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The Concord Coalition
COVID
in the Shadow of Debt
Before COVID-19, federal debt was already
approaching record levels
Source: Congressional Budget Office THE CONCORD COALITION
Percent
World War I
Great Depression
World War II
Great Recession
Caused by a long-standing structural imbalance
between revenues and spending
Source: Congressional Budget Office, Update to the Budget Outlook, September 2020 THE CONCORD COALITION
Outlays
Revenues
Projected
Average 1970-2019: 20.4%
Average 1970-2019: 17.4%
23.0%
17.8%
●
●
Unemployment jumped 10 points in one month
and still remains historically high
Source: Bureau of Labor Statistics, Unemployment Situation Report THE CONCORD COALITION
The COVID-induced recession is deep
Source: Bureau of Economic Analysis THE CONCORD COALITION
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2018 2019 2020
The federal fiscal response to COVID-19 has been
significant but appropriate
THE CONCORD COALITION
March 18
H.R.6201
Family First
Coronavirus
Response Act
$192 billion
March 27
$1,721
billion
H.R.748
Coronavirus Aid, Relief, and Economic Security (CARES) Act
March 6
$8 b
H.R.6704
Coronavirus
Preparedness
and Response
Supplemental
Act
April 24
$483 billion
H.R.266
Paycheck Protection
and Health Care
Enhancement Act
With significant consequences on near-term
budget deficits
Source: Congressional Budget Office, Update to the Budget Outlook, September 2020 THE CONCORD COALITION
March
Baseline
March
Baseline
COVID-19
+ Interest
COVID-19
+ Interest
Trillions
$1.1 T
$2.0 T
$1.0 T
$0.8 T
$3.1 T
$1.8 T
Post-COVID, a record no one wants
Source: Congressional Budget Office, Update to the Budget Outlook, September 2020 THE CONCORD COALITION
Projected
Our nation’s fiscal challenges do not end with
COVID-19
Source: Congressional Budget Office, The Long-Term Budget Outlook, September 2020 THE CONCORD COALITION
2019 2025 2030 2035 2040 2045 2050
Projected
Waning Budgetary
Effects of COVID-19
Percent
-12.6
-4.6
Growing deficits and debt remain long after the
budgetary effects of COVID are gone
THE CONCORD COALITION
2019 2025 2030 2035 2040 2045 2050
195
78
Source: Congressional Budget Office, The Long-Term Budget Outlook, September 2020
Entitlements and interest costs drive spending
Source: Congressional Budget Office, The Long-Term Budget Outlook, September 2020 THE CONCORD COALITION
Revenue growth is constrained by factors
affecting output
Source: Congressional Budget Office, The Long-Term Budget Outlook, September 2020
THE CONCORD COALITION
Potential Labor Force Size
Potential Labor Force
Productivity
Percent
2.4
1.6
Change in Revenues as a Percent of GDP
Source: Congressional Budget Office, The Long-Term Budget Outlook, September 2020 THE CONCORD COALITION
Percent
Expiring tax provisions
*Other
Real bracket creep (wage growth > economic growth)
*COVID response, rising taxable retirement income, faster earnings growth among higher income earners,
rising cost of non-taxable fringe benefits
Delay makes policy solutions more
challenging
Source: Congressional Budget Office, The Long-Term Budget Outlook, September 2020 THE CONCORD COALITION
Deficit reduction needed
by starting in fiscal year…
…to reach debt equal to 2019 level in 2050 (79% GDP)
…to reach debt equal to 2020 level of GDP in 2050 (100% GDP)$730 billion savings in yr 1
$900 billion savings in yr 1
Why should YOU care about the debt?
• Like climate change, once debt becomes a conspicuous problem, it may be too late.
• Rising debt reduces the fiscal space needed to respond to the next crisis (natural
disasters, war, pandemic)
• Interest costs, even under low interest rates, will grow and crowd out needed
investments (student loan reform, green energy, broadband)
• Politicians have strong incentives to leave the debt problem for future generations
– an irresponsible and immoral legacy to leave for our children
• We can change this trajectory by demanding answers and action from our
elected officials.
THE CONCORD COALITION

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Concord Coalition: The Current US Fiscal Situation (October 2020)

  • 1. The Concord Coalition COVID in the Shadow of Debt
  • 2. Before COVID-19, federal debt was already approaching record levels Source: Congressional Budget Office THE CONCORD COALITION Percent World War I Great Depression World War II Great Recession
  • 3. Caused by a long-standing structural imbalance between revenues and spending Source: Congressional Budget Office, Update to the Budget Outlook, September 2020 THE CONCORD COALITION Outlays Revenues Projected Average 1970-2019: 20.4% Average 1970-2019: 17.4% 23.0% 17.8% ● ●
  • 4. Unemployment jumped 10 points in one month and still remains historically high Source: Bureau of Labor Statistics, Unemployment Situation Report THE CONCORD COALITION
  • 5. The COVID-induced recession is deep Source: Bureau of Economic Analysis THE CONCORD COALITION Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2018 2019 2020
  • 6. The federal fiscal response to COVID-19 has been significant but appropriate THE CONCORD COALITION March 18 H.R.6201 Family First Coronavirus Response Act $192 billion March 27 $1,721 billion H.R.748 Coronavirus Aid, Relief, and Economic Security (CARES) Act March 6 $8 b H.R.6704 Coronavirus Preparedness and Response Supplemental Act April 24 $483 billion H.R.266 Paycheck Protection and Health Care Enhancement Act
  • 7. With significant consequences on near-term budget deficits Source: Congressional Budget Office, Update to the Budget Outlook, September 2020 THE CONCORD COALITION March Baseline March Baseline COVID-19 + Interest COVID-19 + Interest Trillions $1.1 T $2.0 T $1.0 T $0.8 T $3.1 T $1.8 T
  • 8. Post-COVID, a record no one wants Source: Congressional Budget Office, Update to the Budget Outlook, September 2020 THE CONCORD COALITION Projected
  • 9. Our nation’s fiscal challenges do not end with COVID-19 Source: Congressional Budget Office, The Long-Term Budget Outlook, September 2020 THE CONCORD COALITION 2019 2025 2030 2035 2040 2045 2050 Projected Waning Budgetary Effects of COVID-19 Percent -12.6 -4.6
  • 10. Growing deficits and debt remain long after the budgetary effects of COVID are gone THE CONCORD COALITION 2019 2025 2030 2035 2040 2045 2050 195 78 Source: Congressional Budget Office, The Long-Term Budget Outlook, September 2020
  • 11. Entitlements and interest costs drive spending Source: Congressional Budget Office, The Long-Term Budget Outlook, September 2020 THE CONCORD COALITION
  • 12. Revenue growth is constrained by factors affecting output Source: Congressional Budget Office, The Long-Term Budget Outlook, September 2020 THE CONCORD COALITION Potential Labor Force Size Potential Labor Force Productivity Percent 2.4 1.6
  • 13. Change in Revenues as a Percent of GDP Source: Congressional Budget Office, The Long-Term Budget Outlook, September 2020 THE CONCORD COALITION Percent Expiring tax provisions *Other Real bracket creep (wage growth > economic growth) *COVID response, rising taxable retirement income, faster earnings growth among higher income earners, rising cost of non-taxable fringe benefits
  • 14. Delay makes policy solutions more challenging Source: Congressional Budget Office, The Long-Term Budget Outlook, September 2020 THE CONCORD COALITION Deficit reduction needed by starting in fiscal year… …to reach debt equal to 2019 level in 2050 (79% GDP) …to reach debt equal to 2020 level of GDP in 2050 (100% GDP)$730 billion savings in yr 1 $900 billion savings in yr 1
  • 15. Why should YOU care about the debt? • Like climate change, once debt becomes a conspicuous problem, it may be too late. • Rising debt reduces the fiscal space needed to respond to the next crisis (natural disasters, war, pandemic) • Interest costs, even under low interest rates, will grow and crowd out needed investments (student loan reform, green energy, broadband) • Politicians have strong incentives to leave the debt problem for future generations – an irresponsible and immoral legacy to leave for our children • We can change this trajectory by demanding answers and action from our elected officials. THE CONCORD COALITION