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"National Debt Basics." By James D. Agresti. Just Facts, April 26, 2011. Updated 8/26/15. http://www.justfacts.com/nationaldebt.basics.asp

 
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» This research contains basic facts about the national debt. For detailed facts, click here. For a video, click here.

 

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Introductory Notes

Quantifying the National Debt

Causes

Spending and Taxes

Spending Distribution

Tax Distribution

Consequences

Politics

Responsibility

Current Policies

Alternative Policies

Public Opinion

Congresses

Presidents

Government Accounting

Ownership

Debt Owed to Non-Federal Entities

- Debt Owed to Foreign Entities

Debt Owed to Federal Entities

Media

Budget Cuts

Tax Cuts

Context

 

Be Informed: National Debt

 

Introductory Notes

 

In keeping with Just Facts' Standards of Credibility, all graphs show the full range of available data, and all facts are cited based upon availability and relevance, not to slant results by singling out specific years that are different from others.

In keeping with the practice of the Congressional Budget Office and other federal agencies that attend to budget policy, many of the federal debt, spending and revenue figures in this research are expressed as a percentage of gross domestic product (GDP). This is because debates about the size of government and the effects of its debt are frequently centered upon how much of a nation's economy is consumed by government. This measure also accounts for population growth, some of the effects of inflation, and the relative capacity of government to service the debt.

 

 

* As of April 3, 2015, the official debt of the United States government is $18.2 trillion.[1] This amounts to $56,649 for every person living in the U.S.[2] or $147,304 per household.[3]

 

* Publicly traded companies are legally required to account for "explicit" and "implicit" future obligations such as employee pensions and retirement benefits.[4] [5] [6] The federal budget is not bound by this rule.[7] [8]

 

* Using accounting principles that approximate how publicly traded companies are required to calculate their obligations,[9] at the close of its 2014 fiscal year, the federal government had about $74.3 trillion in debts, liabilities, and unfunded obligations.[10]

 

* This $74.3 trillion shortfall is 91% of the combined net worth of all U.S. households and nonprofit organizations, including all assets in savings, real estate, corporate stocks, private businesses, and consumer durable goods such as automobiles.[11] [12]

 

* This shortfall equates to $232,627 for every person living in the U.S.[13] or $603,194 per household.[14]

 

* These figures depend upon "a wide range of complex assumptions" made by federal agencies.[15]

 
Causes of the National Debt

 


Spending and Taxes

 

[16]

 


Spending Distribution

 

justFacts

† Social programs include income security, healthcare, education, housing, and recreation.

‡ National defense includes military spending and veterans' benefits.

§ General government and debt service includes the executive & legislative branches, tax collection, financial management, and interest payments.

# Economic affairs includes transportation, general economic & labor affairs, agriculture, natural resources, energy, and space.

£ Public order and safety includes police, fire, law courts, prisons, and immigration enforcement.

[17]

 


Tax Distribution

 

[18]

 
Consequences

 

* As detailed in publications of the Congressional Budget Office, a Brooking Institution paper authored by Alan J. Auerbach (University of California, Berkeley) & William G. Gale (Brookings Institution), and a Princeton University Press book authored by Carmen M. Reinhart (University of Maryland) & Kenneth S. Rogoff (Harvard University),[19] the following are some potential consequences of unchecked government debt:

 

• reduced "future national income and living standards"[20] [21] [22];

• "reductions in spending" on "government programs"[23];

• "higher marginal tax rates"[24];

• "higher inflation" that increases "the size of future budget deficits" and decreases the "the purchasing power" of citizens' savings and income"[25] [26];

• restricted "ability of policymakers to use fiscal policy to respond to unexpected challenges, such as economic downturns or international crises"[27];

• "losses for mutual funds, pension funds, insurance companies, banks, and other holders of federal debt"[28]; and

• increased "probability of a fiscal crisis in which investors would lose confidence in the government's ability to manage its budget, and the government would be forced to pay much more to borrow money."[29] [30]

 
Politics

 
Responsibility

 

* The U.S. Constitution vests Congress with the powers to tax, spend, and pay the debts of the federal government. Legislation to carry out these functions is typically:

 

• passed by majorities in both houses of Congress and approved by the President, or

• passed by two-thirds of both houses of Congress if the President vetoes the bill.[31]

 

* Other factors impacting the national debt include but are not limited to legislation passed by previous Congresses and Presidents,[32] economic cycles, terrorist attacks, natural disasters, demographics, and the actions of U.S. citizens and foreign governments.[33]

 


Current Policies

 

* In 2014, the Congressional Budget Office (CBO) projected the debt that the U.S. government would accumulate under current federal policies.[34] Combining these projections with historical data yields the following results:

 

[35]

 

[36] [37]

 

* Per CBO, postponing action to stabilize the debt will:

  • punish younger generations of Americans, because most of the burden would fall on them.
  • reward older generations of Americans, because "they would partly or entirely avoid the policy changes needed to stabilize the debt."
  • "substantially increase the size of the policy adjustments needed to put the budget on a sustainable course."[38]

Alternative Policies 

 

* As alternatives to the CBO's current policy projections detailed above, the CBO also ran projections for scenarios such as these:

 

1) "Current law"[39]:

 

• Federal taxes (as a percent of GDP) will progressively increase through 2084 to be 35% higher than the average of the past 40 years (1974–2013).[40] [41] [42]

• Payments for Medicare services will undergo reductions that will likely cause "severe problems with beneficiary access to care."[43] [44]

 

2) Republican Congressman Paul Ryan's 2014 budget resolution called the "The Path to Prosperity"[45]:

 

• Federal taxes (as a percent of GDP) will progressively increase by 2032 to be 9% higher than the average of the past 40 years and then remain constant thereafter.[46] [47]

• Starting in 2024, Medicare beneficiaries will have a choice to enroll in private plans paid for by Medicare or remain in the traditional Medicare program.[48] Also starting in 2024, the eligibility age for Medicare benefits will incrementally rise to correspond with Social Security's retirement age.[49] [50]
• Federal Medicaid spending will be converted to an "allotment that each state could tailor to meet its needs, indexed for inflation and population growth."[51] The expansion of Medicaid mandated by the Affordable Care Act (a.k.a. Obamacare) will be repealed.[52] [53]
• All federal spending related to Obamacare's exchange subsidies will be repealed.[54]

 

* Combining historical data on the national debt with CBO's projections for current policy, current law, and the Ryan plan yields the following results:

 

[55]

 


Public Opinion

 

* A poll conducted in November 2010 by the Associated Press and CNBC found that:

 

• 85% of Americans are worried that the national debt "will harm future generations."

• 56% think "the shortfalls will spark a major economic crisis in the coming decade."

• when asked to choose between two options to balance the budget, 59% prefer to cut unspecified government services, while 30% prefer to raise unspecified taxes.[56]

 


 

* A poll conducted by NBC News and the Wall Street Journal in February 2011 found that:

 

• 22% of Americans think cuts in Social Security spending will be needed to "significantly reduce the federal budget deficit," 49% do not, and 29% have no opinion or are not sure.

• 18% think cuts in Medicare spending will be needed to "significantly reduce the federal budget deficit," 54% do not, and 28% have no opinion or are not sure.[57]

 

* Other than interest on the national debt, most of the long-term growth in federal spending (as a percent of GDP) under the CBO's current policy and current law scenarios stems from Social Security, Medicare, Medicaid, the Children's Health Insurance Program, and Affordable Care Act (a.k.a. Obamacare) subsidies.[58]

 


Congresses

 

* During the first session of the 113th Congress (January–December 2013), U.S. Representatives and Senators introduced 168 bills that would have reduced spending and 828 bills that would have raised spending.[59]

 

* The table below shows the effect on spending of these bills by political party. This data is provided by the National Taxpayers Union Foundation and represents the annual net effects of these bills (omitting inflation).[60]

 
  Costs/Savings of Bills Sponsored or

Cosponsored in 2013 by Typical Congressman (in billions)

   Increases  Decreases  Net Agenda
House Democrats  $407  $10  $397
Senate Democrats  $22  $3  $18
House Republicans  $9  $91  -$83
Senate Republicans  $6  $165  -$159

[61]

 

* Click here to look up any member of Congress and see the costs and savings of the legislation he or she has sponsored.

 


Presidents

 

* In February 2001, Republican President George W. Bush stated:

 

Many of you have talked about the need to pay down our national debt. I listened, and I agree. We owe it to our children and grandchildren to act now, and I hope you will join me to pay down $2 trillion in debt during the next 10 years. At the end of those 10 years, we will have paid down all the debt that is available to retire. That is more debt, repaid more quickly than has ever been repaid by any nation at any time in history.[62]

 

* From the time that Congress enacted Bush's first major economic proposal (June 2001[63]) until the time that he left office (January 2009), the national debt rose from 53% of GDP to 74%, or an average of 2.7 percentage points per year.[64]

 

* During eight years in office, President Bush vetoed 12 bills, four of which were overridden by Congress and thus enacted without his approval.[65] These bills were projected by the Congressional Budget Office to increase the deficit by $26 billion during 2008-2022.[66]

 


 

* In February 2009, Democratic President Barack Obama stated:

 

I refuse to leave our children with a debt that they cannot repay—and that means taking responsibility right now, in this administration, for getting our spending under control.[67]

 

* From the time that Congress enacted Obama's first major economic proposal (February 2009[68]) until December 31, 2014, the national debt rose from 74% of GDP to 103%, or an average of 4.8 percentage points per year.[69]

 

* As of May 18, 2015, President Obama has vetoed four bills, none of which have been overridden by Congress and thus enacted without his approval.[70]

 
Government Accounting

 

* Some federal programs (such as Social Security) have "trust funds" that are legally separated from the rest of the federal government.[71]

 

* When these programs spend less than the federal government allocates to them, their surpluses are loaned to the federal government. This creates a legal obligation for the federal government to pay money and interest to these programs, thus adding to the national debt.[72] [73] [74] [75] [76]

 

* The federal government divides the national debt into two main categories[77] [78]:

 

1) money that it owes to federal entities such as the Social Security program; and

2) money that it owes to non-federal entities such as individuals, corporations, local governments, and foreign governments.[79] Also, money owed to the Federal Reserve is classified under this category, even though the Federal Reserve is a federal entity.[80] [81]

 

NOTE: Just Facts has identified numerous instances in which politicians and journalists have used terms that technically refer to the overall national debt, when in fact, they are only referring to a portion of it. In order to clear up some of the confusion this has created, below are common terms for the national debt categorized by their proper meanings:

 

(a) Overall national debt: gross debt, federal debt, public debt[82]

(b) Portion of the national debt owed to federal entities: debt held by government accounts, government-held debt, intragovernmental holdings[83] [84] [85]

(c) Portion of the national debt owed to non-federal entities: debt held by the public, publicly held debt[86] [87]

 

* On December 31, 2014, the national debt consisted of:

 

$5.1 trillion  owed to federal entities
$13.0 trillion  owed to non-federal entities
$18.1 trillion  owed in total

[88]

 

* The federal law that governs the repayment of the national debt draws no distinction between the debt owed to federal and non-federal entities. Both must be repaid with interest.[89]

 

* The White House Office,[90] [91] Congressional Budget Office,[92] and other federal agencies[93] sometimes exclude the debt owed to federal entities in their reckonings of the national debt because this portion of the debt "represents internal transactions of the government and thus has no effect on credit markets."

 

* Federal programs to which this money is owed, such as Social Security and Medicare, include this money and the interest it generates in their assets and financial projections.[94] [95] [96]

 
Ownership

 

* As of June 30, 2015, the national debt consists of:

 

     Portion of Total
$13.1 trillion  owed to non-federal entities (i.e., publicly held debt)  72%
$5.1 trillion  owed to federal entities (i.e., intragovernmental debt)  28%

[97]

 


Debt Owed to Non-Federal Entities

 

* Ownership of publicly held debt as of December 31, 2014:

 

[98]

 


Debt Owed to Foreign Entities

 

* Ownership of U.S. government debt by foreign creditors as of April 30, 2015:

 

[99]

 


Debt Owed to Federal Entities

 

* Ownership of intergovernmental debt as of June 30, 2015:

 

[100]

 
Media

 

Budget Cuts

 

* In April 2011, journalists reported on a "$38 billion" federal budget cut agreement with the following headlines and wording:

 

• "New Cuts Detailed in Agreement for $38 Billion in Reductions"; "deep budget cuts in programs for the poor, law enforcement, the environment and civic projects" - Los Angeles Times[101]

• "Congress Sends Budget Cut Bill to Obama"; "cutting a record $38 billion from domestic spending" - Associated Press[102]

• "Budget Deal to Cut $38 Billion Averts Shutdown"; "Republicans were able to force significant spending concessions from Democrats…." – New York Times[103]

 

* None of these articles contained a budget-wide frame of reference for the cuts. A spending reduction of $38 billion equates to 1.0% of the estimated 2011 budget or 2.7% of the projected deficit:

 

[104]

 


Tax Cuts

 

* In February 2010, Fareed Zakaria of CNN stated:

 

Now, please understand that the Bush tax cuts are the single largest part of the black hole that is the federal budget deficit.[105]

 

* As of April 11, 2011, the federal government has not published a hindsight estimate of the Bush tax cuts with figures for 2010.[106] Per a 2007 Congressional Budget Office projection adjusted for inflation, the Bush tax cuts were slated to have a revenue effect of -$283 billion in fiscal year 2010.[107] This equates to 22% of the reported budget deficit or 8% of the budget.[108]

 


Context

 

* Without mentioning the role of Congress in taxes, spending, or the national debt,[109] [110] PolitiFact, a Pulitzer Prize-winning project of the St. Petersburg Times to "help you find the truth in politics," wrote that the national debt increased by $5.73 trillion "under" George W. Bush whereas there were budget surpluses "at the end of the Clinton administration."[111]

 

* Below are the fluctuations in national debt organized by the tenures of recent presidents and congressional majorities:

 
Political Power  Dates  Average Annual Change

in National Debt

(Percentage Points of GDP)

Bill Clinton with Democratic

House and Senate

 1/20/93 - 1/4/95  0.9
Bill Clinton with Republican

House and Senate

 1/4/95 - 1/19/01  -1.6
George W. Bush with Republican

House and Senate

 1/19/01 - 6/6/01,

11/12/02 - 1/4/07

 0.8
George W. Bush with Republican

House and Democratic Senate

 6/6/01 - 11/12/02  2.3
George W. Bush with Democratic

House and Senate

 1/4/07 - 1/20/09  6.5
Barack Obama with Democratic

House and Senate

 1/20/09 - 1/4/11  9.3
Barack Obama with Republican

House and Democratic Senate

 1/5/11 - 1/6/15  1.9

[112]

 

* Other factors impacting the national debt include but are not limited to legislation passed by previous congresses and presidents,[113] economic cycles, terrorist attacks, natural disasters, demographics, and the actions of U.S. citizens and foreign governments.[114]

 
Footnotes

 

[1] Webpage: "The Debt to the Penny and Who Holds It." Bureau of the Public Debt, United States Department of the Treasury. Accessed April 7, 2015 at http://www.treasurydirect.gov/NP/debt/current

 

As of 4/3/2015, the "Total Public Debt Outstanding" is $18,152,112,019,695.

 

[2] Dataset: "Monthly Population Estimates for the United States: April 1, 2010 to December 1, 2014." U.S. Census Bureau, Population Division, April 2014. http://www.census.gov/popest/data/index.html

 

"Resident Population … March 1, 2014 [=] 320,430,996"

 

CALCULATION: $18,152,112,019,695 debt / 320,430,996 people = $56,649 debt/person

 

[3] Dataset: "Average Number of People per Household, by Race and Hispanic Origin, Marital Status, Age, and Education of Householder: 2014." U.S. Census Bureau, January 2015. http://www.census.gov/hhes/families/data/cps2014.html

Total households = 123,229,000

CALCULATION: $18,152,112,019,695 debt / 123,229,000 households = $147,304 debt/household

 

[4] Report: "Enron: Selected Securities, Accounting, and Pension Laws Possibly Implicated in its Collapse." By Michael V. Seitzinger, Marie B. Morris, and Mark Jickling. Congressional Research Service, Library of Congress, January 16, 2002. http://fpc.state.gov/documents/organization/7960.pdf

 

Page 2:

 

Among the disclosures of publicly traded companies are accounting statements. Since financial information is of little use to investors unless all firms use comparable accounting methods, the securities laws give the Securities and Exchange Commission broad authority to establish standards for financial reporting. The SEC has delegated the task of writing accounting standards to private sector bodies, and since 1973 the Financial Accounting Standards Board has been charged with formulating accounting and financial reporting standards.

 

[5] Summary of Statement No. 106: "Employers' Accounting for Postretirement Benefits Other Than Pensions." Financial Accounting Standards Board, December 1990. http://www.fasb.org/st/summary/stsum106.shtml

 

This Statement establishes accounting standards for employers' accounting for postretirement benefits other than pensions…. It will significantly change the prevalent current practice of accounting for postretirement benefits on a pay-as-you-go (cash) basis by requiring accrual, during the years that the employee renders the necessary service, of the expected cost of providing those benefits to an employee and the employee's beneficiaries and covered dependents. …

 

… The Board believes that measurement of the obligation and accrual of the cost based on best estimates are superior to implying, by a failure to accrue, that no obligation exists prior to the payment of benefits. The Board believes that failure to recognize an obligation prior to its payment impairs the usefulness and integrity of the employer's financial statements. …

 

The provisions of this Statement are similar, in many respects, to those in FASB Statements No. 87, Employers' Accounting for Pensions, and No. 88, Employers' Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits. …

 

This Statement relies on a basic premise of generally accepted accounting principles that accrual accounting provides more relevant and useful information than does cash basis accounting. …

 

[L]ike accounting for other deferred compensation agreements, accounting for postretirement benefits should reflect the explicit or implicit contract between the employer and its employees.

 

[6] Book: Finance for Managers. By Richard Luecke and Samuel L. Hayes. Harvard Business School Press, 2002. Page 39:

 

In contrast to cash-basis accounting, accrual accounting records transactions as they are made, whether or not the cash has actually changed hands. Most companies of any size use accrual accounting. This system provides a better matching between revenues and their associated cost, which helps companies understand the true causes and effect of business activities. Accordingly, revenues are recognized during the period in which the sales activities occur, whereas expenses are recognized in the same period as their associated revenues.

 

[7] See the three notes above for details regarding the manner in which publicly traded companies are required to calculate their debt and obligations using accrual-based accounting. The following note explains that the federal budget, in contrast, is calculated on a cash basis.

 

[8] "2008 Financial Report of the United States Government." U.S. Department of the Treasury, 2008. http://www.fms.treas.gov/fr/08frusg/08frusg.pdf

 

Page 21 (in pdf): "The President's Budget (Budget), the Government's primary financial planning and control tool, describes how the Government spent and plans to spend the money it collects.

 

Page 30 (in pdf): President's Budget … Prepared primarily on a 'cash basis'

 

[9] Report: "Understanding the Primary Components of the Annual Financial Report of the United States Government." U.S. Government Accountability Office, September, 2005. http://www.gao.gov/new.items/d05958sp.pdf

 

Page 5:

 

Accrual accounting, which is also used by private business enterprises, is the basis for U.S. generally accepted accounting principles for federal government entities. It is intended to provide a complete picture of the federal government's financial operations and financial position. The federal government primarily uses the cash basis of accounting for its budget, which is the federal government's primary financial planning and control tool.

 

Page 6:

 

The accrual basis of accounting recognizes revenue when it is earned and recognizes expenses in the period incurred, without regard to when cash is received or disbursed. The federal government, which receives most of its revenue from taxes, nevertheless recognizes tax revenue when it is collected, under an accepted modified cash basis of accounting.

 

[10]

 

Federal Debt, Liabilities, Obligations, and Assets at Close of the 2014 Fiscal Year

Category

 (Billions $)
Publicly Held Debta b 12,833.6
Liabilitiesc 7,932
Social Security Future Expenditures in Excess of Future Dedicated Revenuesd b 28,150
Medicare Future Expenditures in Excess of Future Dedicated Revenuese b 28,481
Assetsf -3,065.3
Total 74,331


NOTES:


a) "Fiscal Year 2014 Financial Report of the United States Government." U.S. Department of the Treasury, February 26, 2015. http://www.fiscal.treasury.gov/…

Page 48: "United States Government Balance Sheets as of September 30, 2014 (In billions of dollars) … Federal debt securities held by the public and accrued interest [=] 12,833.6"

b) "Publicly held debt" differs from the "national debt" in that it excludes "intergovernmental debt," which is money that the federal government owes to various trust funds such as Social Security's. Just Facts uses the publicly held debt in this calculation because this is the convention of the Financial Report of the United States Government, which is the source for the federal assets and liabilities cited in the table above. Facts regarding why and how the federal government keeps its books in this manner are covered in the section of this research entitled "Government Accounting." Hence, to account for the portion of the national debt that consists of monies owed to the Social Security and Medicare Trust Funds, the shortfalls for these programs in the table above do not include the trust fund balances.

c) See here
 

d) Calculated by adding Social Security's unfunded closed-group obligation of $25,386 billion to Social Security's trust fund assets of $2,764 billion (see here for documentation of this data). The sum of these figures equals $28,150 billion.

e) Calculated by adding Medicare's unfunded closed-group obligation of $28,200 billion to Medicare's trust fund assets of $280.5 billion (see here for documentation of this data). The sum of these figures equals $28,481 billion.

f) "Fiscal Year 2014 Financial Report of the United States Government." U.S. Department of the Treasury, February 26, 2015. http://www.fiscal.treasury.gov/…. Page 46: "United States Government Balance Sheets"

 

Assets

 2014 (billions $)
Cash and other monetary assets 264.9
Accounts and taxes receivable, net 104.0
Loans Receivable and Mortgage-Backed

Securities, net

1,123.5
TARP Direct Loans & Equity Investments,

net

2.2
Inventories and related property, net 318.4
Property, plant, and equipment, net 878.3
Debt and equity securities 115.4
Investments in Government-Sponsored

Enterprises;

95.8
Other assets 162.8
Total  3065.3

 

[11] Calculated with data from the footnote above and the report: "Financial Accounts of the United States: Flow of Funds, Balance Sheets, and Integrated Macroeconomic Accounts, Fourth Quarter 2014." Board of Governors of the Federal Reserve System, March 12, 2015. http://www.federalreserve.gov/releases/z1/current/z1.pdf


Page 133: "B.101 Balance Sheet of Households and Nonprofit Organizations … Billions of dollars; amounts outstanding end of period, not seasonally adjusted … [Line] 42 Net worth … 2014 Q3 [=] 81394.8"

NOTE: Household assets detailed in this table include items such as real estate, corporate equities, mutual funds, equity in noncorporate businesses, life insurance, pension fund reserves, and consumer durable goods. Liabilities detailed in this table include items such as home mortgages and consumer credit. Nonprofit organizations are explicitly named in the title of this table because their assets are not considered household property, whereas assets of for-profit entities are considered household property.

CALCULATION: $74,331 in federal debts, liabilities, and Social Security/Medicare obligations / $8,1394.8 net worth of households and nonprofit organizations = 91%

 

[12] Webpage: "Updated PPI Commodity Weight Allocations to Stage-of-Processing Indexes." Bureau of Labor Statistics. Last modified February 18, 2009. http://www.bls.gov/ppi/ppisopallo.htm

 

"SOP 3130 - Consumer Durable Goods: contains nonfood products, ready for final consumption, with a life expectancy of more than three years. Examples of durable goods include furniture, passenger cars, and appliances."

 

[13] Dataset: "Monthly Population Estimates for the United States: April 1, 2010 to December 1, 2015." U.S. Census Bureau, Population Division, March 2015. http://www.census.gov/popest/data/index.html

"Resident Population … October 1, 2014 [=] 319,528,204"

CALCULATION: $74,331,000,000,000 / 319,528,204 people = $232,627/person

 

[14] Dataset: "Average Number of People per Household, by Race and Hispanic Origin, Marital Status, Age, and Education of Householder: 2014." U.S. Census Bureau, January 2015. http://www.census.gov/hhes/families/data/cps2014.html

"Total households (In Thousands) … All [=] 123,229"

CALCULATION: $74,331,000,000,000 / 123,229,000 households = $603,194 / household

 

[15] "2010 Financial Report of the United States Government." U.S. Department of the Treasury, December 21, 2010. http://www.fms.treas.gov/fr/10frusg/10frusg.pdf

 

Page 5: "Further, the long-term nature of these costs and their sensitivity to a wide range of complex assumptions can, in some cases, cause significant fluctuation in agency and Governmentwide costs from year to year. … At VA and other agencies that administer postemployment benefit programs, these fluctuations are attributable to an array of assumptions and variables including interest rates, inflation, beneficiary eligibility, life expectancy, and cost of living."

 

Page 131: "Assumptions are made about many economic and demographic factors, including gross domestic product (GDP), earnings, the CPI, the unemployment rate, the fertility rate, immigration, mortality, disability incidence and terminations and, for the Medicare projections, health care cost growth."

 

[16] Calculated with data from:

 

a) Dataset: "Table 3.2. Federal Government Current Receipts and Expenditures." United States Department of Commerce, Bureau of Economic Analysis. Last revised May 29, 2015. http://www.bea.gov/iTable/iTable.cfm?ReqID=9&step=1
Line items 1 and 20: "Current receipts" and "Current expenditures"

b) Dataset: "Table 1.1.5. Gross Domestic Product." United States Department of Commerce, Bureau of Economic Analysis. Last revised May 29, 2015. http://www.bea.gov/iTable/iTable.cfm?ReqID=9&step=1

 

NOTE: An Excel file containing the data and calculations is available upon request.

 

[17] Calculated with data from:

 

a) Dataset: "Table 3.16. Government Current Expenditures by Function." U.S. Department of Commerce, Bureau of Economic Analysis. Last revised September 17, 2014. http://www.bea.gov/iTable/iTable.cfm…

 

b) Report: "Fiscal Year 2015 Historical Tables: Budget Of The U.S. Government." White House Office of Management and Budget, February 26, 2014. http://www.whitehouse.gov/sites/default/files/omb/…
Pages 50-59: "Table 3.1—Outlays by Superfunction and Function: 1940–2018."
Line item: "Veterans Benefits and Services."

 

NOTES:

- Per correspondence from the Bureau of Economic Analysis (March 8, 2011), spending for veterans' benefits is "included within those functions that best reflect the nature of the specific benefits programs managed by the agency." Per the White House Office of Management and Budget (Table 3.2: "Outlays by Function and Subfunction, 1962–2016." Accessed March 8, 2011 at http://www.whitehouse.gov/omb/budget/Historicals), "Veterans benefits and services" consist of "Income security for veterans," "Veterans education, training, and rehabilitation," "Hospital and medical care for veterans," "Veterans housing," and "Other veterans benefits and services." These all fall into categories that Just Facts categorizes as "Social programs." Thus, Just Facts subtracted the total "Veterans benefits and services" from the "Social programs" category and added this to the "National defense" category. Per the same correspondence from the Bureau of Economic Analysis, "The administrative expenses of the [Veterans' Affairs] agency … might be included within the General Public Service function." Because of the uncertainty implicit in this statement and the lack of such data from all sources known to Just Facts, we are unable to segregate this spending.

- Given the recent steep rise in the national debt, Just Facts has been asked why the portion of federal spending dedicated to "General government and debt service" has generally fallen since the mid-1990s. Major causes for this include (1) the recent steep rise in overall government spending (2) the recent low interest rates (3) the interest payments shown here do not include the interest due on government-held (a.k.a., "nonmarketable") debt, which as of February 28, 2011, has a 75% higher interest rate than publicly held debt ["Average Interest Rates on U.S. Treasury Securities." February 2011, U.S. Department of the Treasury. http://www.treasurydirect.gov/govt/rates/pd/avg/2011/2011_02.htm]. Facts regarding why and how the federal government keeps its books in this manner are covered in the section of this research entitled "Government Accounting."

- An Excel file containing the data and calculations is available upon request.

 

[18] Constructed with data from:


 

a) Dataset: "The Distribution of Household Income and Federal Taxes, 2011." Congressional Budget Office, November 12, 2014. http://www.cbo.gov/…


b) Report: "The Distribution of Household Income and Federal Taxes, 2011." Congressional Budget Office, November 12, 2014. https://www.cbo.gov/…


Page 1: "Federal taxes as examined in this report comprise four separate sources: individual income taxes, payroll (or social insurance) taxes, corporate income taxes, and excise taxes."

Page 5:


For this analysis, federal taxes include individual income taxes, payroll taxes, corporate income taxes, and excise taxes, which together accounted for approximately 92 percent of all federal revenues in fiscal year 2011. Revenues from states' deposits for unemployment insurance, estate and gift taxes, miscellaneous fees and fines, and net income earned by the Federal Reserve, which make up the remaining 8 percent, are not allocated to households in this analysis, mainly because it is uncertain to which households those revenue sources should be attributed.


Page 2 (in PDF): "Before-tax income is market income plus government transfers. Market income consists of labor income, business income, capital gains (profits realized from the sale of assets), capital income excluding capital gains, income received in retirement for past services, and other sources of income."

Pages 32–33:


Government transfers consist of the cost of two types of benefits: Cash. Payments from Social Security, unemployment insurance, Supplemental Security Income, Temporary Assistance for Needy Families (and its predecessor, Aid to Families With Dependent Children), veterans' programs, workers' compensation, and state and local government assistance programs. In-Kind Benefits. The cost of Supplemental Nutrition Assistance Program vouchers (popularly known as food stamps); school lunches and breakfasts; housing assistance; energy assistance; and benefits provided by Medicare, Medicaid, and the Children's Health Insurance Program.


Page 5:


Transfers as measured in this report do not equal total government spending on the transfer programs included in the analysis. The values of most transfers are based on amounts reported in the Census Bureau's Current Population Survey. The values of transfers from Medicare, Medicaid, and the Children's Health Insurance Program are based on the Census Bureau's estimate of the government's average cost of providing those benefits. In addition, because some transfers go to recipients outside the scope of the survey data collected by the Census Bureau and because some recipients misreport the amount of transfer payments they receive, the total amount of government transfers observed in the data used here is lower than the total amount the government spends through those transfer programs.


Pages 15–16:


Two important caveats apply to CBO's estimates of federal tax rates under 2013 tax rules. First, the analysis does not account for any shifts in the distribution of income between 2011 and 2013, which will not be known until detailed tax information becomes available. The further recovery of the economy might have resulted in uneven growth in incomes at different points in the income scale, which could affect tax rates for households in different income groups. Additionally, taxpayers probably changed their behavior in various ways in response to the changes in tax rules between 2011 and 2013. For example, higher-income taxpayers probably shifted some income from 2013 into 2012 in anticipation of the scheduled tax increases. Such shifts represent temporary changes in income, and holding incomes fixed, as this analysis does, may be a better way to measure the longterm effects of the tax changes. However, higher-income taxpayers probably also reduced their incomes in permanent ways because of the tax increases, and to the extent that is true, holding incomes fixed misstates the long-term effects of the tax changes.

Second, CBO considered only the major changes to individual income and payroll taxes and did not incorporate minor changes to those taxes or any changes to corporate income taxes or excise taxes.20 For example, under 2011 law, tax filers with qualifying investment properties could deduct 100 percent of their investment expenses. That full expensing provision (introduced in the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010) expired at the end of 2012, and the depreciation schedule used for investments in 2013 was less generous than the full expensing in effect in 2011. Under the rules for 2013, depreciation deductions would have been smaller and taxable business income and taxes would therefore have been larger than the amounts reflected in CBO's analysis of 2011 data.

 

NOTE: An Excel file containing the data and calculations is available upon request.

 

[19] Book: This Time is Different: Eight Centuries of Financial Folly. By Carmen M. Reinhart (University of Maryland) and Kenneth S. Rogoff (Harvard University). Princeton University Press, 2009.

 

xxvii: "Our aim here is to be expansive, systematic, and quantitative: our empirical analysis covers sixty-six countries over nearly eight centuries."

 

[20] Brief: "Federal Debt and the Risk of a Fiscal Crisis." Congressional Budget Office, July 27, 2010. http://www.cbo.gov/ftpdocs/116xx/doc11659/07-27_…

 

Page 1: "Some of those consequences would arise gradually: A growing portion of people's savings would go to purchase government debt rather than toward investments in productive capital goods such as factories and computers; that 'crowding out' of investment would lead to lower output and incomes than would otherwise occur."

 

[21] Report: "The Long-Term Budget Outlook." Congressional Budget Office, June 2010 (Revised August 2010). https://www.cbo.gov/sites/default/files/06-30-ltbo.pdf

 

Page xi: "Large budget deficits would reduce national saving, leading to higher interest rates, more borrowing from abroad, and less domestic investment—which in turn would lower income growth in the United States."

 

[22] Paper: "Tempting Fate: The Federal Budget Outlook." By Alan J. Auerbach and William G. Gale. Brookings Institution, February 8, 2011. http://www.brookings.edu/~/media/Files/rc/papers/2011/…

 

Page 14: "[S]ustained large deficits will reduce future national income and living standards."

 

[23] Brief: "Federal Debt and the Risk of a Fiscal Crisis." Congressional Budget Office, July 27, 2010. http://www.cbo.gov/ftpdocs/116xx/doc11659/07-27_…

 

Page 1: "Rising interest costs might also force reductions in spending on important government programs."

 

[24] Brief: "Federal Debt and the Risk of a Fiscal Crisis." Congressional Budget Office, July 27, 2010. http://www.cbo.gov/ftpdocs/116xx/doc11659/07-27_Debt_…

 

Page 1: "[I]f the payment of interest on the extra debt was financed by imposing higher marginal tax rates, those rates would discourage work and saving and further reduce output."

 

[25] Book: This Time is Different: Eight Centuries of Financial Folly. By Carmen M. Reinhart (University of Maryland) and Kenneth S. Rogoff (Harvard University). Princeton University Press, 2009.

 

Page 175: "[I]nflation has long been the weapon of choice in sovereign defaults on domestic debt and, where possible, on international debt."

 

Page 77: "Inflation conditions often continue to worsen after an external default.12"

 

Page 398: "12 Domestic defaults produce even worse inflation outcomes; see chapter 9."

 

Page 175: "[G]overnments engage in massive monetary expansion, in part because they can thereby gain a seigniorage tax on real money balances (by inflating down the value of citizen's currency and issuing more to meet demand). But they also want to reduce, or even wipe out, the real value of public debts outstanding."

 

Page 400: "Seigniorage is simply the real income a government can realize by exercising its monopoly on printing currency. The revenue can be broken down into the quantity of currency needed to meet the growing transactions demand at constant prices and the remaining growth, which causes inflation, thereby lowering the purchasing power of existing currency."

 

[26] Brief: "Federal Debt and the Risk of a Fiscal Crisis." Congressional Budget Office, July 27, 2010. http://www.cbo.gov/ftpdocs/116xx/doc11659/07-27_…

 

Page 13:

 

[A]s governments create money to finance their activities or pay creditors during fiscal crises, they raise inflation. Higher inflation has negative consequences for the economy, especially if inflation moves above the moderate rates seen in most developed countries in recent years.[footnote omitted] Higher inflation might appear to benefit the U.S. government financially because the value of the outstanding debt (which is mostly fixed in dollar terms) would be lowered relative to the size of the economy (which would increase when measured in dollar terms). [footnote omitted] However, higher inflation would also increase the size of future budget deficits.

 

[27] Brief: "Federal Debt and the Risk of a Fiscal Crisis." Congressional Budget Office, July 27, 2010. http://www.cbo.gov/ftpdocs/116xx/doc11659/07-27_…

 

Page 1: "Moreover, rising debt would increasingly restrict the ability of policymakers to use fiscal policy to respond to unexpected challenges, such as economic downturns or international crises."

 

[28] Brief: "Federal Debt and the Risk of a Fiscal Crisis." Congressional Budget Office, July 27, 2010. http://www.cbo.gov/ftpdocs/116xx/doc11659/07-27_…

 

Page 7: "A sudden increase in interest rates would also reduce the market value of outstanding government bonds, inflicting losses on investors who hold them. That decline could precipitate a broader financial crisis by causing losses for mutual funds, pension funds, insurance companies, banks, and other holders of federal debt—losses that might be large enough to cause some financial institutions to fail."

 

[29] Report: "The Long-Term Budget Outlook." Congressional Budget Office, June 2010 (Revised August 2010). https://www.cbo.gov/sites/default/files/06-30-ltbo.pdf

 

Page xi: "Over time, higher debt would increase the probability of a fiscal crisis in which investors would lose confidence in the government's ability to manage its budget, and the government would be forced to pay much more to borrow money."

 

Page 14: "The federal government could not issue ever-larger amounts of debt relative to the size of the economy indefinitely. If debt continued to rise rapidly relative to GDP, investors at some point would begin to doubt the government's willingness to pay interest on that debt."

 

[30] Brief: "Federal Debt and the Risk of a Fiscal Crisis." Congressional Budget Office, July 27, 2010. http://www.cbo.gov/ftpdocs/116xx/doc11659/07-27_Debt_…

 

Pages 4-5:

 

A rising level of government debt would have another significant negative consequence. Combined with an unfavorable long-term budget outlook, it would increase the probability of a fiscal crisis for the United States. In such a crisis, investors become unwilling to finance all of a government's borrowing needs unless they are compensated with very high interest rates; as a result, the interest rates on government debt rise suddenly and sharply relative to rates of return on other assets. Unfortunately, there is no way to predict with any confidence whether and when such a crisis might occur in the United States; in particular, there is no identifiable tipping point of debt relative to GDP indicating that a crisis is likely or imminent. But all else being equal, the higher the debt, the greater the risk of such a crisis. …

 

The history of fiscal crises in other countries does not necessarily indicate the conditions under which investors might lose confidence in the U.S. government's ability to manage its budget or the consequences for the nation of such a loss of confidence. On the one hand, the United States may be able to issue more debt (relative to output) than the governments of other countries can, without triggering a crisis, because the United States has often been viewed as a "safe haven" by investors around the world, and the U.S. government's securities have often been viewed as being among the safest investments in the world. On the other hand, the United States may not be able to issue as much debt as the governments of other countries can because the private saving rate has been lower in the United States than in most developed countries, and a significant share of U.S. debt has been sold to foreign investors.

 

[31] Constitution of the United States. Signed September 17, 1787. http://justfacts.com/constitution.asp

 

Article I, Section 7:

 

[Clause 1] All Bills for raising Revenue shall originate in the House of Representatives; but the Senate may propose or concur with Amendments as on other Bills.

 

[Clause 2] Every Bill which shall have passed the House of Representatives and the Senate, shall, before it become a Law, be presented to the President of the United States; If he approve he shall sign it, but if not he shall return it, with his Objections to that House in which it shall have originated, who shall enter the Objections at large on their Journal, and proceed to reconsider it. If after such Reconsideration two thirds of that House shall agree to pass the Bill, it shall be sent, together with the Objections, to the other House, by which it shall likewise be reconsidered, and if approved by two thirds of that House, it shall become a Law. But in all such Cases the Votes of both Houses shall be determined by yeas and Nays, and the Names of the Persons voting for and against the Bill shall be entered on the Journal of each House respectively. If any Bill shall not be returned by the President within ten Days (Sundays excepted) after it shall have been presented to him, the Same shall be a Law, in like Manner as if he had signed it, unless the Congress by their Adjournment prevent its Return, in which Case it shall not be a Law.

 

Article I, Section 8, Clause 1: "The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States…."

 

[32] Report: "A Citizen's Guide to the Federal Budget: Fiscal Year 2000." White House Office of Management and Budget, January 1999. http://www.gpo.gov/…

 

Pages 18–19:

 

• Discretionary spending, which accounts for one-third of all Federal spending, is what the President and Congress must decide to spend for the next year through the 13 annual appropriations bills. It includes money for such activities as the FBI and the Coast Guard, for housing and education, for space exploration and highway construction, and for defense and foreign aid.

• Mandatory spending, which accounts for two-thirds of all spending, is authorized by permanent laws, not by the 13 annual appropriations bills. It includes entitlements--such as Social Security, Medicare, veterans' benefits, and Food Stamps--through which individuals receive benefits because they are eligible based on their age, income, or other criteria. It also includes interest on the national debt, which the Government pays to individuals and institutions that hold Treasury bonds and other Government securities. The President and Congress can change the law in order to change the spending on entitlements and other mandatory programs--but they don't have to.

 

[33] Report: "GAO Strategic Plan, 2007-2012." U.S. Government Accountability Office, March 2007. http://www.gao.gov/new.items/d071sp.pdf

 

Page 15:

 

Table 2: Forces Shaping the United States and Its Place in the World

 

Changing security threats: The world has changed dramatically in overall security, from the conventional threats posed during the Cold War era to more unconventional and asymmetric threats. Providing for people's safety and security requires attention to threats as diverse as terrorism, violent crime, natural disasters, and infectious diseases. The response to many of these threats depends not only on the action of the U.S. government but also on the cooperation of other nations and multilateral organizations, as well as on state and local governments and the private and independent sectors. Complicating such efforts are a number of failed states allowing the trade of arms, drugs, or other illegal goods; the spread of infectious diseases; and the accommodation of terrorist groups. …

 

Economic growth and competitiveness: Economic growth and competition are also affected by the skills and behavior of U.S. citizens, the policies of the U.S. government, and the ability of the private and public sectors to innovate and manage change. … Importantly, the saving and investment behavior of U.S. citizens affects the capital available to invest in research, development, and productivity enhancement. …

 

Global interdependency: Economies as well as governments and societies are becoming increasingly interdependent as more people, information, goods, and capital flow across increasingly porous borders. …

 

Societal change: The U.S. population is aging and becoming more diverse. As U.S. society ages and the ratio of elderly persons and children to persons of working age increases, the sustainability of social insurance systems will be further threatened. Specifically, according to the 2000 census, the median age of the U.S. population is now the highest it has ever been, and the baby boomer age group—people born from 1946 to 1964, inclusive—was a significant part of the population.

 

[34] Report: "The 2014 Long-Term Budget Outlook." Congressional Budget Office, July 2014. https://www.cbo.gov/…

 

Pages 77, 79: "CBO's extended alternative fiscal scenario is based on the assumptions that certain policies that are now in place but are scheduled to change under current law will be continued and that some provisions of law that might be difficult to sustain for a long period will be modified. The scenario, therefore, captures what some analysts might consider to be current policies, as opposed to current laws."

 

[35] a) Dataset: "The 2014 Long-Term Budget Outlook." Congressional Budget Office, July 15, 2014. https://www.cbo.gov/…

 

b) Dataset: "An Update to the Budget and Economic Outlook: Fiscal Years 2014 to 2024." Congressional Budget Office, August 2014. https://www.cbo.gov/…

 

[36] † To measure the entirety of the national debt, it would be preferable to show "gross" debt instead of "publicly held" debt, but this data is not presented in this report. Nonetheless, it would make little difference because the excluded debt primarily resides in federal government trust funds that dwindle and become insolvent during the projection period. Facts regarding why and how the federal government keeps its books in this manner are covered in the section of this research entitled "Government Accounting."

 

Report: "The 2014 Long-Term Budget Outlook." Congressional Budget Office, July 2014. https://www.cbo.gov/…

 

Page 9: "Under both scenarios, the trust funds for Social Security and Part A of Medicare would become insolvent during the long-term projection period."

 

Page 13:

 

The most meaningful measure of federal debt for such projections is debt held by the public, which represents the amount that the government is borrowing in the financial markets (by issuing Treasury securities) to pay for federal operations and activities. That borrowing competes with other participants in the credit markets for financial resources and can crowd out private investment.14

 

14 In contrast, debt held by trust funds and other government accounts—which, together with debt held by the public, make up gross federal debt—represents internal transactions of the government and thus has no effect on credit markets.

 

[37] Dataset: "The 2014 Long-Term Budget Outlook." Congressional Budget Office, July 15, 2014. https://www.cbo.gov/…

 

"Figure 1-1. Federal Debt Held by the Public"

"Figure 6-3. Long-Run Effects of the Fiscal Policies in CBO’s Extended Alternative Fiscal Scenario"

NOTE: These debt projections account for the economic effects of federal debt, taxes, and spending. Per CBO:


The results with economic feedback include the economic effects of the budget policies and the effects of that economic feedback on the budget. Those results are CBO’s central estimates from ranges determined by alternative assessments about how much deficits “crowd out” investment in capital goods such as factories and computers (because a larger portion of people’s savings is being used to purchase government securities) and how much people respond to changes in after-tax wages by adjusting the number of hours they work.

 

[Report: "The 2014 Long-Term Budget Outlook." Congressional Budget Office, July 2014. https://www.cbo.gov/…. Page 76.]

 

[38] a) Report: "The 2014 Long-Term Budget Outlook." Congressional Budget Office, July 2014. https://www.cbo.gov/…

Pages 12-13:


Second, CBO has estimated the amount by which delaying policy changes to reduce deficits would increase the size of the policy adjustments needed to achieve any chosen goal for debt. If the goal was to have the debt equal 74 percent of GDP in 2039 but to wait to implement new policies until 2020, the combination of increases in revenues and reductions in noninterest spending over the 2020–2039 period would need to be 1.5 percent of GDP, rather than the 1.2 percent of GDP needed to reach that goal if policy changes took effect in 2015 (see Figure 1-2). If lawmakers waited even longer— until 2025—to take action, the policy changes over the 2025–2039 period would need to amount to 2.1 percent of GDP. If, instead of aiming to keep debt from rising relative to GDP, lawmakers wanted to return debt to its historical average percentage of GDP—but policy changes did not take effect until 2020—the policy changes would need to amount to 3.2 percent rather than 2.6 percent of GDP. Waiting an additional five years would require even larger changes, amounting to 4.3 percent of GDP.

Third, CBO has studied how waiting to resolve the long-term fiscal imbalance would affect various generations of the U.S. population. In 2010, CBO compared economic outcomes under a policy that would stabilize the debt-to- GDP ratio starting in 2015 with outcomes under a policy that would delay stabilizing the ratio until 2025.6 That analysis suggested that generations born after about 2015 would be worse off if action to stabilize the debt-to-GDP ratio was postponed to 2025. People born before 1990, however, would be better off if action was delayed— largely because they would partly or entirely avoid the policy changes needed to stabilize the debt—and generations born between 1990 and 2015 could either gain or lose from a delay, depending on the details of the policy changes.7

6. See Congressional Budget Office, Economic Impacts of Waiting to Resolve the Long-Term Budget Imbalance (December 2010), www.cbo.gov/publication/21959. That analysis was based on a projection of slower growth in debt than CBO now projects, so the estimated effects of a similar policy today would be close, but not identical, to the effects estimated in that earlier analysis.

7. Those conclusions do not incorporate the possible negative effects of a fiscal crisis or effects that might arise from the government’s reduced flexibility to respond to unexpected challenges.


b) Report: "The Long-Term Budget Outlook." Congressional Budget Office, June 2010 (Revised August 2010). https://www.cbo.gov/publication/21546?index=11579


Page 16:


Waiting to close the fiscal gap would make the necessary changes larger. To illustrate the costs of delay, CBO simulated the effects of closing the fiscal gap under the alternative fiscal scenario beginning in 2011, 2015, 2020, or 2025. Those simulations indicate that postponing action would substantially increase the size of the policy adjustments needed to put the budget on a sustainable course. For example, if lawmakers wanted to close the fiscal gap through 2035 but did not begin until 2015, they would have to reduce primary spending or increase revenues over that period by 5.7 percent of GDP, rather than by 4.8 percent if they acted in 2011 (see Figure 1-3). If they waited until 2020 to close the fiscal gap through 2035, they would have to cut noninterest outlays or raise revenues over that period by 7.9 percent of GDP. Moreover, those simulations omit the effects that deficits and debt would have on economic growth and interest rates in the intervening years; incorporating such effects would make the impact of delaying policy changes even more severe.

 

[39] Report: "The Long-Term Budget Outlook." Congressional Budget Office, June 2010 (Revised August 2010). https://www.cbo.gov/sites/default/files/06-30-ltbo.pdf

 

Page ii: "The extended-baseline scenario adheres closely to current law, following CBO's 10-year baseline budget projections through 2020 (with adjustments for the aforementioned health care legislation) and then extending the baseline concept for the rest of the long-term projection period."

 

Page 2: "The current-law assumption of the extended-baseline scenario implies that many adjustments that lawmakers have routinely made in the past—such as changes to the AMT [Alternative Minimum Tax] and to the Medicare program's payments to physicians—will not be made again."

 

[40] Dataset: "The 2014 Long-Term Budget Outlook." Congressional Budget Office, July 15, 2014. https://www.cbo.gov/…

 

Tab 1. "Summary Data for the Extended Baseline."

 

[41] Report: "The 2014 Long-Term Budget Outlook." Congressional Budget Office, July 2014. https://www.cbo.gov/…

 

Pages 7–8: "… CBO projects, revenues would remain roughly stable relative to GDP for the next 10 years as an increase in individual income taxes was offset by a decline in receipts from corporate income taxes and remittances from the Federal Reserve (all relative to the size of the economy)."

Page 18:


Revenue projections through 2024 follow the 10-year baseline, which generally incorporates the assumption that various tax provisions will expire as scheduled even if they have routinely been extended in the past. After 2024, rules for individual income taxes, payroll taxes, excise taxes, and estate and gift taxes are assumed to evolve as scheduled under current law.13 Because of the structure of current tax law, total federal revenues from those sources are estimated to grow faster than GDP over the long run. Revenues from corporate income taxes and other sources (such as receipts from the Federal Reserve System) are assumed to remain constant as a percentage of GDP after 2024….


13 The sole exception to the current-law assumption applies to expiring excise taxes dedicated to trust funds. The Deficit Control Act requires CBO's baseline to reflect the assumption that those taxes would be extended at their current rates. That law does not stipulate that the baseline include the extension of other expiring tax provisions, even if they have been routinely extended in the past.


Page 59: "After 2024, revenues would continue rising faster than GDP, largely for two reasons: Growth in real (inflation-adjusted) income and the interaction of the tax system with inflation would push a greater proportion of income into higher tax brackets; and certain tax increases enacted in the Affordable Care Act (ACA) would generate increasing amounts of revenues relative to the size of the economy."


Pages 64–65:


Under CBO's extended baseline, marginal tax rates on income from labor and capital would rise over time. The effective federal marginal tax rate on labor income—that is, the marginal tax rate on labor income averaged across taxpayers using weights proportional to their labor income—is projected to increase from about 29 percent in calendar year 2014 to 34 percent in 2039…. By contrast, the effective federal marginal tax rate on capital income (returns on investment) is projected to rise only from 18 percent to 19 percent over that period.


Page 66:


The cumulative effect of rising prices would significantly reduce the value of some parameters of the tax system that are not indexed for inflation. As one example, CBO estimates that the amount of mortgage debt eligible for the mortgage interest deduction, which is not indexed for inflation, would fall from $1 million today to less than $600,000 in 2039 measured in today's dollars. As another example, the portion of Social Security benefits subject to taxation would increase from about 30 percent now to about 50 percent by 2039, CBO estimates, because the thresholds for taxing benefits are not indexed for inflation.

 

[42] Calculated with data from:

 

a) Dataset: "The 2014 Long-Term Budget Outlook." Congressional Budget Office, July 15, 2014. https://www.cbo.gov/…
Tab 1. "Summary Data for the Extended Baseline (Percentage of Gross Domestic Product). … Revenues … 2084 [=] 23.5"
Figure 1-3. "Spending and Revenues Under CBO's Extended Baseline, Compared With Past Averages. (Percentage of Gross Domestic Product) … Revenues … Total … Average, 1974–2013 [=] 17.4."
 

b) Report: "The 2014 Long-Term Budget Outlook." Congressional Budget Office, July 2014. https://www.cbo.gov/…

Page 60: "Over the past 40 years, total federal revenues have ranged from a high of 19.9 percent of GDP (in 2000) to a low of 14.6 percent (in 2009 and 2010), with no evident trend over time…."


CALCULATION: (23.5% - 17.4%) / 17.4% = 35%

 

[43] Report: "The 2014 Long-Term Budget Outlook." Congressional Budget Office, July 2014. https://www.cbo.gov/…

 

Page 8:


CBO's 10-year and extended baselines are meant to serve as benchmarks for measuring the budgetary effects of proposed changes in federal revenues or spending. They are not meant to be predictions of future budgetary outcomes; rather, they represent CBO's best assessment of how the economy and other factors would affect revenues and spending if current law generally remained unchanged. In that way, the baselines incorporate the assumption that some policy changes that lawmakers have routinely made in the past—such as preventing the sharp cuts to Medicare's payment rates for physicians that are called for by law—will not be made again.

Page 16: "… the projections incorporate the reduction in Medicare's payments to physicians scheduled for 2015 and the reductions in Medicare spending specified in the Budget Control Act of 2011, as amended, for 2015 through 2024."

 

[44] "2014 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds." Centers for Medicare and Medicaid Services, July 28, 2014. http://www.cms.gov/…

Pages 276–277:


STATEMENT OF ACTUARIAL OPINION …

In past reports, the Board of Trustees has emphasized the virtual certainty that actual Part B expenditures will exceed the projections under current law due to further legislative action to avoid substantial reductions in the Medicare physician fee schedule. Current law would require a physician fee reduction of almost 21 percent on April 1, 2015—an implausible expectation.

Since lawmakers have overridden these scheduled reductions each year since 2003, the Trustees have changed the basis of their projections of Part B expenditures from current law to a projected baseline, which includes an assumption that the physician payment updates will equal the increase averaged over the last 10 years. This change results in a far more reasonable expectation of Medicare expenditures than occurs under current law. The projected baseline estimates are summarized throughout the main body of this report, while current-law estimates are included in appendix C.

The Affordable Care Act is making important changes to the Medicare program that are designed, in part, to substantially improve its financial outlook. While the ACA has been successful in reducing many Medicare expenditures to date, there is a strong possibility that certain of these changes will not be viable in the long range. Specifically, the annual price updates for most categories of non-physician health services will be adjusted downward each year by the growth in economy-wide productivity. The ability of health care providers to sustain these price reductions will be challenging, as the best available evidence indicates that most providers cannot improve their productivity to this degree for a prolonged period given the labor-intensive nature of these services.

Absent an unprecedented change in health care delivery systems and payment mechanisms, the prices paid by Medicare for health services will fall increasingly short of the costs of providing these services. By the end of the long-range projection period, Medicare prices for many services would be less than half of their level without consideration of the productivity price reductions. Before such an outcome would occur, lawmakers would likely intervene to prevent the withdrawal of providers from the Medicare market and the severe problems with beneficiary access to care that would result. Overriding the productivity adjustments, as lawmakers have done repeatedly in the case of physician payment rates, would lead to substantially higher costs for Medicare in the long range than those projected in this report.

 

[45] Report: "Budgetary and Economic Outcomes Under Paths for Federal Revenues and Noninterest Spending Specified by Chairman Ryan, April 2014." Congressional Budget Office, April 1, 2014. http://www.cbo.gov/…

 

Page 2: "The amounts of federal debt and economic output estimated for all of the scenarios in this report are highly uncertain. That uncertainty stems from the difficulties inherent in projecting the effects of federal fiscal policies, especially far into the future."

Page 12:


The projections for debt, revenues, spending, and economic output presented in this report are highly uncertain for many reasons. The projections are based on CBO's central estimates for key parameters of economic behavior—including the extent to which government borrowing crowds out capital investment and the effect that changes in real after-tax wages have on the supply of labor.11 Estimates of those and other economic parameters are uncertain, and analysis using different parameters can produce results that are substantially higher or lower than CBO's central estimates.

 

[46] Dataset: "Budgetary and Economic Outcomes Under Paths for Federal Revenues and Noninterest Spending Specified by Chairman Ryan, April 2014." Congressional Budget Office, April 1, 2014. https://www.cbo.gov/…

 

Figure 11: "Revenues Under Various Budget Scenarios, With Macroeconomic Effects (Percentage of Gross Domestic Product) … Paths for Revenues and Noninterest Spending Specified by Chairman Ryan … 2015 [=] 18.2 … 2025 [=] 18.4 … 2032 [=] 19.0"

 

[47] Calculated with data from the previous footnote and the dataset: "The 2014 Long-Term Budget Outlook." Congressional Budget Office, July 15, 2014. https://www.cbo.gov/…

 

Figure 1-3: "Spending and Revenues Under CBO's Extended Baseline, Compared With Past Averages (Percentage of Gross Domestic Product). … Revenues … Total Revenues … Average, 1947 to 2013 [=] 17.4"

CALCULATION: (19.0 - 17.4) / 17.4 = 9.2%

 

[48] Report: "The Path to Prosperity: Fiscal Year 2015 Budget Resolution." House Budget Committee, April 2014. https://budget.house.gov/uploadedfiles/fy15_blueprint.pdf

 

Pages 58–59:


The Medicare reform envisioned in this budget resolution begins with a commitment to keep the promises made to those who now are in or near retirement. Consequently, for those who enter the program before 2024, the Medicare program and its benefits will remain as they are, without change.

For future retirees, the budget supports an approach known as "premium support." Starting in 2024, seniors (those who first become eligible by turning 65 on or after January 1, 2024) would be given a choice of private plans competing alongside the traditional fee-for-service Medicare program on a newly created Medicare Exchange. Medicare would provide a premium-support payment either to pay for or offset the premium of the plan chosen by the senior, depending on the plan's cost. For those who were 55 or older in 2013, they would remain in the traditional Medicare system.

The Medicare recipient of the future would choose, from a list of guaranteed-coverage options, a health plan that best suits his or her needs. This is not a voucher program. A Medicare premium-support payment would be paid, by Medicare, directly to the plan or the fee-for-service program to subsidize its cost. The program would operate in a manner similar to that of the Medicare prescription-drug benefit. The Medicare premium-support payment would be adjusted so that the sick would receive higher payments if their conditions worsened; lower-income seniors would receive additional assistance to help cover out-of-pocket costs; and wealthier seniors would assume responsibility for a greater share of their premiums.

This approach to strengthening the Medicare program—which is based on a long history of bipartisan reform plans—would ensure security and affordability for seniors now and into the future. In September 2013, the Congressional Budget Office analyzed illustrative options of a premium support system. They found that a program in which the premium-support payment was based on the average bid of participating plans would result in savings for affected beneficiaries as well as the federal government.52

Moreover, it would set up a carefully monitored exchange for Medicare plans. Health plans that chose to participate in the Medicare Exchange would agree to offer insurance to all Medicare beneficiaries, to avoid cherry-picking, and to ensure that Medicare's sickest and highest-cost beneficiaries receive coverage.

While there would be no disruptions in the current Medicare fee-for-service program for those currently enrolled or becoming eligible before 2024, all seniors would have the choice to opt in to the new Medicare program once it began in 2024. This budget envisions giving seniors the freedom to choose a plan best suited for them, guaranteeing health security throughout their retirement years.

52 Congressional Budget Office, "A Premium Support System for Medicare: Analysis of Illustrative Options," 18 Sept. 2013.

 

[49] Report: "The Path to Prosperity: Fiscal Year 2015 Budget Resolution." House Budget Committee, April 2014. https://budget.house.gov/uploadedfiles/fy15_blueprint.pdf

 

Page 59: "Also starting in 2024, the age of eligibility for Medicare would begin to rise gradually to correspond with Social Security's retirement age and the fee-for-service benefit would be modernized to have a single deductible and by reforming supplemental insurance policies."

 

[50] Calculated with "Summary Tables for the Path to Prosperity: Fiscal Year 2015 Budget Resolution." House Budget Committee, April 2014. http://budget.house.gov/…


a) Table S-3. "FY2015 House Budget by Major Category (Outlays in Billions) … Medicare (Net) … 2016 [=] $552 … 2020 [=] $684 … 2024 [=] $855."

b) Table S-4. "FY2015 House Budget vs. Current Policy by Major Category (Outlays in Billions) … Medicare (Net) … 2016 [=] $-3 … 2020 [=] $-13 … 2024 [=] $-38."

CALCULATIONS:
$-3 / ($552 + $3) = -0.5%
$-13 / ($684 + $13) = -1.9%
-$38 / ($855 + $38) = -4.3%

 

[51] Report: "The Path to Prosperity: Fiscal Year 2015 Budget Resolution." House Budget Committee, April 2014. https://budget.house.gov/uploadedfiles/fy15_blueprint.pdf

 

Pages 54–55:


Provide State Flexibility on Medicaid. One way to secure the Medicaid benefit is by converting the federal share of Medicaid spending into an allotment that each state could tailor to meet its needs, indexed for inflation and population growth. Such a reform would end the misguided one-size-fits-all approach that has tied the hands of state governments. States would no longer be shackled by federally determined program requirements and enrollment criteria. Instead, each state would have the freedom and flexibility to tailor a Medicaid program that fit the needs of its unique population.

The budget resolution proposes to transform Medicaid from an open-ended entitlement into a block-granted program like SCHIP [State Children's Health Insurance Program]. These programs would be unified under the proposal and grown together for population growth and inflation.

This reform also would improve the health-care safety net for low-income Americans by giving states the ability to offer their Medicaid populations more options and better access to care. Medicaid recipients, like all other Americans, deserve to choose their own doctors and make their own health-care decisions, instead of having Washington make those decisions for them.

There are numerous examples across the country where states have used the existing, but limited, flexibility of Medicaid's waiver program to introduce innovative reforms that produced cost savings, quality improvements, and beneficiary satisfaction. The state of Indiana implemented such reforms through the Healthy Indiana Plan, a patient-centered system that provided health coverage to uninsured residents who didn't qualify for Medicaid. Enrollees in this program had access to benefits such as physician services, prescription drugs, both patient and outpatient hospital care, and disease management.

The Medicaid reforms proposed in the fiscal year 2015 budget provide all states with the necessary flexibility to pursue reforms similar to the Indiana plan.

Based on this kind of reform, this budget assumes $732 billion in savings over ten years, easing the fiscal burdens imposed on state budgets and contributing to the long-term stabilization of the federal government's fiscal path.

 

[52] Report: "The Path to Prosperity: Fiscal Year 2015 Budget Resolution." House Budget Committee, April 2014. https://budget.house.gov/uploadedfiles/fy15_blueprint.pdf

 

Page 55:


Repeal the Medicaid Expansions in the New Health-Care Law. The recently enacted health-care law calls for major expansions in the Medicaid program beginning in 2014. These expansions will have a significant impact on the federal share of the Medicaid program and will dramatically increase outlays.

In the face of enormous stress on federal and state budgets and declining quality of care in Medicaid, the new health-care law would increase the eligible population for the program by one-third. For fiscal years 2015 through 2024, CBO projects the new law will increase federal spending by $792 billion.

This future fiscal burden will have serious budgetary consequences for both federal and state governments. While the health law requires the federal government to finance 100 percent of the Medicaid costs associated with covering new enrollees, this provision begins to phase out in fiscal year 2016. At that time, state governments will be required to assume a share of this cost. This share increases from fiscal year 2016 through 2020, when states will be required to finance 10 percent of the health law's expansion of Medicaid.

Not only does this expansion magnify the challenges to both state and federal budgets, it also binds the hands of local governments in developing solutions that meet the unique needs of their citizens. The health-care law would exacerbate the already crippling one-size-fits-all enrollment mandates that have resulted in below-market reimbursements, poor health-care outcomes, and restrictive services. The budget calls for repealing the Medicaid expansions contained in the health-care law and removing the law's burdensome programmatic mandates on state governments. Adopting this option would save $792.4 billion over ten years.

 

[53] Calculated with "Summary Tables for the Path to Prosperity: Fiscal Year 2015 Budget Resolution." House Budget Committee, April 2014. http://budget.house.gov/…

a) Table S-3. "FY2015 House Budget by Major Category (Outlays in Billions) … Medicaid & Other Health … 2016 [=] $311 … 2020 [=] $343 … 2024 [=] $403."

b) Table S-4. "FY2015 House Budget vs. Current Policy by Major Category (Outlays in Billions) … Medicaid & Other Health … 2016 [=] $-31 … 2020 [=] $-80 … 2024 [=] $-124."

CALCULATIONS:
-$31 / ($311 + $31) = -9.1%
$-80 / ($343 + $80) = -18.9%
$-124 / ($403 + $124) = -23.5%

 

[54] Report: "The Path to Prosperity: Fiscal Year 2015 Budget Resolution." House Budget Committee, April 2014. https://budget.house.gov/uploadedfiles/fy15_blueprint.pdf

 

Pages 55–56:


Repeal the Exchange Subsidies Created by the New Health-Care Law. According to CBO estimates, the health law proposes to spend $1.2 trillion over the next ten years providing eligible individuals with subsidies to purchase government-approved health insurance. These subsidies can only be used to purchase plans that meet standards determined by the new health-care law. In addition to this enormous market distortion, the law also stipulates a complex maze of eligibility and income tests to determine how much of a subsidy qualifying individuals may receive.

The new law couples these subsidies with a mandate for individuals to purchase health insurance and bureaucratic controls on the types of insurance that may legally be offered. Taken together, these provisions will undermine the private insurance market, which serves as the backbone of the current U.S. health-care system. Exchange subsidies will undermine the competitive forces of the marketplace. Government mandates will drive out all but the largest insurance companies. Punitive tax penalties will force individuals to purchase coverage whether they choose to or not. Further, this budget does not condone any policy that would require entities or individuals to finance activities or make health decisions that violate their religious beliefs. This budget provides for the repeal of the President's onerous health-care law for this and many other reasons.

Left in place, the health law will create pressures that will eventually lead to a single-payer system in which the federal government determines how much health care Americans need and what kind of care they can receive. This budget recommends repealing the architecture of this new law, which puts health-care decisions into the hands of bureaucrats, and instead allowing Congress to pursue patient-centered health-care reforms that actually bring down the cost of care by empowering consumers.

… To be clear, this budget repeals all federal spending related to the health law's exchange subsidies and related spending.

 

[55] Constructed with data from:

 

a) Dataset: "The 2014 Long-Term Budget Outlook." Congressional Budget Office, July 15, 2014. https://www.cbo.gov/…

"Figure 1-1. Federal Debt Held by the Public"
"Figure 6-3. Long-Run Effects of the Fiscal Policies in CBO’s Extended Alternative Fiscal Scenario"

 

b) Dataset: "Budgetary and Economic Outcomes Under Paths for Federal Revenues and Noninterest Spending Specified by Chairman Ryan, April 2014." Congressional Budget Office, April 1, 2014. https://www.cbo.gov/…

Figure 1: "Debt Held by the Public under CBO's Alternative Fiscal Scenario and the Roadmap (Percentage of GDP)."

 

[56] Article: "AP-CNBC Poll: Cut services to balance the budget." By Alan Fram and Jennifer Agiesta. Associated Press, November 30, 2010. http://apnews.myway.com

 

Eighty-five percent worry that growing red ink will harm future generations - the strongest expression of concern since AP polls began asking the question in 2008. Fifty-six percent think the shortfalls will spark a major economic crisis in the coming decade. …

 

Asked to choose between two paths lawmakers could follow to balance the budget, 59 percent in the AP-CNBC Poll preferred cutting unspecified government services while 30 percent picked unspecified tax increases.

 

[57] Article: "Poll Shows Budget-Cuts Dilemma." By Neil King Jr. and Scott Greenberg. Wall Street Journal, March 3, 2011. http://online.wsj.com/article/…

 

[58] Report: "The 2014 Long-Term Budget Outlook." Congressional Budget Office, July 2014. https://www.cbo.gov/…

 

Pages 19–20:


Spending for the Major Health Care Programs and Social Security

Mandatory programs have accounted for a rising share of the federal government's noninterest spending over the past few decades, averaging 60 percent in recent years. Most of the growth in mandatory spending has involved the three largest programs—Social Security, Medicare, and Medicaid. Federal outlays for those programs together made up more than 40 percent of the government's noninterest spending, on average, during the past 10 years, compared with less than 30 percent four decades ago.

Most of the anticipated growth in noninterest spending as a share of GDP over the long term is expected to come from the government's major health care programs: Medicare, Medicaid, the Children's Health Insurance Program, and the subsidies for health insurance purchased through the exchanges created under the ACA. CBO projects that, under current law, total outlays for those programs, net of offsetting receipts, would grow much faster than the overall economy, increasing from just below 5 percent of GDP now to 8 percent in 2039…. Spending for Social Security also would increase relative to the size of the economy, but by much less—from almost 5 percent of GDP in 2014 to more than 6 percent in 2039 and beyond….

Those projected increases in spending for Social Security and the government's major health care programs are attributable primarily to three causes: the aging of the population, rising health care spending per beneficiary, and the ACA's expansion of federal subsidies for health insurance.

 

[59] "BillTally Report 113-2: The Tea Is Cooling: The First Session of the 113th Congress." National Taxpayers Union Foundation, July 10, 2014. http://www.ntu.org/…

Page 2: "During the First Session of the 113th Congress, Representatives authored 496 spending bills and 112 savings bills. Senators drafted 332 increase bills and 56 savings bills. While the number of increases was the lowest seen since the 105th Congress, this is also the first time in several years that there were fewer cut bills introduced compared to the preceding Congress."

 

[60] Appendix C: "BillTally Methodology Rules." National Taxpayers Union Foundation. Accessed May 18, 2015 at http://www.ntu.org/…

 

Pages i–ii:


In cases where a Member cosponsors the same spending in more than one bill (e.g., cosponsored more than one universal health care bill), the same spending is offset and thus is not counted twice toward the Member's total. …

 

Inclusions


In estimating the cost of reauthorization and appropriation bills, NTUF [National Taxpayers Union Foundation] counts only the net increase or decrease in cost over the prior year's authorization or appropriation.

 

Page iv:


Sources of Cost Estimates


The estimates contained in the BillTally study are generally obtained from sources outside of NTUF. Where there is more than one estimate available for a given bill, NTUF uses the most credible source. Where NTUF obtains estimates from more than one equally credible source, NTUF uses the least optimistic (largest increase/smallest reduction) estimate. In cases where cost estimates are not readily available from any outside source, NTUF will attempt to calculate an estimate (with the assistance of the sponsor where possible). Generally, these estimates prove to be low compared to the actual cost of the program. …


Annualized Estimates


Each bill used in the report contains spending estimates for budget years one through five, the source of those estimates, and an annualized cost.1 NTUF cannot obtain a full five-year estimate for every bill. In some cases, only multi-year totals are available; while in others, NTUF can obtain only a first-year estimate. To compensate for this irregularity, NTUF annualizes the cost of each bill.


In general, where estimates for each of the next five fiscal years are available, or where only a five-year total estimate can be obtained, the annualized amount is the five-year average. Where only estimates for less than five fiscal years are available, the annualized amount is the average shown for those years. In certain cases where multi-year estimates are available, but where out-year spending estimates are lower than the first year estimate, the annualized amount reflects either the first year estimate, or an average of the years during which spending is projected to grow.2

 

Page vi:


Accuracy


The scope and nature of the BillTally cost survey make total precision impossible. To maximize accuracy and ensure fairness, NTUF provides Members of Congress with a significant review period to comment confidentially on the accuracy of their own reports. In response to these comments, NTUF makes appropriate changes to the BillTally database. To the extent that more up-to-date information comes to light, it will be reflected in subsequent reports. However, the comprehensive nature of the database makes it unlikely that errors with respect to individual bills will alter the general findings of this study.

 

[61] "BillTally Report 113-2: The Tea Is Cooling: The First Session of the 113th Congress." National Taxpayers Union Foundation, July 10, 2014. http://www.ntu.org/…


Pages 1-3:


This report summarizes data from NTUF's [National Taxpayers Union Foundation's] BillTally accounting software, which computes the cost or savings of all legislation introduced in the First Session of the 113th Congress that affects spending by at least $1 million. Agenda totals for individual lawmakers were developed by cross indexing their sponsorship and cosponsorship records with cost estimates for 608 House bills and 388 Senate bills under BillTally accounting rules that prevent the double counting of overlapping proposals. All sponsorship and cost data in this report were reviewed confidentially by each Congressional office prior to publication. Appendix A lists all Members alphabetically, Appendix B lists members by state delegation, and Appendix C gives a thorough explanation of the BillTally methodology. …

In the House, the average Democrat called for net spending hikes of $396.5 billion—nearly a hundred billion less than in the previous Congress and the lowest since the 107th Congress. This spending would have boosted FY 2013's total outlays by 11 percent.

During the previous Congress, the typical House Republican proposed, on net, a record level of spending cuts: $130.2 billion. In this current Congress, the amount of cuts receded by over a third, to $82.6 billion. Relative to FY 2013 total outlays, this would have reduced spending by just over 2 percent.

As recently as the 111th Congress (2009), the average Senate Democrat supported legislation that would have increased total spending by $133.7 billion (which would have represented a 4 percent increase in total budgetary outlays for that year). In this Congress their average net agenda amounted to $18.3 billion in new spending, which would grow the budget by one half of a percentage point. This marks the Senate Democrats' lowest recorded net spending agenda since the 104th Congress.

As in the previous Congress, the average Senate Republican was a net cutter, but called for a smaller level of reductions. The result was a net agenda that went from -$238.7 billion to -$159.1 billion (both net cuts). That amount would have shaved FY 2013 total outlays by 4.6 percent. …

A Senator's or Representative's record of authored and sponsored bills can be viewed as his or her legislative "wish list," free from the pressure of party leaders that normally comes with the voting process. By tabulating the cost and/or savings of each Member's agenda, taxpayers can gain a better understanding of the policy interests as well as the guiding budgetary philosophies of their elected representatives.
 

Pages 8–10:


Table 3. House Sponsorship of Legislation in the First Sessions of the Past Twelve Congresses by Party (Dollar Amounts in Millions) … Democrats … 113th Congress … Proposed Increases [=] $406,795 … Proposed Cuts [=] ($10,311) … Net Agendas [=] $396,483 … Percent Change in Fiscal Year Budget Outlays [=] 11.48 … Republicans … 113th Congress … Proposed Increases [=] $8,633 … Proposed Cuts [=] ($91,280) … Net Agendas [=] ($82,647) … Percent Change in Fiscal Year Budget Outlays [=] -2.39

Table 4. Senate Sponsorship of Legislation in the First Sessions of the Past Twelve Congresses by Party (Dollar Amounts in Millions) … Democrats … 113th Congress … Proposed Increases [=] $21,530 … Proposed Cuts [=] ($3,233) … Net Agendas [=] $18,296 … Percent Change in Fiscal Year Budget Outlays [=] 0.53 … Republicans … 113th Congress … Proposed Increases [=] $5,792 … Proposed Cuts [=] ($164,895) … Net Agendas [=] ($159,103) … Percent Change in Fiscal Year Budget Outlays [=] -4.61 

 

[62] Speech: "Address of the President to Joint Sessions of Congress." President George W. Bush, February 27, 2001. http://georgewbush-whitehouse.archives.gov/news/…

 

[63] Article: "$1.35 trillion tax cut becomes law." By Kelly Wallace. CNN, June 7, 2001. http://archives.cnn.com/2001/ALLPOLITICS/06/07/bush.taxes/

 

"President George W. Bush signed into law Thursday the first major piece of legislation of his presidency, a $1.35 trillion tax cut over 10 years."

 

[64] Calculated with data from the footnote above and:

a) Webpage: "The Debt to the Penny and Who Holds It." Bureau of the Public Debt, United States Department of the Treasury. Accessed May 18, 2015 at http://www.treasurydirect.gov/NP/debt/current
"Total Public Debt Outstanding … 06/07/2001 [=] 5,672,373,164,658 … 01/20/2009 [=] 10,626,877,048,913"

b) Dataset: "Table 1.1.5. Gross Domestic Product." U.S. Department of Commerce, Bureau of Economic Analysis. Last revised April 29, 2015. http://www.bea.gov/iTable/iTable.cfm?ReqID=9&step=1
"Gross Domestic Product (billions $) … 2001 Q3 [=] 10,639.5 … 2009 Q1 [=] 14,383.9"

c) Webpage: "Calculate duration between two dates." Accessed September 29, 2012 at http://www.timeanddate.com/date/duration.html
"From and including: Thursday, June 7, 2001 … To, but not including : Tuesday, January 20, 2009 … It is 2785 days from the start date to the end date, end date included"

CALCULATIONS:
2,785 days / 365.25 days per year = 7.63 years

$5,672,373,164,658 debt on June 7, 2001 / $10,639,500,000,000 GDP in 2001Q3 = 53.3%

$10,626,877,048,913 debt on January 20, 2009 / $14,383,900,000,000 GDP in 2009Q1 = 73.9%

(73.9% - 53.3%) / 7.63 years = 2.69% per year

 

[65] Webpage: "Vetoes by President George W. Bush." United States Senate. Accessed March 15, 2011 at http://www.senate.gov/reference/Legislation/Vetoes/BushGW.htm

 

Vetoes overridden:

 

H.R.2419: Food, Conservation, and Energy Act of 2008*

 

H.R.6124: Food, Conservation, and Energy Act of 2008*

 

H.R.6331: Medicare Improvement for Patients and Providers Act of 2008

 

H.R.1495: Water Resources Development Act of 2007

 

* NOTE: "The House and Senate passed H.R. 2419 over veto, enacting 14 of 15 farm bill titles into law. The trade title (title III) was inadvertently excluded from the enrolled bill. To remedy the situation, both chambers re-passed the farm bill conference agreement (including the trade title) as H.R. 6124, again over veto. H.R. 6124, in section 4, repealed Public Law 110-234 and amendments made by it, effective on the date of that Act's enactment." [Webpage: "H.R.2419: Food, Conservation, and Energy Act of 2008." Library of Congress. Accessed May 18, 2015 at https://www.congress.gov/…]

 

[66] Calculated with data from:

 

a) Cost Estimate: "H.R. 2419, Food, Conservation, and Energy Act of 2008." Congressional Budget Office, May 13, 2008. http://www.cbo.gov/sites/default/files/hr2419conf.pdf

"Relative to CBO’s March 2008 baseline projections, we estimate that enacting H.R. 2419 would increase direct spending by about $3.6 billion over the 2008-2018 period, assuming that the legislation would remain in effect throughout that period. JCT and CBO estimate that revenues would increase under the legislation by $0.7 billion over the same period. On balance, those changes would produce net costs (increases in deficits or reductions in surpluses) of about $2.9 billion over the 11-year period, relative to CBO’s most recent baseline projections."

b) Cost Estimate: "H.R. 6331, Medicare Improvements for Patients and Providers Act of 2008." Congressional Budget Office, July 23, 2008. http://www.cbo.gov/sites/default/files/hr6331pgo.pdf
"CBO estimates that enacting H.R. 6331 will increase direct spending by less than $50 million over the 2008-2013 period and by $0.3 billion over the 2008-2018 period. In addition, the Joint Committee on Taxation (JCT) estimates that the act will increase federal revenues by $0.2 billion over the 2008-2013 period and by $0.4 billion over the 2008-2018 period. In total, CBO estimates that the act will reduce deficits (or increase surpluses) by $0.1 billion over the 2008-2013 period and by less than $50 million over the 2008-2018 period."

c) Cost Estimate: "H.R. 1495: Water Resources Development Act of 2007." Congressional Budget Office, September 24, 2007. http://www.cbo.gov/sites/default/files/hr1495conference.pdf
"Assuming appropriation of the necessary amounts, including adjustments for increases in anticipated inflation, CBO estimates that implementing this conference agreement for H.R. 1495 would result in discretionary outlays of about $11.2 billion over the 2008-2012 period and an additional $12.0 billion over the 10 years after 2012. (Some construction costs and operations and maintenance would continue or commence after those first 15 years.)"

CALCULATION:
$2.9 billion (over 2008-2018 for H.R. 2419) + $0.1 billion (over 2008-2013 for H.R. 6331) + $11.2 billion (over 2008-2012 for H.R. 1495) + $12.0 billion (over 2013-2022) = 26.2 billion over 2008-2022

 

[67] "Remarks at the Fiscal Responsibility Summit." By Barack Obama. Government Printing Office, February 23, 2009. https://www.whitehouse.gov/…

 

[68] Transcript: "Obama's Remarks at Stimulus Bill Signing." Washington Post, February 17, 2009. http://www.washingtonpost.com…

 

"The American Recovery and Reinvestment Act that I will sign today, a plan that meets the principles I laid out in January, is the most sweeping economic recovery package in our history."

 

[69] Calculated with data from the footnote above and:


a) Webpage: "The Debt to the Penny and Who Holds It." Bureau of the Public Debt, United States Department of the Treasury. Accessed May 18, 2015 at http://www.treasurydirect.gov/NP/debt/current
"Total Public Debt Outstanding … 01/20/2009 [=] 10,626,877,048,913 … 12/31/2014 [=] 18,141,444,135,563"

b) Dataset: "Table 1.1.5. Gross Domestic Product." U.S. Department of Commerce, Bureau of Economic Analysis. Last revised April 29, 2015. http://www.bea.gov/iTable/iTable.cfm?ReqID=9&step=1
"Gross Domestic Product (billions $) … 2009 Q1 [=] 14,382.9 … 2014 Q4 [=] 17,703.7

c) Webpage: "Calculate duration between two dates." Accessed May 18, 2015 at http://www.timeanddate.com/date/duration.html
"From and including: Tuesday, January 20, 2009 … To and including: Wednesday, December 31, 2014 … It is 2172 days from the start date to the end date, end date included"

CALCULATIONS:
2,172 days / 365.25 days per year = 5.95 years

$10,626,877,048,913 debt on January 20, 2009 / $14,382,900,000,000 GDP in 2009 Q1 = 73.9%

$18,141,444,135,563 debt on December 31, 2014 / $17,703,700,000,000 GDP in 2014 Q4 = 102.5%

(102.5% - 73.9%) / 5.95 years = 4.8% per year

 

[70] Webpage: "Vetoes by President Barack H. Obama." United States Senate. Accessed May 18, 2015 at http://www.senate.gov/reference/Legislation/Vetoes/ObamaBH.htm

 

[71] "2010 Annual Report of the Board of Trustees of The Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds." United States Social Security Administration, August 9, 2010. http://www.ssa.gov/OACT/TR/2010/tr2010.pdf

 

Page 138: "The Federal Old-Age and Survivors Insurance (OASI) Trust Fund was established on January 1, 1940 as a separate account in the United States Treasury. The Federal Disability Insurance (DI) Trust Fund, another separate account in the United States Treasury, was established on August 1, 1956. All the financial operations of the OASI and DI programs are handled through these respective funds."

 

[72] Report: "The Debt Limit: History and Recent Increases." By D. Andrew Austin. Congressional Research Service, April 29, 2008. http://fpc.state.gov/documents/organization/105193.pdf

 

Summary: "[D]ebt increases when the federal government issues debt to certain government accounts, such as the Social Security, Medicare, and Transportation trust funds, in exchange for their reported surpluses. This increases debt held by government accounts."

 

[73] Webpage: "Debt versus Deficit: What's the Difference?" United States Department of the Treasury, Bureau of the Public Debt, August 5, 2004. Last updated October 10, 2008. http://www.treasurydirect.gov/news/pressroom/pressroom_bpd08052004.htm

 

"Additionally, the Government Trust Funds are required by law to invest accumulated surpluses in Treasury securities. The Treasury securities issued to the public and to the Government Trust Funds (intragovernmental holdings) then become part of the total debt."

 

[74] "2010 Annual Report of the Board of Trustees of The Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds." Board of Trustees of the Federal OASDI Trust Funds, August 9, 2010. http://www.ssa.gov/OACT/TR/2010/tr2010.pdf

 

Page 221: "Funds not withdrawn for current monthly or service benefits, the financial interchange, and administrative expenses are invested in interest-bearing Federal securities, as required by law; the interest earned is also deposited in the trust funds."

 

[75] Report: "Federal Debt and Interest Costs." Congressional Budget Office, December 2010. http://cbo.gov/ftpdocs/119xx/doc11999/12-14-FederalDebt.pdf

 

Page IX:

 

Because those trust funds and other government accounts are part of the federal government, transactions between them and the Treasury are intragovernmental; that is, the government securities in those funds are an asset to the individual programs but a liability to the rest of the government. The resources needed to redeem the government securities in the trust funds and other accounts in some future year must be generated from taxes, income from other government sources, or borrowing by the government in that year.

 

[76] Report: "Analytical Perspectives: Budget of the U.S. Government, Fiscal Year 2011." White House Office of Management and Budget. http://www.whitehouse.gov/sites/default/files/omb/budget/fy2011/assets/spec.pdf

 

Page 57: "The … Federal social insurance and employee retirement programs … own 93 percent of the debt held by Government accounts…."

 

[77] "The Debt to the Penny and Who Holds It." United States Department of the Treasury, Bureau of the Public Debt. Accessed April 5, 2011 at http://www.treasurydirect.gov/NP/debt/current

 

NOTE: As shown in this source, the Bureau of the Public Debt breaks down the "Total Public Debt Outstanding" into "Debt Held by the Public" and "Intragovernmental Holdings." Forthcoming facts define these terms.

 

[78] Report: "The Debt Limit: History and Recent Increases." By D. Andrew Austin. Congressional Research Service, April 29, 2008. http://fpc.state.gov/documents/organization/105193.pdf

 

Summary:

 

Total debt of the federal government can increase in two ways. First, debt increases when the government sells debt to the public to finance budget deficits and acquire the financial resources needed to meet its obligations. This increases debt held by the public. Second, debt increases when the federal government issues debt to certain government accounts, such as the Social Security, Medicare, and Transportation trust funds, in exchange for their reported surpluses. This increases debt held by government accounts. The sum of debt held by the public and debt held by government accounts is the total federal debt.

 

[79] Webpage: "Frequently Asked Questions About the Public Debt." United States Department of the Treasury, Bureau of the Public Debt. Last Updated November 26, 2010. http://www.treasurydirect.gov/govt/resources/faq/faq_publicdebt.htm

 

"The Debt Held by the Public is all federal debt held by individuals, corporations, state or local governments, foreign governments, and other entities outside the United States Government less Federal Financing Bank securities. Types of securities held by the public include, but are not limited to, Treasury Bills, Notes, Bonds, TIPS, United States Savings Bonds, and State and Local Government Series securities."

 

[80] Paper: "Government Debt." By Douglas W. Elmendorf (Federal Reserve Board) and N. Gregory Mankiw (Harvard University and the National Bureau of Economic Research), January 1998. http://www.federalreserve.gov/pubs/feds/1998/199809/199809pap.pdf

 

Page 2: "The figure shows federal debt "held by the public," which includes debt held by the Federal Reserve System but excludes debt held by other parts of the federal government, such as the Social Security trust fund."

 

[81] Report: "Federal Debt and Interest Costs." Congressional Budget Office, December 2010. http://cbo.gov/ftpdocs/119xx/doc11999/12-14-FederalDebt.pdf

 

Page 14: "A significant amount of federal debt is held by the Federal Reserve—the nation's central bank and an independent entity within the government that is responsible for conducting monetary policy, among other activities."

 

[82] Report: "Analytical Perspectives: Budget of the U.S. Government, Fiscal Year 2011." White House Office of Management and Budget. http://www.whitehouse.gov/sites/default/files/omb/budget/fy2011/assets/spec.pdf

 

Page 125: "The gross Federal debt is defined to consist of both the debt held by the public and the debt held by Government accounts. Nearly all the Federal debt has been issued by the Treasury and is sometimes called 'public debt,' but a small portion has been issued by other Government agencies and is called 'agency debt.' "

 

[83] Report: "The Debt Limit: History and Recent Increases." By D. Andrew Austin. Congressional Research Service, April 29, 2008. http://fpc.state.gov/documents/organization/105193.pdf

 

Summary: "[D]ebt increases when the federal government issues debt to certain government accounts, such as the Social Security, Medicare, and Transportation trust funds, in exchange for their reported surpluses. This increases debt held by government accounts."

 

[84] Testimony: "An Overview of Federal Debt." By Paul L. Posner. United States General Accounting Office, June 24, 1998. http://www.gao.gov/archive/1998/ai98221t.pdf

 

Page 2: "[G]overnment held debt is expected to grow due to the large projected increases in trust fund surpluses invested in special Treasury securities."

 

[85] Webpage: "Frequently Asked Questions About the Public Debt." United States Department of the Treasury, Bureau of the Public Debt. Last Updated November 26, 2010. http://www.treasurydirect.gov/govt/resources/faq/faq_publicdebt.htm

 

What are Intragovernmental Holdings?

 

Intragovernmental Holdings are Government Account Series securities held by Government trust funds, revolving funds, and special funds; and Federal Financing Bank securities.

 

[86] Report: "Analytical Perspectives: Budget of the U.S. Government, Fiscal Year 2011." White House Office of Management and Budget. http://www.whitehouse.gov/sites/default/files/omb/budget/fy2011/assets/spec.pdf

 

Page 56: "For the purposes of the Budget, 'debt held by the public' is defined as debt held by investors outside of the Federal Government, both domestic and foreign, including U.S. State and local governments and foreign governments. It also includes debt held by the Federal Reserve."

 

[87] "2009 Financial Report of the United States Government." U.S. Department of the Treasury, February 26, 2010. http://fms.treas.gov/fr/09frusg/09frusg.pdf

 

Page iv: "[T]he largest contributors to the Government's net cost include … the interest paid on debt held by the public (i.e., publicly-held debt)."

 

[88] Report: "Monthly Statement of the Public Debt of the United States, December 31, 2014." United States Department of the Treasury, Bureau of the Public Debt. https://www.treasurydirect.gov/…
 
   Millions $
Debt Held By the Public  13,023,951
Intragovernmental Holdings  5,117,493
Total  18,141,444

 

[89] United States Code Title 31, Subtitle III, Chapter 31, Subchapter II, Section 3123: "Payment of obligations and interest on the public debt." Accessed April 7, 2011 at http://www.law.cornell.edu/uscode/html/uscode31/…

 

Section (a): "The faith of the United States Government is pledged to pay, in legal tender, principal and interest on the obligations of the Government issued under this chapter."

 

[90] Report: "Analytical Perspectives: Budget of the U.S. Government, Fiscal Year 2011." White House Office of Management and Budget. http://www.whitehouse.gov/sites/default/files/omb/budget/fy2011/assets/spec.pdf

 

Page 57:

 

However, issuing debt to Government accounts does not have any of the credit market effects of borrowing from the public. It is an internal transaction of the Government, made between two accounts that are both within the Government itself. Issuing debt to a Government account is not a current transaction of the Government with the public; it is not financed by private saving and does not compete with the private sector for available funds in the credit market. While such issuance provides the account with assets—a binding claim against the Treasury—those assets are fully offset by the increased liability of the Treasury to pay the claims, which will ultimately be covered by taxation or borrowing. Similarly, the current interest earned by the Government account on its Treasury securities does not need to be financed by other resources. …

 

… For all these reasons, debt held by the public and debt net of financial assets are both better gauges of the effect of the budget on the credit markets than gross Federal debt.

 

[91] Report: "Analytical Perspectives: Budget of the U.S. Government, Fiscal Year 2010." White House Office of Management and Budget, May 7, 2009. http://www.whitehouse.gov/omb/budget/fy2010/assets/spec.pdf

 

Page 223: "Debt is the largest legally binding obligation of the Federal Government. At the end of 2008, the Government owed $5,803 billion of principal to the individuals and institutions who had loaned it the money to fund past deficits."

 

NOTE: As proof that the statement above excludes the debt owed to federal entities, consider that at the end of fiscal year 2008 (September 30, 2008), the gross national debt was $10,025 billion, which consisted of $5,809 billion of publicly held debt and $4,216 billion of government-held debt. ["The Debt to the Penny and Who Holds It." United States Department of the Treasury, Bureau of the Public Debt. Accessed April 4, 2011 at http://www.treasurydirect.gov/NP/debt/current]

 

[92] Report: "The Long-Term Budget Outlook." Congressional Budget Office, June 2010 (Revised August 2010). https://www.cbo.gov/sites/default/files/06-30-ltbo.pdf

 

Page 13:

 

The most meaningful measure of federal debt for such projections is debt held by the public, which represents the amount that the government is borrowing in the financial markets (by issuing Treasury securities) to pay for federal operations and activities. That borrowing competes with other participants in the credit markets for financial resources and can crowd out private investment.14

 

14 In contrast, debt held by trust funds and other government accounts—which, together with debt held by the public, make up gross federal debt—represents internal transactions of the government and thus has no effect on credit markets.

 

[93] "2008 Financial Report of the United States Government." U.S. Department of the Treasury, 2008. http://www.fms.treas.gov/fr/08frusg/08frusg.pdf

 

Page 26: "Intra-governmental debt is not shown on the balance sheet because claims of one part of the Government against another are eliminated for consolidation purposes (see Financial Statement Note 11)."

 

[94] "2010 Annual Report of the Board of Trustees of The Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds." United States Social Security Administration, August 9, 2010. http://www.ssa.gov/OACT/TR/2010/tr2010.pdf

 

Page 141: "Another source of income to the trust funds is interest received on investments held by the trust funds. That portion of each trust fund that is not required to meet the current cost of benefits and administration is invested, on a daily basis, primarily in interest-bearing obligations of the U.S. Government (including special public-debt obligations described below)."

 

Page 2: "Total income was $807 billion ($689 billion in tax revenue and $118 billion in interest earnings), and assets held in special issue U.S. Treasury securities grew to $2.5 trillion."

 

[95] Table VI.F7: "Operations of the Combined OASI and DI Trust Funds, in Constant 2010 Dollars, Calendar Years 2010-85 [In billions]." United States Social Security Administration, Office of the Chief Actuary. Last reviewed or modified August 5, 2010. http://www.ssa.gov/OACT/TR/2010/lr6f7.html

 

NOTES:

- The "combined OASI and DI Trust Funds" comprise the "Social Security Trust Fund."

- Just Facts has conducted extensive research on Social Security, and all of the Social Security Administration's solvency projections include the monies owed to the program by the federal government.

 

[96] "Status of the Social Security and Medicare Programs: A Summary of the 2000 Annual Reports." Social Security and Medicare Boards of Trustees, April 2000. http://www.ssa.gov/history/pdf/tr00summary.pdf

 

Page 1: "Trust fund operations, in billions of dollars … HI [Hospital Insurance, a.k.a., Medicare Part A] … Assets (end of 1999) [=] 44.8"

 

[97] Report: "Monthly Statement of the Public Debt of the United States." U.S. Bureau of the Public Debt, June 30, 2015. https://www.treasurydirect.gov/…

 

[98] Calculated with data from:

 

a) Report: "Treasury Bulletin." U.S. Department of the Treasury, Financial Management Service, June 2015. https://www.fiscal.treasury.gov/…
Page 43: "Table OFS-2.—Estimated Ownership of U.S. Treasury Securities"

b) Webpage: "The Debt to the Penny and Who Holds It." Bureau of the Public Debt, United States Department of the Treasury. Accessed July 15, 2015 at http://www.treasurydirect.gov/NP/debt/current
"12/31/2014 … Debt Held by the Public [=] $13,023,951,380,768.58 … Intragovernmental Holdings [=] $5,117,492,754,794.72 … Total Public Debt Outstanding [=] $18,141,444,135,563.30"

c) Report: "Factors Affecting Reserve Balances of Depository Institutions and Condition Statement of Federal Reserve Banks." U.S. Federal Reserve, December 29, 2014. http://www.federalreserve.gov/releases/h41/20141229/
"Dec 24, 2014 … U.S. Treasury securities [=] 2,461,420 [millions $] … Federal agency debt securities [=] 38,677"

 

NOTE: An Excel file containing the data and calculations is available upon request.

 

[99] Calculated with the dataset: "Major Foreign Holders of Treasury Securities Holdings at End of Period (in billions of dollars)." U.S. Department of the Treasury, June 15, 2015. http://www.treasury.gov/ticdata/Publish/mfh.txt

NOTE: An Excel file containing the data and calculations is available upon request.

 

[100] Calculated with data from:

 

a) "Monthly Statement of the Public Debt of the United States." U.S. Bureau of the Public Debt, June 30, 2015. https://www.treasurydirect.gov/…
"Table III - Detail of Treasury Securities Outstanding, June 20, 2015 … Government Account Series - Intragovernmental Holdings"
 

b) Report: "Analytical Perspectives: Budget of the U.S. Government, Fiscal Year 2016." White House Office of Management and Budget. https://www.whitehouse.gov/…
Pages 40, 42: "The Government account holdings of Federal securities are concentrated among a few funds: the Social Security Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI) trust funds; the Medicare Hospital Insurance (HI) and Supplementary Medical Insurance (SMI) trust funds; and four Federal employee retire-ment funds. These Federal employee retirement funds include two trust funds, the Military Retirement Fund and the Civil Service Retirement and Disability Fund, and two special funds, the uniformed services Medicare- Eligible Retiree Health Care Fund (MERHCF) and the Postal Service Retiree Health Benefits Fund (PSRHBF)."

 

NOTE: An Excel file containing the data and calculations is available upon request.

 

[101] Article: "New Cuts Detailed in Agreement for $38 Billion in Reductions." By Lisa Mascaro. Los Angeles Times, April 12, 2011. http://www.latimes.com/

 

[102] Article: "Congress Sends Budget Cut Bill to Obama." By Andrew Taylor, Associated Press, Apr 14, 2011. http://www.aolnews.com/

 

[103] Article: "Budget Deal to Cut $38 Billion Averts Shutdown." By Carl Hulse. New York Times, April 8, 2011. http://www.nytimes.com/2011/04/09/us/politics/09fiscal.html

 

[104] Calculated with data from: "An Analysis of the President's Budgetary Proposals for Fiscal Year 2012." Congressional Budget Office. April 2011. http://cbo.gov/ftpdocs/121xx/doc12130/04-15-AnalysisPresidentsBudget.pdf

Page 2: "Table 1-1. Comparison of Projected Revenues, Outlays, and Deficits Under CBO's March 2011 Baseline and CBO's Estimate of the President's Budget (Billions of dollars) … 2011 … Revenues [=] 2,230 … Outlays [=] 3,629 … Total Deficit = -1,399."

 

NOTES:

- To help sort through the intricacies of this matter, Just Facts queried the legislative director of a U.S. congressman to identify the proper baselines for these cuts (referenced in this footnote). Just Facts then double-checked these figures in various ways to ensure continuity.

- An Excel file containing the data and calculations is available upon request.

 

[105] Transcript: "Fareed Zakaria GPS." CNN, February 14, 2010. http://transcripts.cnn.com/TRANSCRIPTS/1002/14/fzgps.01.html

 

NOTE: Credit for bringing this fact to our attention belongs to NewsBusters ["Fareed Zakaria: Bush Tax Cuts Are Largest Cause Of Budget Deficit." By Noel Sheppard. February 14, 2010. http://www.newsbusters.org/blogs/noel-sheppard/2010/02/…].

 

[106] Just Facts conducted a search of all federal agencies for this data and found nothing. On April 11, 2011, Just Facts sent correspondence to the Congressional Budget Office, White House Office of Management and Budget, and Joint Committee on Taxation asking if they had "published research that quantifies the actual (not projected) revenue effects of EGTRRA and JGTRRA during 2010." These acronyms collectively refer to the "Bush tax cuts" and stand for the "Economic Growth and Taxpayer Relief Act of 2001" and the "Jobs and Growth Tax Relief Reconciliation Act of 2003." The Joint Committee on Taxation and White House Office of Management and Budget replied negatively. The Congressional Budget Office did not respond. Just Facts located several estimates by nonprofit organizations but found the methodologies questionable.

 

[107] Letter: "From Peter R. Orszag (CBO Director) to John M. Spratt, Jr. (House Budget Committee Chairman)." Congressional Budget Office, July 20, 2007. http://www.cbo.gov/doc.cfm?index=8337&type=0

 

JCT [the Joint Committee On Taxation] estimated the revenue effects of EGTRRA and JGTRRA at the time the acts were considered in 2001 and 2003, respectively. Taken together, those estimates imply a loss of revenues totaling $165 billion in 2007. As you requested, CBO has calculated the debt-service costs that would result in 2007 from the legislation under an assumption that they were financed in full by additional debt rather than offset elsewhere in the budget. On that basis, CBO estimates that the revenue loss in JCT's projections would lead to additional debt-service costs of $46 billion in 2007, for a total budgetary cost of $211 billion. On the same basis, the agency estimates the total budgetary costs, including interest, for 2008 through 2011 to be $233 billion, $245 billion, $269 billion, and $215 billion, respectively.

 

NOTES:

- Per the Bureau of Labor Statistics' "CPI Inflation Calculator," $269 billion in 2007 had the same buying power as $282.90 in 2010. [Accessed April 13, 2011 at http://www.bls.gov/data/inflation_calculator.htm]

- The projections in this letter are likely overestimates given the ensuing recession's widespread negative effects on tax revenues.

 

[108] Calculated with data from the footnote above and "Analytical Perspectives: Budget of the U.S. Government, Fiscal Year 2012." White House Office of Management and Budget. http://www.whitehouse.gov/sites/default/files/omb/budget/fy2012/assets/spec.pdf

 

Page 120: "Table 12–1. Totals For the Budget and the Federal Government (In billions of dollars) … 2010 Actual … Outlays (Unified) [=] 3,456 … Deficit (Unified) [=] 1,293."

 

CALCULATIONS:

 

$282.90 billion reduced revenue from the Bush tax cuts / $1,293 reported budget deficit = 21.9%

 

$282.90 billion reduced revenue from the Bush tax cuts / $3,456 budget outlays = 8.2%

 

[109] Constitution of the United States. Signed September 17, 1787. http://justfacts.com/constitution.asp

 

Article I, Section 7:

 

[Clause 1] All Bills for raising Revenue shall originate in the House of Representatives; but the Senate may propose or concur with Amendments as on other Bills.

 

[Clause 2] Every Bill which shall have passed the House of Representatives and the Senate, shall, before it become a Law, be presented to the President of the United States; If he approve he shall sign it, but if not he shall return it, with his Objections to that House in which it shall have originated, who shall enter the Objections at large on their Journal, and proceed to reconsider it. If after such Reconsideration two thirds of that House shall agree to pass the Bill, it shall be sent, together with the Objections, to the other House, by which it shall likewise be reconsidered, and if approved by two thirds of that House, it shall become a Law. But in all such Cases the Votes of both Houses shall be determined by yeas and Nays, and the Names of the Persons voting for and against the Bill shall be entered on the Journal of each House respectively. If any Bill shall not be returned by the President within ten Days (Sundays excepted) after it shall have been presented to him, the Same shall be a Law, in like Manner as if he had signed it, unless the Congress by their Adjournment prevent its Return, in which Case it shall not be a Law.

 

Article I, Section 8, Clause 1: "The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States…."

 

[110] Report: "The Debt Limit: History and Recent Increases." By D. Andrew Austin. Congressional Research Service. Updated April 29, 2008.

 

Page 2: "The debt limit also provides Congress with the strings to control the federal purse, allowing Congress to assert its constitutional prerogatives to control spending. The debt limit also imposes a form of fiscal accountability, which compels Congress and the President to take visible action to allow further federal borrowing when the federal government spends more than it collects in revenues."

 

[111] Fact check of Rahm Emanuel's statement: "We've added, in the last eight years, $4 trillion of debt to the nation's obligations." PolitiFact, January 18, 2009. http://www.politifact.com/truth-o-meter/statements/2009/…

 

At the end of the Clinton administration, there were several years of budget surpluses. …

 

When Bush took office, the national debt was $5.73 trillion. When he left, it was $10.7 trillion. …

 

… the debt increased greatly under Bush.

 

[112] Calculated with data from:


a) Dataset: "Table 1.1.5. Gross Domestic Product." U.S. Department of Commerce, Bureau of Economic Analysis. Last revised April 29, 2015. http://www.bea.gov/iTable/iTable.cfm?ReqID=9&step=1


b) Webpage: "Dates of Sessions of the Congress, Present-1789." Accessed May 19, 2015 at http://www.senate.gov/reference/Sessions/sessionDates.htm


c) Webpage: "Chronology of Swearing-In Events." Joint Congressional Committee on Inaugural Ceremonies. Accessed May 14, 2015 at http://www.inaugural.senate.gov/swearing-in/chronology


d) Web Page: "Party Divisions of the House of Representatives (1789-Present)." U.S. House of Representatives, Office of the Clerk. Accessed May 19, 2015 at http://history.house.gov/Institution/Party-Divisions/Party-Divisions/


e) Web Page: "Party Division in the Senate, 1789-Present." U.S. Senate Historical Office. Accessed May 19, 2015 at

http://www.senate.gov/…


f) Webpage: "The Debt to the Penny and Who Holds It." Bureau of the Public Debt, United States Department of the Treasury. Accessed May 19, 2015 at http://www.treasurydirect.gov/NP/debt/current


NOTES:

- Debt/GDP calculations are performed with seasonally adjusted GDP figures from the quarters in which Presidential and Congressional power shifts occurred.

- In cases where a Congressional and Presidential power shift occur in the same quarter, the date of the presidential power shift is used as the milestone for the debt.

- An Excel file containing the data and calculations is available upon request.

 

[113] Report: "A Citizen's Guide to the Federal Budget: Fiscal Year 2000." White House Office of Management and Budget, January 1999. http://www.gpo.gov/…

 

• Discretionary spending, which accounts for one-third of all Federal spending, is what the President and Congress must decide to spend for the next year through the 13 annual appropriations bills. It includes money for such activities as the FBI and the Coast Guard, for housing and education, for space exploration and highway construction, and for defense and foreign aid.

• Mandatory spending, which accounts for two-thirds of all spending, is authorized by permanent laws, not by the 13 annual appropriations bills. It includes entitlements--such as Social Security, Medicare, veterans' benefits, and Food Stamps--through which individuals receive benefits because they are eligible based on their age, income, or other criteria. It also includes interest on the national debt, which the Government pays to individuals and institutions that hold Treasury bonds and other Government securities. The President and Congress can change the law in order to change the spending on entitlements and other mandatory programs--but they don't have to.

 

[114] Report: "GAO Strategic Plan, 2007-2012." U.S. Government Accountability Office, March 2007. http://www.gao.gov/new.items/d071sp.pdf

 

Page 15:

 

Table 2: Forces Shaping the United States and Its Place in the World

 

Changing security threats: The world has changed dramatically in overall security, from the conventional threats posed during the Cold War era to more unconventional and asymmetric threats. Providing for people's safety and security requires attention to threats as diverse as terrorism, violent crime, natural disasters, and infectious diseases. The response to many of these threats depends not only on the action of the U.S. government but also on the cooperation of other nations and multilateral organizations, as well as on state and local governments and the private and independent sectors. Complicating such efforts are a number of failed states allowing the trade of arms, drugs, or other illegal goods; the spread of infectious diseases; and the accommodation of terrorist groups. …

 

Economic growth and competitiveness: Economic growth and competition are also affected by the skills and behavior of U.S. citizens, the policies of the U.S. government, and the ability of the private and public sectors to innovate and manage change. … Importantly, the saving and investment behavior of U.S. citizens affects the capital available to invest in research, development, and productivity enhancement. …

 

Global interdependency: Economies as well as governments and societies are becoming increasingly interdependent as more people, information, goods, and capital flow across increasingly porous borders. …

 

Societal change: The U.S. population is aging and becoming more diverse. As U.S. society ages and the ratio of elderly persons and children to persons of working age increases, the sustainability of social insurance systems will be further threatened. Specifically, according to the 2000 census, the median age of the U.S. population is now the highest it has ever been, and the baby boomer age group—people born from 1946 to 1964, inclusive—was a significant part of the population.

 

© 2015 Just Facts

 

Information provided by Just Facts is not legal or investment advice.

 

 


 
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