Principles & Priorities: Interactive Budget Deficit Exercise

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1 Principles & Priorities: Interactive Budget Deficit Exercise Updated June 2015 THE CONCORD COALITION

2 America is on an Unsustainable Fiscal Path Debt Held by the Public, as a Percent of GDP, Historical Projected 250 As a Percentage of GDP World War II 106% % Source: CBO s Long Term Outlook Extended Alternative Scenario, June 2015.

3 Billions of Dollars $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0 Composition of Fiscal Year 2014 Federal Budget Deficit: $483 Billion Interest Domestic** Defense Other Mandatory Medicare & Medicaid* Social Security $229 $583 $596 $420 $831 $845 Outlays: $3.50 trillion *Includes CHIP, spending related to exchanges and subsidies $263 $321 $1,024 **Includes all appropriated domestic spending such as education, transportation, homeland security, housing assistance and foreign aid. Source: Congressional Budget Office, January $1,395 Revenues: $3.02 trillion Estate & Gift Taxes ($19 billion) Other Taxes Corporate Taxes Social Insurance Taxes Individual Income Taxes

4 Automatic Expenditures Are Consuming a Growing Share of the Budget * 2025* 48% 45% 7% 36% 15% 49% 32% 6% 62% 23% 13% 64% Mandatory Spending Automatic Net Interest Discretionary *Projected Source: Congressional Budget Office, March 2015.

5 27 25 Federal Spending vs. Revenues as a Percent of GDP CBO Baseline CBO Outlays CBO Revenues Projected Percentage of GDP Average outlays: 20.6% Average revenues: 17.3% Source: Congressional Budget Office, March 2015.

6 The Sources of Growth in Federal Spending Change in Outlays as a Percentage of GDP, Growth as a Percentage of GDP Social Security Medicaid, CHIP, Exchange Subsidies Medicare Interest All Other Spending -3 Source: CBO Extended Baseline, June 2015.

7 Your Opportunity to Make the Hard Choices

8 Principles and Priorities: An Overview This is an interactive group exercise designed to educate Americans about the federal budget. The goal is to demonstrate the trade-offs and tough choices that must be made in order to reduce the size of our nation s budget deficit. By working in groups, you will review policy options, discuss the consequences of the policy options and come to a decision whether to implement the policy. At the end of the exercise, you will have an opportunity to report the recommendations made by your group.

9 Principles and Priorities: Categories Principles and Priorities will require your group to examine policy options in four major areas of the federal budget: I. General Government (Discretionary) Spending II. III. IV. Military / Homeland Security Spending Health Care / Social Security Taxes / Revenues

10 Principles and Priorities: How does it Work? Each individual has a Workbook and each group has an Options Book

11 P&P Workbook: An Example Policy Option Impact on the Deficit: (-) means decrease in deficit Group s Decision: Majority Rules Include dollar amount only when group says YES and adopts a policy.

12 P&P Options Book: An Example Policy Option Description Pros and Cons

13 Principles and Priorities Principles and Priorities is a representative sample of policy options and not meant to be all inclusive. If we included all the possible options, the exercise would be substantially larger. This is not intended to provide you with a comprehensive budget plan, but rather a simulation of the type of tough choices that must be made to develop a budget. You will want more time and more information. All of the policy options come from scoring provided by the nonpartisan Congressional Budget Office and their publication Reducing the Deficit: Spending and Revenue Options.

14 Principles and Priorities: Time to Get Started Start on Option 1 and see how far your group can get. Concord Staff will be walking around to answer any questions. Majority Rules. No Amendments or altering options. Wrap-Up at the End.

15 Wrap-Up Questions Did you reduce the deficit? If yes, by how much? Which policy decisions were easy or [near] unanimous? Which policy choices were the hardest for your group to make a decision?

16 How Can I Make a Difference? Visit to learn more about these fiscal issues and sign up for our weekly Washington Budget Report. Become a part of The Concord Coalition s volunteer community and help us give the country a fiscal wake-up call. Lead the discussion on the issue of fiscal responsibility with friends, family and other members of your community. Tell your Representative and Senators in Congress that we need strong leadership for fiscal responsibility. Take personal responsibility for your own retirement and start saving now. Join our on-line communities: Support The Concord Coalition. We need your help!

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