Key Fiscal Facts & Figures

FACTS & FIGURES

According to the Congressional Budget Office’s alternative fiscal scenario, rising debts will reduce annual income per person by as much as $5,000 by 2039.

A poor fiscal foundation and rising debt uses up capital and resources, and leads to:

• A reduction in private investments that fuel job growth.
• Crowding out of public investments:
  • Infrastructure, R&D and other programs that boost economic growth.
  • Education and other policy measures that improve mobility.

The bipartisan Eberly-Swagel report stated:

• "A gradual fiscal adjustment [as it becomes clear that sustained private sector growth has been established] provides a foundation for economic growth and stability, creating an environment in which broadly-shared income gains and mobility are possible. However, the distribution and accessibility of gains should not be taken for granted. Indeed, the adjustment should ensure both that fiscal sustainability is achieved in a gradual fashion and that resources are available for growth-enhancing public uses."
• "Faster growth generates more resources for both the private and public sectors; mobility implies greater accessibility to economic success and incentive to invest; and a more stable and resilient economy provides greater opportunity for all."

FACTS & FIGURES

CBO’s current-law baseline predicts high and rapidly growing interest costs:

• Interest cost over next ten years: $5.2 trillion.
• By 2023, interest costs will exceed what the federal government has spent historically on education, research and development and nondefense infrastructure, combined.
• In 2021, we’ll spend more on interest costs than on health insurance for low-income Americans (Medicaid, CHIP and exchange subsidies).
• By 2023, interest will be the third largest federal "program" (exceeded only by Social Security and Medicare).
• CBO's less optimistic projections show even higher interest costs.

Growing interest costs put pressure on important programs.

• Growing debt levels will lead to continued budget battles.
  • Infrastructure, R&D and other programs that boost economic growth.
  • Education and other policy measures that improve mobility.
• Spending caps set by the Budget Control Act and the 2013 sequestration are real life examples of crowding out.
  • Indiscriminate across-the-board cuts to important investments were made due to budgetary pressures under a poor U.S. fiscal posture.

FACTS & FIGURES

Rising federal debt and an unsustainable fiscal outlook put all government programs in danger.

According to the 2014 Trustees Reports, key programs for Americans are in jeopardy:

• Social Security
  • Trust Funds will be exhausted in 19 years, which could lead to an automatic cut for all beneficiaries of 23%. Low-income seniors rely on Social Security benefits for a large share of their retirement income.
  • Disability trust fund will become insolvent by 2016, meaning full disability benefits could be cut by 19%.
• Medicare
  • Medicare Hospital Insurance Trust Fund will run out in 2030.

Delaying reforms not only puts the vulnerable at risk but gives retirees less time to prepare.

• The sooner action is taken, the more options are on the table and the more gradual the reforms can be.
• Planned reforms are more fair than sudden cuts.

A fiscal plan is critical to protecting these programs from budgetary pressure in an uncertain fiscal environment.

FACTS & FIGURES

An economic policy is not credible if it is based on an unsustainable fiscal path.

Getting our fiscal house in order will lead to:

• Increased consumer and business confidence in the U.S.
  • Domestically and internationally
• More certainty regarding:
  • Future U.S. economic posture
  • Future tax policies and spending programs

Americans across party lines are concerned about our fiscal outlook, according to the Peterson Foundation’s Fiscal Confidence Index, a monthly measure of public confidence about the nation's long-term debt and the efforts elected leaders are making to address America’s fiscal challenges.

• The August 2014 Fiscal Confidence Index was 43 (100 is neutral), indicating voters view addressing our long-term debt as a top priority in order to secure our economic future.

Failing to deal with our long-term debt path has economic costs.

• A recent paper from Macroeconomic Advisers found significant damage to the economy due to government-by-crisis, in the form of uncertainty, decreased GDP growth and higher unemployment.

CBO's 2014 Long-Term Budget Outlook: "The projected amounts of debt would reduce the total amounts of national saving and income in the long term; increase the government’s interest payments, thereby putting more pressure on the rest of the budget; limit lawmakers’ flexibility to respond to unforeseen events; and increase the likelihood of a fiscal crisis."

FACTS & FIGURES

While annual deficits have decreased from the highs of the Great Recession, the long-term problem is still as undeniable as ever.

• The long-term path remains unsustainable. According to the CBO Alternative Fiscal Scenario, our debt will more than double to 183% of GDP in 25 years.
• Slower recent healthcare cost growth has only bought us time. It has not solved the problem. Healthcare spending is still on a sharp upward path. Further:
  • Some of the slowdown in cost growth may be due to the weak economy, and may not be permanent.
  • Long-term healthcare projections are also inherently uncertain.

Fiscal reforms enacted early:

• Can be more modest in terms of budgetary impact.
  • Compounding interest on growing debt means more reforms needed to stabilize the debt.
• Can be phased in more gradually, with less disruption to the economy or people.

Acting under budget pressure or in crisis (real or self-imposed) eliminates the best options and leads to worse policy.

Cutting a deal now gives the nation fiscal certainty.

• Can always make incremental policy adjustments after a more stable fiscal posture has been achieved.