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Source: CBO, Summary Table 1, in The Economic and Budget Outlook: An Update (August 2010).
20 10 0
2010 2015 2020 2025 2030 2035 2040 2045 2050 2055 2060 2065 2070 2075 2080
Sources: CBO, Historical Budget Outlook, Tables F-2, F-10 (January 2010) and GAO The Federal Government's Long Term Fiscal Outlook: January 2010 Update, based on alternative simulation from CBO.
Spending on the Elderly, Defense, Interest Will Crowd Out All Else
22% 21%
20% 19% 18% 17% 16% 15% 14% 13% 12% 11% 10% 2000
Resources left for other domestic outlays Spending on non-child Social Security, Medicare, Medicaid, defense, international, and interest on debt
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2018
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2022
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2028
2030
Source: Adam Carasso, C. Eugene Steuerle, Gillian Reynolds, Tracy Vericker, and Jennifer Macomber, Kids Share 2008: How Children Fare in the Federal Budget, Figure 19.
Source: CBO, Table 1-1: Comparison of Projected Revenues, Outlays, and Deficits in CBOs March 2010 Baseline and CBOs Estimate of the Presidents Budget, in An Analysis of the Presidents Budgetary Proposals for Fiscal Year 2011 (March 2010).
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Offsets to costs
But can we restrain costs enough to reduce current projected deficits? (CBO says maybe; others disagree)
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Why Taxes Cant Be the Entire Solution for the Longer Term
Assume taxes bore the entire brunt of the projected increase in spending Under a reasonable scenario the tax rate for: Those in the 10 percent bracket would increase to 26 percent by 2050. Those in the 25 percent bracket to 66 percent Those in the 35 percent bracket to 92 percent Corporations would increase from 35 to 92 percent
Source: CBO, Financing Projected Spending in the Long Run (letter to Senator Judd Gregg), July 9, 2007; assumes excess health care cost growth of 2.5 percentage points (which is close to the historical average).
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Defense Cuts
Annual spending in Iraq and Afghanistan is currently about $200 billion; more than $1 T since 2001. There are other ways to decrease military spending: Reigning in procurement of new weapons systems could save $15 to $20 billion per year Continuing reforms like those Secretary Gates has begun could save $10 to $15 billion a year Changes to the personnel structure and benefit structure could save $10 to $20 billion a year
Source: CBO, The Budget and Economic Outlook: An Update, Box 1-3, August 2010 and Mike OHanlon, Defense Cut Proposals Deserve Thought, Politico, September 3, 2010.
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Source: Isabel V. Sawhill, Paying for Investments in Children, in Big Ideas for Children: Investing in Our Nations Future, ed. First Focus (Washington, D.C.: First Focus, 2008); updated with data f or 2007 where available.
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Source: Isabel V. Sawhill, Paying for Investments in Children, in Big Ideas for Children: Investing in Our Nations Future, ed. First Focus (Washington, D.C.: First Focus, 2008).
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President Obama
Has talked about not kicking can down road; appointed Commission But hasnt used power of WH to move the country forward or backed his own Commission Why not? A) timidity, B) smart politics His April framework a response to Ryan
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7% 22% 7% 17% 11% 6% 13% 12% 12% 27% 71% 19% 22% 27% 27% 29% 12% 10% 20% 30% 40% 50% 60% 70% 80%
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On the Web
www.brookings.edu/budget