8. President’s Proposed “Savings” Table S-3. Deficit Reduction Since January 2011 (Deficit reduction (-) or increase (+) in billions of dollars) 2012-2021 2013-2022 Enactment of 2011 full-year appropriations ᵃ……………..…………………………………………. -357 -320 Enactment of 2012 full-year appropriations………………………………......................................... -565 -598 Budget Control Act discretionary caps for 2013 through 2021 ᵇ…………………………………….. -681 -791 PAYGO legislation enacted during the 1st Session of the 112th Congress ᵃ………………………… -7 -11 2013 Budget: Short-term measures for job growth………………………………………………………………. 354 176 Tax cuts for families, individuals, and businesses c …………….………………............................. 319 352 Reauthorize surface transportation………………………………………………………………... 117 125 Health and other mandatory initiatives……………………………………………………………. -446 -597 Expiration of high income tax cuts………………………………………………………………… -1236 -1433 Other revenue proposals…………………………………………………………………………… -423 -480 Cap Overseas Contingency Operations (OCO) funding…………………………………………... -741 -848 Proposed program integrity cap adjustment for IRS and Unemployment Insurance, including mandatory savings…………………………………….. -23 -28 Proposed Budget Control Acct disaster relief cap adjustment……………………………………. 6 6 Outlay effects of discretionary policy…………………………………………………………….. -31 -38 Debt service……………………………………………………………………….………………….. -595 -800 Total deficit reduction since January 2011 ………………………… - 4309 -5286 Memorandum, revenue and outlay effects: Enacted outlay reductions and 2013 Budget spending proposals………………………………… -3136 -3777 Enacted receipt increases and 2013 Budget revenue proposals…………………………………... -1174 -1510 ᵃ Savings totaled through 2021. ᵇ Includes program integrity and the cap adjustment for proposed disaster relief. c Includes the effects of continuing certain expiring provisions through calendar year 2013.
Explain current situation Why use CBO Baseline – current law Historical Averages Deficits as far as the eye can see
Tell why we are discussing this
Still has annual deficits. Adds to debt. Not even getting to balance or paying off debt
What’s driving the debt? Spending on health care. President doesn’t have reform proposals. Discussion about discretionary spending: debt limit; Budget Control Act, Find $1.2 trillion, didn’t find it so automatic sequester But let’s look at what the President is proposing for “savings” – next slide
Revise Slide with Gimmicks pulled out to show alternative view on Savings. President’s FY13 Budget states $4.3 trillion in deficit reduction – Leaving aside fact that debt still grows and deficits continue forever: Assumes: $1.6 trillion in savings already enacted savings in BCA $740 billion from drawdown of war – can’t use this for savings $600 billion in interest savings from reducing costs $830 billion from tax cuts expiring on wealthy
Just general explanation of tax revenue – revenue breakout Taxes are going to be a big part of this year’s discussion So, where are we? Corporate tax reform --- why we need fundamental tax reform / payroll and individual are more And we have a corporate tax paper as a handout
What is tax reform President’s budget would allow Bush era tax cuts and estate tax cuts to expire for upper earners ($250k) – raises $970 billion relative to $4.5 trillion cost of extending all of tax cuts. However, if middle-class tax cuts are extended and AMT is continually patched, this ADDS $3.5 trillion to deficit! Not decrease. In other words, President is assuming a $3.5 trillion tax increase on the middle class. Why we need a proper accounting of our tax system – reform – and stop picking winners and losers
Already at tipping point of 90% debt to GDP
OMB does not develop long-term fiscal scenarios To wrap up – what does the President’s budget fail to do? Uses gimmicks to achieve “savings” both on the tax and spending side of the budget Fails to provide reform of entitlements Does nothing to change our long-term fiscal outlook – deficits continue and debt climbs to $x trillion
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