the president's fy 2017 budget in charts

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CBO’s January Baseline Sets the Stage

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Trillion-Dollar Deficits Are Returning

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$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026

Billions

DeficitsIncreased

Almost 800%

DeficitsFell 69%

DeficitsTriple to

Nearly $1.4 Trillion

Sources: CBO, CRFB Calculations2

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The National Debt is Rising

Sources: CBO, CRFB Calculations

Percent of GDP

35%

45%

55%

65%

75%

85%

95%

2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026

August 2015 Baseline

January 2016 Baseline

Alternative Budget Outlook

Actual Projected

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The Gap Between Revenue and Spending is Growing

Percent of GDP

Sources: CBO, CRFB Calculations

14%

16%

18%

20%

22%

24%

26%

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026

50 Year Avg.Revenue = 17.4%

50 Year Avg.Spending = 20.2%

Actual Projected

Spending

Revenue

CRFB.orgSources: CBO January 2016 Baseline, CRFB Calculations. Numbers may not add due to rounding

These 3 areas account for 83% of the $2.7 trillion in nominal growth from 2015 to 2026

Social Security, 27%

Health Care, 33%

Interest, 22%

Discretionary, 10%

Other Mandatory,

8%

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Social Security, Health, and Interest Explain the Growth

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The President’s FY 2017 Budget

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60%

65%

70%

75%

80%

85%

90%

2010 2012 2014 2016 2018 2020 2022 2024 2026

OMB Baseline

FY2016 Budget

FY2017 Budget

The President’s Budget Stabilizes the Debt

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Sources: OMB, CRFB Calculations

Percent of GDPProjectedActual

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….But at Record-High Levels

Sources: OMB, CBO, CRFB calculations

Percent of GDP

0%

20%

40%

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80%

100%

1981 1986 1991 1996 2001 2006 2011 2016 2021 2026

Actual Projected

President’s Budget

OMB Baseline

50-Year Historical Average

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Budget Projections in the President’s Budget

^ Ten-year figures refer to 2017-2026 for all categories except FY 2016 Budget, which is 2016-2025.* CRFB’s “PAYGO Baseline” adjusts OMB’s baseline to remove claimed savings from a drawdown of Overseas Contingency Operations (OCO) and to treat the so-called “sequester” under CBO’s conventions by assuming discretionary levels continue at sequester-levels, adjusted for inflation, beyond 2021.

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Tax Increases, $3,155B

New Tax Breaks, $410B

Health Care Savings, $445B

New Infrastructure Spending, $310B

Other Spending,

$85B

Other Spending, $485B

Immigration, $170B

Sequester Relief, $525B

Interest, $350B

Deficit Reduction, $2,475B

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Savings How It's Spent

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Where Does the Money Come From? Where Does It Go?

Sources: Office of Management and Budget, CRFB CalculationsMeasured against a PAYGO baseline which assumes continuation of current law, including inflation adjustments of the 2021 post-sequester discretionary levels, along with a drawdown in war spending as in the President’s budget.

Billions of Dollars

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New Spending and Sequester Relief in the President’s Budget

Note: All numbers rounded to the nearest $5 billion and estimated roughly by CRFB staff. Numbers may not add due to rounding.

Costs

New Spending Initiatives $1,250 billion

Provide Mandatory and Discretionary Sequester Relief $525 billion ($125b from OMB baseline)

Increase Transportation and Clean Energy Infrastructure $310 billion

Expand Access to Child Care $80 billion

Offer Universal Pre-K and Expand Home Visiting $75 billion

Expand College Grants $60 billion

Increase Clean Energy R&D Spending (Mission Innovation) $30 billion

Reform Unemployment Insurance Benefits and Establish Wage Insurance $60 billion

Other Spending Increases (net of certain savings) $105 billion

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Mandatory and Health Savings in the President’s Budget

Note: All numbers rounded to the nearest $5 billion and estimated roughly by CRFB staff. Numbers may not add due to rounding.

Savings

Other Mandatory Savings -$85 billion

Reduce Farm Subsidies -$20 billionIncrease PBGC premiums -$15 billionEnact Postal Reform -$40 billionReduce Social Security and SSI costs -$10 billion

Health Care Savings (net) -$380 billion

Reduce Spending on Prescription Drugs -$170 billionReduce Spending on Post-Acute Care -$95 billionIncrease Income-Based Premiums and Expand Cost-Sharing -$55 billionReduce Medicare Advantage Payments -$75 billionReduce Other Medicaid Costs -$30 billionOther Savings & Interactions -$15 billionMedicaid and CHIP Spending $70 billion

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2016-2026 Annual Growth Rates by Spending Category

Sources: OMB, CRFB CalculationsNote: Other Spending is non-interest

6.6%

5.6% 5.8%

2.7%

5.7% 5.6% 5.8%

2.5%

0%

1%

2%

3%

4%

5%

6%

7%

Medicare Medicaid Social Security Other Spending

Adjusted Baseline President's Budget

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Revenue Provisions in the President's Budget

Note: All numbers rounded to the nearest $5 billion and estimated roughly by CRFB staff. Numbers may not add due to rounding.

Savings/CostsRevenue Increases -$3,155 billionLimit Value of Tax Preferences for High Earners, Enact “Buffett rule” -$685 billion Tax Capital Gains and Dividends at Top Rate of 28 percent and Repeal Step-Up Basis -$235 billion Rationalize Net Investment Income and SECA Taxes -$270 billion Restore Estate Tax to 2009 Levels and Close Loopholes -$225 billionImpose a Financial Fee -$110 billion Increase Tobacco Tax -$115 billion Repeal or Reform Various Corporate Tax Expenditures and Loopholes -$225 billion Reform the International Tax System, including with a minimum tax -$485 billion Enact One-Time “Deemed Repatriation” Tax on Income Held Overseas -$300 billionEnact $10-per-barrel Oil Tax -$320 billionOther Revenue -$180 billion

New Tax Breaks $410 billionExpand the Earned Income Tax Credit (EITC) $65 billionProvide Second Earner Tax Credit $85 billionExpand Tax Breaks for Child Care, Education, and Other Purposes $90 billionExpand Business Tax Breaks, especially for Research, Energy, and Infrastructure $160 billion

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• Abides by PAYGO by paying for all new initiatives

• Stabilizes the debt-to-GDP ratio

• Calls for business tax reform and Medicare reform

• Emphasizes pro-growth investments and includes policies to promote labor force participation

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What We Like in the President’s Budget

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Our Concerns with the President’s Budget

• Leaves debt levels at post-WWII record high levels

• Fails to put debt on a clear downward path relative to GDP

• Includes practically no reforms to Social Security, and insufficient health care savings

• Puts too little focus on long-term fiscal sustainability

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