1. The FY 2015 “Budget”
The Proposals and Real Reform
Dr. Jason J. Fichtner
Senior Research Fellow
Mercatus Center
April 15, 2014

2. What we’re going to discuss today:
• Where we are: CBO baseline – past, present
and future
• FY15 “budgets”
• What’s driving our fiscal condition
• The real bottom line
• Let’s discuss budget process reform
Overview
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3. CBO’s Baseline Projection - 2012
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4. CBO’s Baseline Projection - 2013
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5. FY 2014 Budget Deal
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6. CBO’s Baseline Projection - 2014
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0
5
10
15
20
25
30
1974 1979 1984 1989 1994 1999 2004 2009 2014 2019 2024
percentageofGDP
Total Revenues and Outlays, 1974–2024
Actual Projected
Outlays
Revenue
Source: CBO ( February 2014).

7. FY 2015 “Budgets”
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8. U.S. Government Debt
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9. The True Picture of U.S. Debt - Unfunded Liabilities
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10. The Real Source of the Problem
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11. Defense and Non-Defense Spending Squeezed as
Autopilot Programs Explode
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12. Medicare/Medicaid and Social Security
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13. 13
Medicare Costs Over Time

14. State and Federal Medicaid Spending
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15. Social Security Trust Funds Annual Cash Flows
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16. Social Security Trust Fund Exhaustion
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17. Interest Costs Crowd Out Other Government Spending
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18. A Huge Deficit Would Remain, Even If Any One of
These Steps Were Taken:
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Source: Office of Management and Budget, The New York Times
Based on fiscal year 2010 appropriations and disclosure reports from members
of Congress who received spending earmarks for special projects.

19. 19
Can We Grow Our Way Out of Debt

20. 20
How Can We Balance the Budget

21.  Budget Policy is Backwards – Opposite of Family Budgeting – Policy
drives Budget; Not Budget drives Policy
 Entitlements take up 2/3 of Budget – not much discretionary
budgeting left
 If Congress wants to spend…it will spend
 Budget Games:
 PAYGO / CUTGO – 2nd best solutions
 Scorecard to Zero
 Emergency Spending
 Phase-In, Phase-Out, Expiration
 Earmarks
 Balanced Budget Amendment?
 Need for 2-Year Budget?
 Truth in Accounting?
 Bring Back Earmarks?
 Sunsets?
 Budget for Entitlements?
 Revisit 1974 Budget Act?
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Observations and Possible Reforms

22. Previous Capitol Hill Campus Events on the Budget by Dr. Fichtner
2011: http://mercatus.org/video/making-federal-budget
2012: http://mercatus.org/video/behind-numbers-understanding-
presidents-fy-2013-budget-submission-congress
2013: http://mercatus.org/podcast/2013/04/30/fy-2014-budget-
proposals-and-where-we-go-here (podcast)
All Videos: http://mercatus.org/video/author/1000998
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23. Any Questions???
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