001
$10,001
$12,001
Debt Held by the Federal Reserve Domestically Held U.S. Debt All Other U.S. Debt Held by Foreigners U.S. Debt Held by China
Fede
ral P
ublic
Deb
t In
Tri
llion
s of D
olla
rs
Source: OMB, Historical Tables, 7.1, Feb 2013; U.S. Department of the Treasury; Federal Reserve, Federal Reserve Statistical Release. Compiled by TCAII.Note: All data from September the end of the fiscal year.
44
1.Australia (1)2.New Zealand (2)3.Sweden (4)4.Estonia (3)5.China (5)6.Chile (7)7.Luxembourg (6)8.India (12)9.Brazil (10)10.Denmark (8)11.United Kingdom (9)12.Netherlands (14)13.Israel (19)14.Canada (11)15.Korea (17)16.Poland (13)17.Mexico (18)
18.Slovakia (16)
19.Norway (15)20.Austria (21)21.France (23)22.Finland (22)23.Slovenia (20)24.Germany (25)25.Spain (24)26.Belgium (26)27.Italy (27)28.United States (28)29.Hungary (29)30.Iceland (32)31.Ireland (30)32.Japan (31)33.Portugal (33)34.Greece (34)
Sovereign Fiscal Responsibility Index(As of September 2011)
Source: Comeback America and Stanford Graduate Students’ Sovereign Fiscal Responsibility Index. Compiled by TCAII. Note: Based upon IMF data that was reported in September 2011 and does not take into consideration subsequent events. Numbers in parenthesis indicate prior ranking.
45
1.Australia 2.Sweden 3.Estonia 4.New Zealand5.China 6.Chile 7.Luxembourg8.Denmark 9.Brazil 10.India 11.United Kingdom 12.Israel 13.Canada 14.Poland 15.Netherlands16.Korea 17.Slovakia
18. Mexico19. Austria
20. Norway 21. France22. Finland23. Slovenia24. Germany25. Belgium26. Spain 27. Italy 28. United States29. Hungary30. Iceland31. Ireland32. Portugal 33. Japan34. Greece
Sovereign Fiscal Responsibility Index(As of April 2012)
Source: Comeback America and Stanford Graduate Students’ Sovereign Fiscal Responsibility Index. Compiled by TCAII. Note: Based upon IMF data that was reported in April 2012 and does not take into consideration subsequent events.
46
Overall Fiscal Responsibility Score is composed of 3 equal parts:
• Fiscal Space (Current Position) Sovereign Debt-to-Debt Ceiling, Total Debt-to-Debt Ceiling, and Foreign Held Debt
• Fiscal Path (Fiscal Trend/Future)Projected future levels of debt and implied fiscal space
• Fiscal Governance (Rules responsible for Past, Present, & Future) – Fiscal Rules
Debt limits, Deficit Targets, Expenditure Rules, and Revenue Rules– Fiscal Transparency
Open Gov. Policies, Autonomous Budget/Audit Process, Independent Forecasting
– Enforceability Nature of: Monitoring Body, Enforcement Body, Enforcement Mechanism, and Media Visibility of Rules
SFRI: Calculations
Compiled by TCAII.
47
Federal Programs and Revenues
2012 2020 2030 20400%
5%
10%
15%
20%
25%
30%
35%
40%
1.4% 3.3% 6.7% 10.8%4.8%
5.9%
7.8%
9.3%
5.0%5.3%
6.0%
6.1%
11.7%
8.5%
10.2%
9.9%
Net Interest Medicare & Medicaid Social Security All Other Revenue
Perc
enta
ge o
f GD
P
Source: Congressional Budget Office, Long-Term Budget Outlook, June 2012. Compiled by TCAII. Note: Alternative Fiscal Scenario used for all figures. Medicaid number are estimated and illustrative. They are derived from CBO LTBO June 2012 Data.
48
Interest Risk
1962
1964
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
Net Interest Cost with Average Bond Yield Actual Net Interest Cost
Bill
ions
of C
onst
ant U
.S. D
olla
rs
Source: Federal Reserve, Federal Reserve Economic Data; Office of Management and Budget, Historical Tables. Compiled by TCAII. Note: 10-Year Treasury Constant Maturity Rate annualized used for average bond yield beginning in 1962. Average Yield: 6.74%
49
Interest Rates
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 20230
100
200
300
400
500
600
700
800
900
Net Interest
50
The 3 Budgets
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 202330%
35%
40%
45%
50%
55%
60%
65%
70%
75%
80%
Historical Debt Held by the Public Senate Democrats' Budget House Republicans' BudgetPresident Obama's Budget
Deb
t Hel
d by
the
Publ
ic a
s a P
erce
ntag
e of
GD
P
54.8%
70.4%
73.0%
Source: CBO, Budget and Economic Outlook, Feb. 2013; Budget of the United States Government, Fiscal Year 2014, April 2013; Senate Budget Committee, Foundation for Growth: Restoring the Promise of American Opportunity, March 2013; House Budget Committee, The Path to Prosperity: A Responsible Balanced Budget, March 2013.Compiled by TCAII.
51
Federal Public Debt
1900190619121918192419301936194219481954196019661972197819841990199620022008201420202026203220390
50
100
150
200
250 CBO Alternative Projection
Source: CBO, Long Term Budget Outlook, 2009 and 2012
52
Federal Health Outlays
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
2032
2034
2036
0%
2%
4%
6%
8%
10%
12%
Medicare Medicaid, CHIP, and Exchange SubsidiesMedicare Projected Medicaid, CHIP, and Exchange Subsidies Projected
Fede
ral H
ealth
Car
e Sp
endi
ng a
s a P
erce
ntag
e of
GD
P
Source: CBO, Long-Term Budget Outlook, 2012. Compiled by TCAII.Note: Health care spending projections are based on the Alternative Fiscal Scenario.
53
Federal Health Care Spending(As a Percentage of Primary Spending)
5.0%
24.5%
Health Spending
41.1%
1970 2012 2040
Source: Congressional Budget Office, CBO’s Long-Term Budget Outlook (June 2011), Supplemental Data, Figure B1. Compiled by TCAII. Note: Figures are based on CBO’s Alternative Fiscal Scenario Projections. Primary spending is all federal spending excluding interest.
54
Comparative Health Costs
OECD Average Canada France Germany Sweden United Kingdom United States0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
$3,265
$4,445$3,974
$4,338
$3,056$3,433
$8,233
Per
Cap
ita H
ealth
Car
e C
osts
U.S
. Dol
lars
Source: Organization for Economic Cooperation and Development, OECD Health Data 2012. Compiled by TCAII. Note: Per capita health expenditures for 2010 uses purchasing power parity for all dollar amounts.
55
Burden of Public Health Care
OECD Average Canada France Germany Italy Sweden United Kingdom United States0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
Publ
ic E
xpen
ditu
res o
n H
ealth
care
A
s a P
erce
ntag
e of
GD
P
Public Health Expenditures as a Percentage of Total Health Expenditures 72.2% 71.1% 77.0% 76.8% 79.6% 81.0% 83.2% 48.7%
Source: OECD, Health Data, 2012. Compiled by TCAII.Note: Based on 2010 or nearest year data.
56
Payments vs. Benefits
Taxes Paid Benefits Received $0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
$800,000
$900,000
Medicare Social Security
U.S
. Dol
lars
Source: Urban Institute. Compiled by TCAII.Note: Two-earner couple with one spouse earning an average wage ($43,500 in 2011) and one earning a low wage ($19,500 in 2011). Turning 65 in 2011. Medicare benefits include parts A, B, and D.
8.5% Difference
315.1% Difference
57
Medicare Projected Costs and Revenues
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023$0
$200
$400
$600
$800
$1,000
$261 $278 $288 $297 $318 $327 $341 $367 $387 $411 $446 $462
$232$247 $246 $247
$268 $279 $291$319
$342$368
$408$431
$55$63 $70 $77
$93$96
$98
$116$129
$142
$167$169
Part A Part B Part D Dedicated Medicare Tax Revenue and Premiums
Med
icar
e Sp
endi
ng a
nd D
esig
nate
d R
even
ues
Bill
ions
of D
olla
rs
Source: CBO, The Budget and Economic Outlook: 2013-2023, Supplemental Information, Feb. 2013. Compiled by TCAII.Note: Medicare spending is only the mandatory portion and is net of offsetting receipts. The reduction from the Sequester are accounted for by dividing the yearly projected reductions across the three components.
58
Social Insurance Dedicated Revenues & Outlays 2012
Social Security Medicare Medicaid $0
$100
$200
$300
$400
$500
$600
$700
$800
$570
$201
$0
$752
$466
$251
Dedicated Revenues Outlays
Soci
al In
sura
nce
Ded
icat
ed R
even
ues a
nd O
utla
ysIn
bill
ions
of U
.S. D
olla
rs
Source: Congressional Budget Office, The Budget and Economic Outlook, Fiscal Years 2013 to 2023, Supplemental Data, Feb. 2013. Compiled by TCAIINote: Offsetting receipts have been included. Does not include interest payments.
59
Social Security and Medicare Cash Surpluses and Deficits
2012
2015
2018
2021
2024
2027
2030
2033
2036
2039
2042
2045
2048
2051
2054
2057
2060
2063
2066
2069
2072
2075
2078
2081
2084
($2,500)
($2,000)
($1,500)
($1,000)
($500)
$0
Bill
ions
of C
onst
ant (
2012
) Dol
lars
Source: Social Security, OASDI and HI Annual Non-interest Income, Cost, and Balance in Current Dollars, Calendar Years 2012-90, Table VI.F9. Congressional Budget Office, Long-Term Budget Outlook, June 2012. Compiled by TCAII.Note: Intermediate projections used.
60
Social Security and Medicare Cash Surpluses and Deficits
2012
2015
2018
2021
2024
2027
2030
2033
2036
2039
2042
2045
2048
2051
2054
2057
2060
2063
2066
2069
2072
2075
2078
2081
2084
2087
2090
-14,000
-12,000
-10,000
-8,000
-6,000
-4,000
-2,000
0
OASDI HI
61
Social Security and Medicare Cash Surpluses and Deficits
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2055 2060 2065 2070 2075 2080 2085 2090($13,000)
($11,000)
($9,000)
($7,000)
($5,000)
($3,000)
($1,000)
OASDI HI
62
Social Security and Medicare Deficit in Current Dollars (Billions)
2012
2015
2018
2021
2024
2027
2030
2033
2036
2039
2042
2045
2048
2051
2054
2057
2060
2063
2066
2069
2072
2075
2078
2081
2084
2087
2090
-14,000
-12,000
-10,000
-8,000
-6,000
-4,000
-2,000
0
OASDI HI
Source: Social Security Trustees Report, 2013 Table VI.F9
63
Social Security and Medicare Cash Surpluses and Deficits
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2055 2060 2065 2070 2075 2080 2085 2090($13,500)
($11,500)
($9,500)
($7,500)
($5,500)
($3,500)
($1,500)
$500
OASDI HI
64
Key Dates and Data regarding the financial condition of the Social Security and Medicare Trust Funds
Source: Data from the Social Security Administration, 2013 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds; and Centers for Medicare & Medicaid Services, 2013 Medicare Trustees Report; Compiled by TCAII.Note: The Social Security Disability Trust fund will be exhausted by 2016.
1.Based on the Office of the Chief Actuary of Medicare’s alternative cost projections.
Social Security Medicare Current Beneficiaries 57 Million 50.7 Million Year the Trust Fund began permanently operating with a negative cash flow
2010 2008 (HI Trust Fund)
Trust fund exhaustion year 2033 2026 Discounted Present Value (PV) of unfunded promises $9.6 Trillion $36.2 Trillion1
Social Security and Medicare 2013
65
Relative Defense Spending 2010
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
$800,000
129272
64123
58244
57875
54529
46219
44282
43478
31946
31576
2828023082229551868715209
$690 Bil. Turkey Australia Canada Korea, South Brazil Italy Germany India Saudi Arabia Japan UK France Russia China, P. R. USA
Mill
ions
of C
onst
ant 2
010
US
Dol
lars
$670 Bil.
Source: SIPRI Military Expenditure Database, Military Expenditure by Country, In Constant (2010) US$ millions. Compiled by TCAII.
66
Regional Defense Spending 2011
Oceana Africa Middle East Americas* Asia Europe USA$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
$800,000
$24,570 $26,634 $86,695 $90,842
$338,885$375,581
$689,591
Bill
ions
of C
onst
ant 2
010
Dol
lars
Source: SIPRI Military Expenditure Database, Military Expenditure by Country, In Constant (2010) US$ millions. Compiled by TCAII. Note: Americas* excludes the United States.
67
Composition of National Defense Outlays
31.1%
22.1%
27.7%
12.0%
2.5%
0.4% 3.9% 0.2%
1962
Military Personnel
Operation and Maintenance
Procurement
27.1%
30.7%
25.0%
11.5%
1.3%1.0% 3.4%
0.2%
1992
Research, Development, Test, and Evalua-tion
Military Construction
Family Housing
21.8%
41.1%
19.5%
10.6%
2.5%0.3%2.8%1.2% 0.2%
2012
Atomic energy defense activities
Defense-related activities
Other
Source: Office of Management and Budget, Historical Tables, Table 3.2. Compiled by TCAII. Note: Numbers for 2012 are an estimate.
68
National Defense Spending Trends
1940
1943
1946
1949
1952
1955
1958
1961
1964
1967
1970
1973
1976
1979
1982
1985
1988
1991
1994
1997
2000
2003
2006
2009
2012
0%
1000%
2000%
3000%
4000%
5000%
6000%
7000%
8000%
9000%
10000%
0%
500%
1000%
1500%
2000%
2500%
3000%
3500%
4000%
As percentages of outlays As percentages of GDP
Def
ense
Spe
ndin
g as
a P
erce
ntag
e of
Tot
al F
eder
al O
utla
ys
Def
ense
Spe
ndin
g as
a P
erce
ntag
e of
the
Eco
nom
y
Source: Office of Management and Budget, Historical Tables, Table 3.1. Compiled by TCAII.Note: 2012 numbers are estimates.
69
OECD Rank Country (World Rank)OECD Rank Country (World Rank)
1 Germany (3) 18 Finland (23)2 France (4) 19 Portugal (24)3 Switzerland (5) 20 Ireland (25)4 United Kingdom (6) 21 Norway (27)5 Netherlands (7) 22 Italy (28)6 Korea (9) 23 New Zealand (30)7 Spain (10) 24 Slovenia (35)8 Japan (11) 25 Israel (36)9 Luxembourg (12) 26 Czech Republic (38)
10 Canada (13) 27 Estonia (41)11 United States (14) 28 Greece (43)12 Austria (15) 29 Chile (45)13 Denmark (16) 30 Hungary (50)14 Australia (18) 31 Turkey (51)15 Sweden (19) 32 Slovak Republic (56)16 Iceland (20) 33 Mexico (68)
17 Belgium (21) 34 Poland (73)
Source: World Economic Forum, World Competitiveness Report, 2012. Compiled by TCAII.
Overall Infrastructure Ranking
70
World Rank Country (Last Year’s Rank)
World Rank Country (Last Year’s Rank)
1 Switzerland (1) 18 Saudi Arabia (17)2 Singapore (2) 19 Korea, Rep. (24)3 Finland (4) 20 Australia (204 Sweden (3) 21 France (18)5 Netherlands (7) 22 Luxembourg (23)6 Germany (6) 23 New Zealand (25)7 United States (5) 24 United Arab Emirates (27)8 United Kingdom (10) 25 Malaysia (21)9 Hong Kong SAR (11) 26 Israel (22)
10 Japan (9) 27 Ireland (29)11 Qatar (14) 28 Brunei Darussalam (28)12 Denmark (8) 29 China (26)13 Taiwan, China (13) 30 Iceland (30)14 Canada (12) 31 Puerto Rico (35)15 Norway (16) 32 Oman (32)16 Austria (19) 33 Chile (31)17 Belgium (15) 34 Estonia (33)
Source: World Economic Forum, World Competitiveness Report, 2012. Compiled by TCAII.
Global Competitiveness Ranking
71
Transform the Surface Transportation Program
– Integrate energy, economic, and environmental security in
investment decision making
– Massive consolidation of surface transportation programs
– Eliminate earmarks
– Restructure core programs
– Establish solvent funding
– Rationalize financing
Road to Recovery
Compiled by TCAII.
72
Two Kinds of Spending2012
Revenues Expenditures$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
Bill
ions
of U
.S. D
olla
rs
TaxDeductionsLoopholes
&Preferences
$1.1 Trillion
Source: OMB, Table 17.1; CBO, The Budget and Economic Outlook: Fiscal Years 2013 to 2023, Feb. 2013. Compiled by TCAII.
$2.4 Trillion
$3.5 Trillion In Possible Revenue
$3.5Trillion
RealizedRevenue
73
Tax Expenditures 2013
$0
$50
$100
$150
$200
$250
$300
$248
$161
$70 $61$39
Bill
ions
of D
olla
rs
Source: Source: CBO, June 2013. Compiled by TCAII.Note: Exclusion of employer provided healthcare includes effects on payroll tax receipts ($113 Million 2013). Special Treatment of Capital Gains and Dividends is composed of:Capital gains exclusion on home sales, Treatment of qualified dividends, Capital gains (except agriculture, timber, iron ore, and coal), Step-up basis of capital gains at death. Earned income tax credit includes the outlays associated with it ($52.5 Million 2013).
74
2012 Federal Revenue Composition
Individual Income Tax
46.2%
Social Insurance Taxes34.5%
Corporate Income Tax
9.9%
Other*9.4%
Total Revenues 2012
$2.4 Trillion
Source: CBO, The Budget and Economic Outlook: 2013-2023, Supplemental Data. Compiled by TCAII. Note: Other* contains Excise Taxes (3.2%), Estate and Gift Taxes (0.6%), Customs and Duties (1.2%), and Miscellaneous Receipts (4.3%). Percentages are of total.
75
A Revenue Problem
Taxes Spending$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
Individual Income Tax1132
Social Insurance Taxes845
Corporate Income Tax 242
Other Taxes 229
Net Interest $223
Mandatory $2,031
Discretionary $1,285
Bill
ions
of D
olla
rs
Total Taxes = $2,449 Billion
Total Spending = $3,538 Billion
Source: CBO, The Budget and Economic Outlook: Fiscal Years 2013 to 2023, Feb. 2013. Compiled by TCAII.
76
Effective Tax Rates
Lowest Quintile Second Quintile Middle Quintile Fourth Quintile Top Quintile Top 1 Percent-5.0
0.0
5.0
10.0
15.0
20.0
-4.2%
0.0%3.2%
6.4%
10.8%
18.8%
Perc
enta
ge o
f Tot
al In
com
e
$17,802 - $34,75622.3% of Total
$34,757 - $63,41320.2% of Total
$63,414 - $104,22716.9% of Total
>$104,22714.8% of Total
>$532,4620.8% of Total
Source: Tax Policy Center, Distribution Table by Percentile, Distribution of Effective Individual Tax Rate, 2010. Compiled by TCAII.Note: The cash income percentile classes used in this table are based on the income distribution for the entire population and contain an equal number of people, not tax units.The breaks are (in 2009 dollars). Percent of Total is a representation of tax units.
<$17,802 25.1% of Total
77
Effective Federal Income Tax Rates2012
Less Than $10,000
$10,000 - $20,000
$20,000 - $30,000
$30,000 - $40,000
$40,000 - $50,000
$50,000 - $75,000
$75,000 - $100,000
$100,000 - $200,000
$200,000 - $500,000
$500,000 - $1,000,000
More Than $1,000,000
-10% -5% 0% 5% 10% 15% 20% 25%
-7.8%
-6.5%
-3.4%
0.7%
3.0%
5.6%
7.4%
10.0%
15.7%
20.5%
20.9%
Source: Urban-Brookings Tax Policy Center Microsimulation Model (version 0412-8), Table T13-0042, All Tax Units. Compiled by TCAII.
78
Connecticut Government Spending & Political Party in Power
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
$0
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
Democrat Controlled Legislature
Republican Controlled Legisla-ture
Split Legislature
Republican Governor
Democratic Governor
Independent Governor
Gen
eral
Gov
ernm
ent S
pend
ing
In T
hous
ands
of C
onst
ant 2
009
Dol
lars
Source: U.S. Census Bureau, Annual Survey of State and Local Government Finances. ‘General Government Spending’ is equated to “General Expenditure as defined by the Census. Constant 2009 dollars calculated using inflation index from Bureau of Labor Statistics.
79
Connecticut Government Revenues & Political Party in Power
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
$0
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000 Democrat Controlled Legislature
Republican Controlled Legisla-ture
Split Legislature
Republican Governor
Democratic Governor
Independent Governor
Gen
eral
Gov
ernm
ent R
even
ues
In T
hous
ands
of C
onst
ant 2
009
Dol
lars
Source: U.S. Census Bureau, Annual Survey of State and Local Government Finances. ‘General Government Revenue’ is equated to “General Revenue” as defined by the Census. Constant 2009 dollars calculated using inflation index from Bureau of Labor Statistics.
80
Source: 2010, Institute for Truth in AccountingNumbers in red denote burden per taxpayer, Numbers in black denote a surplus per taxpayer
Taxpayer’s Burden by State 2010(Thousands of Dollars)
1. Alaska 2. Wyoming 3. North Dakota 4. Utah 5. Nebraska 6. South Dakota 7. Montana 8. Iowa 9. Oregon 10. Tennessee 11. Arkansas 12. Idaho 13. Minnesota 14. Colorado15. Florida 16. Arizona 17. Virginia
$21.2 $20.2
$9.5 $2.6 $2.4 $1.4 $0.3 $0.5 $0.9 $1.1 $1.7 $2.6 $2.6 $2.9 $2.9 $3.3 $3.6
18. Nevada 19. Missouri 20. Georgia 21. Indiana 22. Kansas 23. Texas 24. Wisconsin 25. Ohio 26. New Hampshire 27. Vermont28. Washington 29. Pennsylvania 30. South Carolina 31. New Mexico 32. Oklahoma 33. Alabama 34. Louisiana
$3.7 $3.8 $3.9 $3.9 $4.6 $5.5 $5.7 $6.0 $8.2 $9.1 $9.8
$10.3 $10.5 $11.8 $12.6 $14.3 $14.7
35. North Carolina 36. Maine 37. Mississippi 38. Delaware 39. New York 40. Maryland 41. Rhode Island 42. West Virginia 43. Michigan 44. California 45. Massachusetts 46. Kentucky 47. Illinois48. Hawaii 49. New Jersey
50. Connecticut
$14.8 $15.0 $15.7 $16.3 $17.2 $17.3 $18.8 $20.5 $20.8 $21.4 $23.2 $23.5 $31.6 $32.7 $35.8
$49.0
81
Source: 2011, Institute for Truth in AccountingNumbers in red denote burden per taxpayer, Numbers in black denote a surplus per taxpayer
Taxpayer’s Burden by State 2011
1.Alaska $ 34,1002.Wyoming $ 21,5003.North Dakota $ 13,2004.Utah $ 2,8005.Nebraska $ 2,1006.South Dakota $ 1,9007.Oregon $ 200 8.Iowa $ 300 9.Idaho $ 500
10.Tennessee $ 800 11.Arkansas $ 2,100 12.Montana $ 2,200 13.Minnesota $ 2,600 14.Florida $ 2,700 15.Indiana $ 2,900 16.Virginia $ 3,100 17.Colorado $ 3,200
18. Nevada $ 3,200 19. Arizona $ 3,300 20. Missouri $ 3,700 21. Kansas $ 4,700 22. Georgia $ 5,000 23. Wisconsin $ 5,700 24. Oklahoma $ 7,500 25. Ohio $ 7,700 26. Washington $ 8,200 27. Texas $ 8,400 28. New Hampshire $ 8,600 29. South Carolina $ 8,800 30. Maine $ 10,900 31. Pennsylvania $ 11,200 32. New Mexico $ 13,100 33. Vermont $ 14,100 34. Maryland $ 14,200
35.Rhode Island $ 14,200 36.North Carolina $ 14,300 37.Alabama $ 14,600 38.West Virginia $ 15,400 39.Louisiana $ 15,700 40.Delaware $ 18,300 41.Mississippi $ 20,200 42.New York $ 21,100 43.California $ 23,500 44.Michigan $ 23,600 45.Massachusetts $ 24,100 46.Kentucky $ 26,300 47.New Jersey $ 37,000 48.Hawaii $ 38,300 49.Illinois $ 38,500 50.Connecticut $ 50,900
82
Source: 2012, Institute for Truth in AccountingNumbers in red denote burden per taxpayer, Numbers in black denote a surplus per taxpayer
Taxpayer’s Burden by State 2012
1.Alaska $ 45,0002.Wyoming $ 23,5003.North Dakota $ 16,1004.Utah $ 2,5005.Nebraska $ 2,0006.South Dakota $ 1,7007.Tennessee $ 300 8.Iowa $ 100 9.Montana $ 1,000
10.Oregon $ 1,300 11.Idaho $ 1,700 12.Florida $ 2,500 13.Arizona $ 3,000 14.Minnesota $ 3,000 15.Arkansas $ 3,000 16.Colorado $ 3,100 17.Nevada $ 3,100
18. Virginia $ 3,400 19. Indiana $ 3,500 20. Missouri $ 4,600 21. Wisconsin $ 4,800 22. Kansas $ 5,200 23. Georgia $ 5,300 24. Texas $ 7,400 25. Ohio $ 7,400 26. Oklahoma $ 7,600 27. South Carolina $ 7,800 28. Washington $ 7,900 29. New Hampshire $ 9,000 30. Mississippi $ 10,400 31. Maine $ 11,500 32. Alabama $ 12,100 33. North Carolina $ 12,600 34. Pennsylvania $ 13,300
35.New Mexico $ 13,600 36.Rhode Island $ 14,000 37.Vermont $ 14,500 38.Louisiana $ 14,600 39.Maryland $ 14,800 40.Delaware $ 17,700 41.West Virginia $ 18,600 42.New York $ 19,800 43.California $ 23,500 44.Michigan $ 23,600 45.Massachusetts $ 25,500 46.Kentucky $ 26,700 47.New Jersey $ 34,200 48.Hawaii $ 39,900 49.Illinois $ 42,000 50.Connecticut $ 46,000
83
Roads in Poor or Mediocre Condition By State
1. Indiana 17.0%
2.Georgia 19.0%
3.Nevada 20.0%
Tied 5. Utah 25.0%
Tied 5. Alabama 25.0%
6.Florida 26.0%
7.Missouri 31.0%
8.Kentucky 34.0%
9.Delaware 36.0%
Tied 11. Michigan 38.0%
Tied 11. Texas 38.0%
12. Tennessee 38.0%
13. Arkansas 39.0%
14. South Carolina 40.0%
Tied 16. Massachusetts 42.0%
Tied 16. Ohio 42.0%
Tied 18. New Mexico 44.0%
Tied 18.North Dakota 44.0%
Tied 21.Vermont 45.0%
Tied 21. Idaho 45.0%
Tied 21.North Carolina 45.0%
22. Iowa 46.0%
Tied 25.West Virginia 47.0%
Tied 25.Virginia 47.0%
Tied 25.Wyoming 47.0%
Tied 27.Hawaii 49.0%
Tied 27.Alaska 49.0%
28.Mississippi 51.0%
Tied 31.Minnesota 52.0%
Tied 31.Arizona 52.0%
Tied 31.Montana 52.0%
32.Maine 53.0%
33.New Hampshire 54.0%
34.Maryland 55.0%
35. Pennsylvania 57.0%
36. Nebraska 59.0%
37. New York 60.0%
38. South Dakota 61.0%
Tied 40. Louisiana 62.0%
Tied 40. Kansas 62.0%
41. Oregon 65.0%
42. New Jersey 66.0%
43. Washington 67.0%
44. California 68.0%
Tied 47. Rhode Island 70.0%
Tied 47. Oklahoma 70.0%
Tied 47. Colorado 70.0%
48. Wisconsin 71.0%
Tied 50. Connecticut 73.0%
Tied 50. Illinois 73.0%
Source: American Society of Engineers, Report Card for America’s Infrastructure, 2013. Compiled by TCAII.
84
Source: CliftonLarsonAllen LLP, Intergovernmental Financial Dependency: A study of Key Dependency Measures for the 50 StatesIn Montana, Schedule of Expenditures of Federal Awards (SEFA) was used in place of DCF. SEFA data was obtained from the state’s website.Hawaii, Michigan, and New Mexico did not conduct a consolidated state-wide single audit but rather performed single audits at the department/agency level.
The States Federal Dependency 2011
1. Wyoming2. Alaska3. South Carolina4. Virginia5. Delaware6. New Mexico7. Hawaii8. Nebraska9. Minnesota10. New Hampshire11. Indiana12. Vermont13. Oklahoma14. Alabama15. Massachusetts16. California17. New York
13.9%15.7%25.6%28.6%28.9%29.1%29.2%30.6%31.7%31.8%32.0%32.9%32.9%33.3%33.5%34.2%35.2%
18. Maryland19. Kentucky20. Connecticut21. Maine22. Ohio23. New Jersey24. Kansas25. Washington26. North Carolina27. West Virginia28. Idaho29. Wisconsin30. Florida31. Oregon32. Texas33. Utah34. Colorado
35.4%36.2%37.0%37.1%37.2%37.3%37.6%37.9%38.8%39.4%39.6%39.6%40.7%42.2%43.0%43.0%43.2%
35. Iowa36. Nevada37. Montana38. Pennsylvania39. North Dakota40. Mississippi41. Georgia42. Arkansas43. Illinois44. Missouri45. Arizona46. Louisiana47. South Dakota48. Tennessee49. Rhode Island50. Michigan
43.3%43.4%43.8%43.8%43.8%44.0%44.2%45.7%46.4%46.6%50.1%50.9%56.2%57.1%62.3%62.6%
Percentage of State Revenue from Federal Transfers
85
Source: Moody’s (Table 2), 2013
Moody’s Liability and Revenues
1. Illinois2. Connecticut3. Kentucky4. New Jersey5. Hawaii6. Louisiana7. Colorado8. Pennsylvania9. Massachusetts10. Maryland11. Texas12. Rhode Island13. West Virginia14. Maine15. Montana16. California17. Oklahoma
241.1%189.7%140.9%137.2%132.5%130.2%117.5%105.0%100.4%
99.5%92.5%91.3%86.2%76.6%62.5%61.8%61.8%
18. Indiana19. North Dakota20. South Carolina21. New Hampshire22. Alaska23. Mississippi24. Vermont25. Delaware26. Georgia27. Wyoming28. Nevada29. New Mexico30. Alabama31. Virginia32. Oregon33. Arkansas34. Washington
61.3%61.2%59.7%56.4%55.2%53.0%49.2%48.2%42.0%39.9%39.1%37.8%36.9%35.5%33.9%33.6%32.7%
35. Utah36. Missouri37. Minnesota38. Arizona39. Michigan40. Kansas41. South Dakota42. Ohio43. Tennessee44. Florida45. North Carolina46. New York47. Iowa48. Idaho49. Wisconsin50. Nebraska
30.8%27.7%27.3%26.7%25.4%23.1%20.7%19.6%19.2%19.2%18.3%16.6%16.1%14.8%14.4%
6.9%
Percentage of State Revenue from Federal Transfers
86
Moody’s Liability and Revenues
Illinois
Connecticut
Kentucky
New JerseyHawaii
Louisiana
Colorado
Pennsylvania
Massachusetts
MarylandTexas
Kansas
South Dakota Ohio
TennesseeFlorida
North Carolina
New York IowaIdaho
Wisconsin
Nebraska0.00%
50.00%
100.00%
150.00%
200.00%
250.00%
300.00%
Source: Moody’s, 2013
87
New Jersey New Hampshire
Connecticut Maine New York Rhode Island Massachusetts Vermont Wisconsin0
5
10
15
20
25
30
12.1%11.2%
8.6% 8.1%
4.1%
8.0%
5.6%
3.3%4.3%
16.4%
11.9%
11.7%
4.3%
6.3%1.7% 3.8%
4.2%
1.4%
Retiree Health Benefits Retiree Pension Benefits
Act
uari
ally
Req
uire
d C
ontr
ibut
ion
as
Perc
ent S
hare
of S
tate
Rev
enue
NOTE: The actuarially required contribution is the annual contribution to the retiree pension and health funds required for future assets to be in line with future liabilities within 30 years. It has two components: a normal contribution to keep up with new benefit obligations accrued, and a catch-up payment to make up for the current gap between pension assets and liabilities. The data for both revenues and unfunded obligations are for fiscal year 2008. Most states end their fiscal year in June of 2008, and therefore these numbers do not include losses in the stock market that led to losses in most pension funds.
State Pension and Health Costs
88
State City
Texas - Aaa Boston, MA - Aaa
Vermont - Aaa Denver, CO - Aaa
Massachusetts - Aa1 Dallas, TX - Aa1
New Hampshire - Aa1 New York, NY - Aa2
New York - Aa2 Atlanta, GA - Aa2
Maine - Aa2 Washington, D.C. - Aa2
Rhode Island - Aa2 Chicago, IL – Aa3
Connecticut – Aa3 Los Angeles, CA - Aa3
California – A1 Hartford, CT - A1
Illinois – A2 Bridgeport, CT - A1Source: Moody’s Investors Service, Inc., Credit Ratings. Note: All ratings are based on the most recent issuance of general obligation bonds as of 23 August 2012.
State and Local Ratings
89
Each Taxpayer's Financial Burden
Florida
Arizona
Georgia
Texas
North Carolina
New York
California
Massachusetts
New Jersey
Illinois
Connecticut
$- $10,000 $20,000 $30,000 $40,000 $50,000 $60,000
90
Regional Ranking State Overall Ranking
1 North Carolina 4
2 Georgia 9
3 Tennessee 16
4 Florida 29
5 South Carolina 32
6 Kentucky 36
7 Alabama 38
8 Mississippi 46
State Competitiveness
Source: CNBC, America’s Top States for Business 2012. Compiled by TCAII. Note: Categories include: Cost of Business, Workforce, Quality of Life, Economy, Infrastructure and Transportation, Education, Business Friendliness, Access to Capital, and Cost of Living.
91
Select States Overall Ranking
Texas 1
Virginia 3
North Carolina 4
Massachusetts 28
Florida 29
New York 34
New Jersey 41
Connecticut 44
Rhode Island 50
State Competitiveness
Source: CNBC, America’s Top States for Business 2012. Compiled by TCAII. Note: Categories include: Cost of Business, Workforce, Quality of Life, Economy, Infrastructure and Transportation, Education, Business Friendliness, Access to Capital, and Cost of Living.
92
Federal, State, and LocalProjected Deficits
2005
2007
2009
2011
2013
2015
2017
2019
2021
2023
2025
2027
2029
2031
2033
2035
2037
2039
2041
2043
2045
2047
2049
2051
2053
2055
2057
2059
0%
5%
10%
15%
20%
25%
30%
35%
40%Federal State & Local
Fede
ral a
nd S
tate
/Loc
al D
efic
its
as a
Per
cent
age
of G
DP
Source: GAO, Long-Term State and Local Fiscal Data, Feb. 2013. Compiled by TCAII.Note: Alternative fiscal scenario used.
93
There are a number of myths about how to solve the Nation’s fiscal problems. The 4 most common are:
We can Grow our way outWe can Inflate our way out
We can Tax our way outWe can Cut our way out
The simple truth is that none of these by themselves will work and all of them will play a role in order to restore our fiscal sanity.
4 Myths
Compiled by TCAII
94
The Federal government needs a plan that will:
• Get spending under control– Pay-Go, Debt-to-GDP targets, reform entitlements
• Create Competitive Tax Environment– Simplify tax code by eliminating most tax expenditures, deductions,
loopholes, and credits for income and corporate taxes – Make sure revenue needs are met
• Focus on strategic investments – Focus public spending on creating better economic future for all and
away from consumption.
A Way Forward
Compiled by TCAII.
95
• Both have large operating deficits
• Both saw the issues they now face coming, but did not adjust course
• Both need to reexamine what they do, how they do it, and how they pay for it
USPS: Microcosm of Federal Dysfunction
Compiled by TCAII.
96
Every two years, GAO provides Congress with an update on its High Risk Program, which highlights
major areas that are at high risk for waste, fraud, abuse, or mismanagement, or are in need of broad reform.
• Government needs to do more to address these problem areas– There are currently 30 areas on the GAO’s high risk list – There were originally 14 areas on the list– These programs range from:
• The National Flood Insurance Program to the management of federal oil and gas resources
GAO High Risk List
Compiled by TCAII.
97
High Risk List
Original high risk list in 1990 High risk list in 20130
5
10
15
20
25
30
35
98
The 2012 GAO report found 32 areas of duplication, overlap, or fragmentation among federal government programs
• By addressing these issues the government could see a range of benefits:
– Improved customer service
– Decreased administrative burdens
– Potential cost savings in the $10s of billions annually
Duplicative Programs
Compiled by TCAII.
99
• Expansion of government at all levels
• Health Care Costs
• Retirement Income Costs
• Disability and Welfare Related Costs
• Critical Infrastructure Needs
• Education Costs
• Corrections Costs
• Outdated and Inadequate Revenue Systems
• Myopia, Tunnel Vision, Special Interests and Self-Interest
Key Systemic Challenges
Compiled by TCAII.
100
Federal:• Implement statutory budget controls that address discretionary and mandatory
spending as well as tax preferences in order to stabilize our debt/ GDP at a reasonable level
• Achieve Social Security reform that makes the program solvent, sustainable, secure and more savings oriented
• Reduce the rate of increase in health care costs and more effectively target related taxpayer subsidies and tax preferences
• Ensure that all future health care reforms adequately consider coverage, cost quality and personal responsibility
• Pursue comprehensive tax reform that makes the system more streamlined, understandable, equitable and competitive while also generating adequate revenues
A Way Forward
Compiled by TCAII.
101
• Review, re-prioritize and re-engineer the base of the federal government, including national security strategies, to focus on the future, eliminate waste, generate real results and ensure sustainability
• Ensure that we have process that will enable us to achieve the above objectives within a reasonable period of time
State and Local:• Reform pension and health systems to make them reasonable, affordable
and sustainable
• Review, re-prioritize and re-engineer the base of government.
• Pursue comprehensive tax reform in coordination with the federal government.
• Consider an exchange of primary roles, functions and revenue sources as part of a new federalism or devolution effort (e.g., health care, education, infrastructure)
A Way Forward - Continued
Compiled by TCAII.
102
The Fiscal Cliff Legislation’s Impact on the Deficit
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022$0
$200
$400
$600
$800
$1,000
$1,200Prior Law Deficits Effect of The American Taxpayer Relief Act of 2012
Bill
ions
of U
.S. D
olla
rs
Source: Congressional Budget Office, March 2012, January 2013; Committee for Responsible Federal Budget. Compiled by TCAII.
103
Change in Projected Deficits from the Fiscal Cliff Legislation
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022$0
$200
$400
$600
$800
$1,000
$1,200
Prior Law Deficits Revenue Impact Spending Impact Net Interest Impact
Bill
ions
of U
.S. D
olla
rs
Source: Congressional Budget Office, March 2012, January 2013; Committee for Responsible Federal Budget. Compiled by TCAII.
104
Impacts of Fiscal Cliff Deal & Sequester
$6.2 Trillion
$1.2 Trillion
10 Year Federal Deficits
$620 Billion
Source: Committee for Responsible Federal Budget; Congressional Budget Office. Compiled by TCAII.
($7.9 Trillion – Pre Fiscal Cliff Deal)
Fiscal Cliff Deal
Sequester
Remaining Projected Deficits
105
Securities Held Outright by the Federal Reserve
4.0%3.7%
82.9%
9.5%
U.S. Treasury Bills
U.S. Treasury Notes and Bonds
2009$1,846 Billion
Total Securities Held Outright
36.7%
61.0%
2.3%
Federal Agency Debt
Mortgage Backed Securities
2003$666 Billion
Total Securities Held Outright
2.7%
35.2%
58.9%
3.2%
U.S. Treasury TIP Notes, Bonds, & Infla-tion Compensation
2013$2,747 billion
Total Securities Held Outright
Source: Federal Reserve of the United States, Federal Reserve Statistical Release, Factors Affecting Reserve Balances, Feb. 2013. Compiled by TCAII.Note: End of calendar year used for figures. Securities held outright are only a portion of total Fed assets. The numbers used are weekly averages. 2013 number are for Feb.
106
Securities Held Outright by the Federal Reserve
2004 2005 2006 2007 2008$0.0
$500,000.0
$1,000,000.0
$1,500,000.0
$2,000,000.0
$2,500,000.0
$3,000,000.0
U.S. Treasury Bills U.S. Treasury Notes and Bonds U.S. Treasury TIP Notes, Bonds, & Inflation CompensationFederal Agency Debt MBSs
Beginning of Calendar Year
Wee
kly
Ave
rage
of S
ecur
ities
Hel
d O
utri
ght
By
the
Fede
ral R
eser
ve In
Tri
llion
s of U
.S. D
olla
rs
Source: : Federal Reserve of the United States, Federal Reserve Statistical Release, Factors Affecting Reserve Balances, Feb. 2013. Compiled by TCAII.Note: Securities held outright are only a portion of total Fed assets. The numbers used are weekly averages.
107
U.S. Personal Savings Rate
1960
1962
1964
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
0%
2%
4%
6%
8%
10%
Pers
onal
Sav
ings
as a
Per
cent
age
of D
ispos
able
Inco
me
Source: Federal Reserve, Federal Reserve Economic Data, Personal Savings Rate, Feb. 2013. Compiled by TCAII.Note: Numbers reflect annual averages.
108
The Sequester is $85.4 Billion in cuts split equally between defense and non-defense spending
• Designed as bad policy to force action
• Was kicked down the road in January by the ATRA of 2012
• Is now much more likely happen
March 1st Sequester
Compiled by TCAII.
109
$42.7 Billion in cuts for the Military FY2013
Leading to:• Potentially furlough about 800k defense civilians• Grounding of aircraft • Returning ships to port• Stop the driving of combat vehicles in training
Possible Effects of Sequester on Defense
Compiled by TCAII.
110
Statutory Debt Ceiling
1940
1943
1946
1949
1952
1955
1958
1961
1964
1967
1970
1973
1976
1979
1982
1985
1988
1991
1994
1997
2000
2003
2006
2009
2012
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000Recessions
In B
illio
ns o
f 20
10 D
olla
rs
SOURCE: OMB, The Budget, Historical Tables, Table 7.3 - Statutory Limits on Federal Debt; Bureau of Labor Statistics, Inflation Calculator; NBER, US Business Cycle Expansions and Contractions.
111
We must raise the debt ceiling. The Real Questions are:
• How much it should be raised?, and
• What conditions should be attached to any increase in the debt ceiling limit?
The Debt Ceiling Debate
Compiled by TCAII.
112
Given the deteriorating financial condition of the federal government and rising concern regarding spending , deficits and debt, the following conditions are illustrative of the types of conditions that should be considered:
• Short-term Spending: Agreeing to cut discretionary spending, excluding war costs, to fiscal 2008 levels adjusted
for population growth over 2-3 years.
• Structural Deficits: Enacting tough but realistic statutory budget controls that could include:
meaningful PAYGO rules on the spending and tax side; tough but realistic discretionary spending caps, and; specific debt/GDP targets that begin in 2013-2014 with automatic enforcement mechanisms (e.g.,
spending cuts and temporary revenue surcharges or preference reduction). Authorize and fund a major citizen education and engagement effort that will occur
during late 2011 and 2012 to prepare the way for tough choices beginning in 2013.
The Debt Ceiling Debate - Continued
Compiled by TCAII.
113
• What should government do?
• What level of government should do it?
• What are the key goals and objectives?
• What type of government approaches should be used?
• Who should do the work?
• How do you measure success?
• How should it be paid for?
• Are you applying best practices and lessons learned?
• Is it future focused results oriented, affordable and sustainable?
Management 101 for Government
Compiled by TCAII.
114
• Needed Accounting/Financial Reporting Reforms– Governments should be required to record a liability for all debt, including
intra-governmental where an exchange has occurred (e.g., Social Security and Medicare “trust funds” for the U.S.)
– Additional transparency for tax expenditures and all unfunded pension and retiree health obligations
– Fiscal sustainability and intergenerational equity– Inter-governmental dependency – Performance related information– Absolute, trend and comparative information
• Needed Audit Reforms – Report on the system of internal controls – Change the audit opinion conclusion– Greater use of “emphasis paragraphs”– Differentiate between projections and performance information
Needed Government Financial Reporting Reforms
Compiled by TCAII.
115
Accounting Matters(Cash vs. Accrual Deficits)
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012-15%
-13%
-11%
-9%
-7%
-5%
-3%
-1%
1%
3%
0.8%1.4%
2.4%
1.2%
-1.5%
-3.4% -3.5%
-2.6%-1.9%
-1.2%
-3.2%
-10.1%
-9.0%-8.7%
-7.0%
-1.5%
0.8%0.5%
-5.0%
-3.5%
-6.1%
-5.3%
-6.1%
-3.4%
-2.0%
-7.0%
-9.0%
-14.5%
-8.8%-8.5%
Cash Deficit/Surplus (budget deficit/surplus) Accrual Deficit (net operating cost)
Acc
rual
and
Cas
h (-)
Def
icit/
(+)S
urpl
us o
f the
Fed
eral
Gov
ernm
ent
As a
Per
cent
age
of G
DP
Source: U.S. Treasury, Financial Report of the United States Government, 1998-2012; OMB, Historical Tables, Table 10.4; CBO, The Budget and Economic Outlook: Fiscal Years 2013 to 2023, Feb. 2013. Compiled by TCAII.
116
Scope of CAI’s Illustrative Fiscal Frameworks:
• Budget Controls and Process Reforms
• Social Security
• Medicare, Medicaid, and Healthcare
• Defense and Other Spending
• Comprehensive Tax Reforms
• Constitutional Amendments
CAI’s Fiscal Framework
Compiled by TCAII.
117
1.Pro Growth
2.Socially Equitable
3.Culturally Acceptable
4.Mathematically Accurate
5.Politically Feasible
6.Bipartisan Support
6 Key Principles for Reform
Compiled by TCAII.
118
• Budgeting
• Social Security
• Health Care
• Medicare & Medicaid
• Defense
• Taxes
• Other
• Political
Areas of Reforms
Compiled by TCAII.
119
September 7 to October 10, 2012 34 days…..10,000 miles…..27 States & Washington, D.C.
$10 Million A Minute Tour
Compiled by TCAII.
120
• 97% feel that addressing our fiscal challenges should be a top priority
• Only 8% confident Congress can adopt bi-partisan solution
• 92% support six principles for reform
• 85% said solving will involve combination of spending cuts and tax increases
• Between 77% and 90% support for all reform areas
Views From Outside the Beltway
Compiled by TCAII.
121
• GTI Mission: To make government more future focused, results oriented, transparent, economical, efficient, effective, respected and sustainable.
• Comprised of an all-inclusive group of experts and leaders in management and financial performance.
• Organizations expressing interest include leading CPA and consulting firms, and entities involved with government performance and fiscal responsibility.
Government Transformation Initiative (GTI)
Compiled by TCAII.
122
Objectives:
– Create a statutory Federal Transformation Commission or Task Force
– Conduct a systematic, complete review of selected major federal agencies, programs, financial management and other areas
– Deliver informed findings, recommendations and actionable solutions that result in a more efficient, fiscally sound, efficient and respected federal government
– Receive guaranteed hearings and vote in Congress within specified timeframe
Government Transformation Initiative (GTI)
Compiled by TCAII.
123
• Create a statutory commission or task force
• Develop and implement a consistent methodology
• Review federal government programs in partnership with others
• Deliver review findings to President and Congress
• President can make changes within his authority
• Legislative recommendations to Congress for a guaranteed vote within a given timeframe
GTI Commission/Task Force
Compiled by TCAII.
124
Examples of Efficiency Evaluation Opportunities
$82B Unspent TARP money
$18B/year Unused federal buildings
$6.5B/year 80 Economic development programs/4 agencies
$1.4B/year 20 Programs/12 agencies studying invasive species
125
The GTI Coalition Goal:
Pass legislation to establish a Government Transformation Commission/Task Force
• Participate in defining GTI
• Promote the GTI goals and objectives in various forums
• Provide resources to ensure success
An all-inclusive group of experts and leaders inmanagement and financial performance
126
• Federal Level – The Federal Government should be required to record a liability for the
U.S. bonds held in social insurance (e.g.,. Social Security and Medicare) and other government "trust funds"
– A statement that focuses on fiscal sustainability and intergenerational equity issues is needed
– Additional outcome related performance information is also needed.
• State & Local Level– State and local governments should be required to record a liability for
an underfunded or unfunded employee pension and retirement health care programs
– A statement that focuses on fiscal sustainability is needed– Additional outcome related performance information is also needed– Additional discussion on inter-governmental dependencies is needed
Needed Government Financial Reporting Reforms
Compiled by TCAII.
127
Examples of Accountability Failures
• Federal:– Outrage about Apple– IRS targeting tax-exempt organizations– Postal service mismanagement
• State: – New York– Pensions and Unfunded Obligations
• Local:– Stockton, CA– Bridgeport, CT?
128
1974 1995 May 11-142001 Jul 19-22 2005 Feb 7-10 2008 Jul 10-130
10
20
30
40
50
60
70
80
90
100
ApproveDissaprovePe
rcen
tage
84% Approval After Sept 11th
11% Approval Record low December 2011
“Do you approve or disapprove of the way Congress is handling its job?”
86% Disapproval Record High in December 2011
Source: Gallup/Newsweek. Compiled by TCAII.
Public Approval of Congress
129
2013 2013-20222001/2003/2010 Tax Cuts $110 Billion $2.8 Trillion
Alternative Minimum Tax Patches $125 Billion $1.7 Trillion
Jobs Measures $115 Billion $150 Billion
Medicare Physician Payments $10 Billion $150 Billion
Budget Control Act Sequester $65 Billion $980 Billion
"Tax Extenders" $30 Billion $455 Billion
Health Care Reform Taxes $25 Billion $420 Billion
Net Interest N/A $1.2 Trillion
Total (Without Jobs Measures) ~$400 Billion $7.9 Trillion
Total (With Jobs Measures) ~$500 Billion $8.1 Trillion
The Year End Fiscal Cliff
130
The country is currently experiencing similar conditions as in 1992 when Ross Perot first ran for President.
Fiscal IrresponsibilityPolitical Dysfunction
Lack of Trust in GovernmentAbsence of Public Confidence in the Future
The country is approaching an even bigger iceberg than in 1992. We corrected our course then and can do so again if we “wake-up” and get some committed and courageous leadership.
Learning from the Past
Compiled by TCAII.
131
Deficits and Debt (as a percentage of GDP)
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011-11.0%
-9.0%
-7.0%
-5.0%
-3.0%
-1.0%
1.0%
3.0%
-3.9%-4.5% -4.7%
-3.9%
-2.9%-2.2%
-1.4%-0.3%
-1.5%
-3.4% -3.5%-2.6%
-1.9%-1.2%
-3.2%
-10.0%
-8.9% -8.7%
0.0080.014
0.024
0.013
Fede
ral D
efic
its (-
) or
Surp
luse
s as a
Per
cent
age
of G
DP
U.S. Gross Debt as a Percentage of GDP1992 2000 2011
64.1%
Source: Office of Management and Budget, Historical Tables, Table 1.3; Congressional Budget Office, The U.S. Federal Budget, December 2011: Infographic; U.S. Department of Treasury, Bureau of the Public Debt, Debt to the Penny; CBO, Long-Term Budget Outlook (June 2011); Compiled by TCAII. Note: 2011 Gross debt as of Sept 31. Compiled by TCAII.
57.3%
98.7%
132
Government has grown too big, promised too much, and waited too long to restructure
The implications of which:
• The government will ask for more while doing less
• State and local government will be adversely impacted because bad news flows downhill
• Charitable organizations will be more important in the future
• Individuals will be more responsible for their own future
Role of Government & The Individual
Compiled by TCAII.
133
$6 Billion Spent => Political Status Quo Remains
Steps to Move Forward:– Employ a unity approach to governing– Use a two pronged public education and private negotiation strategy on
major policy issues (e.g. Fiscal)– Resolve the “fiscal cliff”– Create a bridge to a fiscal “Grand Bargain
Key Ingredients – Inspired Presidential leadership– “We the People”
Unfortunately the 2016 election cycle is right around the corner
Election 2012
Compiled by TCAII.
134
• Unfunded Retirement Obligations
• Healthcare Costs
• Antiquated Tax Systems
• Too much spending on consumption and not enough on investment
Four Common Fiscal Challenges
135
Connecticut Report - Recommendations
• Connecticut must address its unsustainable fiscal outlook, and adopt a comprehensive solution to put its finances in order
• Connecticut must focus on improving economic growth, reducing disparities, and enhancing the state’s competitiveness
• Connecticut must create and institutionalize a culture of transparency, accountability and transformation at all levels of government
136
Connecticut Report Examples
• How can state government best ensure implementation of strategic planning for the state overall and at key agencies, coupled with improved performance measurement, evaluation, and accountability mechanisms?
• What is the proper role for independent oversight and audits of government organizational structure, programs, taxes and activities to ensure economy, efficiency and effectiveness?
• How can the state optimize the state’s tax structure and diversify revenue bases so that it can raise necessary revenue while minimizing any adverse economic consequences?
• How can the state better invest in and finance infrastructure to improve its competitive posture, reduce congestion and protect the environment ?
• What are the costs and benefits of opportunities for additional public-private partnerships, or the ability to privatize certain government functions, to enhance service while reducing cost?
• What can the state do to bring its unfunded retirement obligations under control?
137
Sequestration
2013 2014 2015 2016 2017 2018 2019 2020 2021-180
-160
-140
-120
-100
-80
-60
-40
-20
0
Defense Discretionary Non-Defense Discretionary MedicareOther Mandatory Interest Rate Savings
138
CBO’s Alternative Scenario
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 202368
70
72
74
76
78
80
82
84
Debt as a % of GDP (May) Debt as a % of GDP Alternative Fiscal Scenario (May)
Source: CBO Updated Budget Projections: Fiscal Years 2013-2023, May
139
CBO’s Projections
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 202370
71
72
73
74
75
76
77
78
79
Debt as a % of GDP (Feb) Debt as a % of GDP (May)
Source: CBO Budget and Economic Outlook: Fiscal Years 2013 to 2023; Updated Budget Projections: Fiscal
Years 2013 to 2023
140
Mandatory and Discretionary Spending (Constant FY 2005)
Source: White House Budget 2014, Table 8.6 and 8.8
1962
1964
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
0.0
500.0
1,000.0
1,500.0
2,000.0
2,500.0
3,000.0
3,500.0
4,000.0
Total outlays for discretionary programs (Billions) Total outlays for mandatory and related programs (Billions)
ProjectionActual
141
Go to KeepingAmericaGreat.org, where you can:• Educate Yourself
– Learn the facts and learn the solutions.
• Test Yourself– Test your fiscal knowledge by taking the Fiscal IQ Quiz
• Stay Current– Follow CAI on Twitter @DaveWalkerCAI and like us on Facebook at
Comeback America. – Sign up for the CAI newsletter
• Spread The Word– Use the Fiscal Facts Presentation and notes to educate others
What You Can Do
Compiled by TCAII.
142
Go to KeepingAmericaGreat.org, where you can:• Educate Yourself
– Learn the facts and learn the solutions.
• Test Yourself– Test your fiscal knowledge by taking the Fiscal IQ Quiz
• Stay Current– Follow CAI on Twitter @DaveWalkerCAI and like us on Facebook at
Comeback America. – Sign up for the CAI newsletter
Speak Out• Go to NoDealNoBreak.net.
What You Can Do
Compiled by TCAII.
