spending, taxes, & deficits: a book of...
TRANSCRIPT
Spending, Taxes, & Deficits:A Book of Charts
Brian RiedlSenior Fellow, Manhattan Institute
October 2020
Highlights
2
-- Why the Deficit Could Top $3 Trillion Yet Again Within a Decade (p. 15)
-- Each 1% Interest Rate Rise Adds 20% of GDP to 30-Year Debt (16)
--Washington Spent $50,000 per Household in 2020 (21)
-- What Happened to the 2011 BCA Spending Caps? (26-27)
-- 90% of 2019-2030 Deficit Rise is From SocSec & Medicare Shortfalls (37)
-- What is Driving CBO’s Projected $104 Trillion Deficit over 30 Years? (46-52)
-- A Menu of Tax Increase Options (57)
-- Joe Biden’s Spending Proposals Would Cost $11 Trillion (63-64)
-- Does the U.S. Have the OECD’s Most Progressive Tax Code? (84)
-- Is it Possible that the 1980s Defense Build Up Paid for Itself? (88)
-- What Really Caused the 1990s Budget Surpluses? (89)
-- The Comprehensive Bush Budget Record (91-92)
-- The Comprehensive Obama Budget Record (93-100)
Methodology
Nearly all charts were built with publicly-available government data from the Office of Management and Budget (OMB), Congressional Budget Office (CBO), U.S. Treasury, Council of Economic Advisors (CEA), Bureau of Labor Statistics (BLS), Bureau of Economic Analysis (BEA), and Census Bureau.
Unless otherwise noted, short time periods are expressed in nominal dollars, medium time periods are expressed in inflation-adjusted dollars, and long time periods are expressed as percentage of the economy.
Sources for any chart can be obtained by contacting Brian Riedl at [email protected].
3
Charts are Organized into 11 Chapters
1) Rising Budget Deficits and National Debt
2) What is Driving the Debt? Soaring Federal Spending
3) Discretionary Spending is Not Driving the Long-Term Debt
4) Mandatory Spending and Entitlement Costs are Rising Rapidly
5) The 30-Yr Debt Estimates are Driven by Social Security & Medicare Shortfalls
6) Can’t We Just Raise Taxes, Cut Defense, & Nationalize Health Care Instead?
7) Progressive Proposals Would Dig the Debt Even Deeper
8) Tax Revenues Will Continue Growing Faster Than the Economy
9) The Tax Code Has Become Increasingly Progressive
10) Countering Tax, Spending, & Deficit Myths of the 1980s Through 2008
11) A Comprehensive Accounting of the Obama Fiscal Record4
Chapter 1
Rising Budget Deficits and National Debt
5
CBO Projects $2 Trillion Budget Deficits Within a Decade, Assuming Current Policies are Extended
6
-779-984
-3,132
-1,814
-1,280-1,132 -1,180 -1,225 -1,275
-1,414-1,596
-1,770
-2,025
-$3,500
-$3,000
-$2,500
-$2,000
-$1,500
-$1,000
-$500
$0
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
No
min
al
$B
illio
ns
Fiscal YearSource: OMB Historical Table 1.1, and September 2020 CBO Baseline,
updated for current-policy tax cut extensions, and removal of timing shifts. Author: Brian Riedl, Manhattan Institute -- @Brian_Riedl
Budget Deficits are Once Again Soaring(Adjusted for Inflation)
7
-$3,500
-$3,000
-$2,500
-$2,000
-$1,500
-$1,000
-$500
$0
$500
1990 1995 2000 2005 2010 2015 2020 2025 2030
Infl
ati
on
-Ad
jus
ted
(2
02
0)
$B
illi
on
s
Fiscal Year
$-197
(2007)
$-1,684
(2030)
$-3,132
(2020)
CBO BaselineHistorical
$-1,677
(2009)
$343
(2000)
$-395
(1990)
Source: Sept. 2020 CBO baseline and historical data, adjusted to assume
extension of the 2017 tax cuts, and adjusted into 2020 dollars.Author: Brian Riedl, Manhattan Institute -- @Brian_Riedl
The 2020 Deficit Dwarfs the “Great Recession” and is the Largest Since World War II
8
-30%
-25%
-20%
-15%
-10%
-5%
0%
5%
1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 2030
Pe
rce
nta
ge
of
GD
P
Fiscal Year
Hi
-30%
(1943)
-6%
(1983)
2%
(2000)
-7%
(2030)-10%
(2009)
-16%
(2020)
Source: Sept. 2020 CBO baseline and historical data,
adjusted to assume extension of the 2017 tax cuts. Author: Brian Riedl, Manhattan Institute -- @Brian_Riedl
The 2020 Budget Deficit is Set to Exceed the Combined 2016 Through 2019 Deficits
9
$3,132
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
1 2
Bu
dg
et
Defi
cit
in
No
min
al
$B
illio
ns
2020 Budget
Deficit
$3,016
Author: Brian Riedl,
Manhattan Institute --
@Brian_Riedl
2016
2019 Budget
Deficit
2018
2017
Source: Sept. 2020 CBO baseline, Treasury data, and historical data.
The National Debt Will Nearly Double Through 2030
$0
$5
$10
$15
$20
$25
$30
2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030
Deb
t in
In
flati
on
-Ad
jus
ted
(2020)
$T
rillio
ns
Fiscal Year
$16.9
(2019)
$29.3
(2030)
National Debt Held by
the Public
$6.1
(2006)
CBO Baseline, Adjusted
for Current Policies
Author: Brian Riedl,
Manhattan Institute -
- @Brian_RiedlSource: Sept. 2020 CBO baseline and historical data,
adjusted to assume extension of the 2017 tax cuts.
11
The National Debt is Set to Surpass the Previous World War II Peak
0%
20%
40%
60%
80%
100%
120%
140%
1940 1950 1960 1970 1980 1990 2000 2010 2020 2030
De
bt
He
ld b
y t
he
Pu
bli
c (
%G
DP
)
Fiscal Year
Historical Debt Held by the Public as a Percentage of GDP
CBO
Baseline
106%
(1946)
23%
(1974)
48%
(1993-95)
114%
(2030)
39%
(2008)
98%
(2020)
Author: Brian Riedl, Manhattan Institute -- @Brian_Riedl
Source: OMB Historical Table 7.1, and September
2020 CBO Baseline adjusted for current policies.
CBO Long-Term Baseline Shows Unsustainable Debt
12
0%
40%
80%
120%
160%
200%
1940 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050
Deb
t H
eld
by t
he P
ub
lic (
%G
DP
)
Fiscal Year
Projected Debt Levels
Historical Debt Levels
48%
(1993-1995)23%
(1974)
195%
(2050)
98%
(2020)
35%
(2007)
106%
(1946)
Author: Brian Riedl,
Manhattan Institute -
- @Brian_RiedlSource: CBO 2020 Long-Term Budget Outlook
Note: This is the rosy scenario that assumes no wars,
no recessions and continued low interest rates.
It also assume all tax cuts expire as scheduled.
In 2020, the National Debt Surpassed $200,000 Per Household
13
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$140,000
$160,000
$180,000
$200,000
$220,000
$240,000
1990 1995 2000 2005 2010 2015 2020 2025 2030
Infl
ati
on
-Ad
jus
ted
(2
02
0)
Do
lla
rs
Fiscal Year
$61,354
(1990)
$102,680
(2008)
$78,050
(2000)
$201,171
(2020)
$230,383
(2030)
Historical Debt Per Household
CBO Baseline
Author: Brian Riedl, Manhattan Institute -- @Brian_Riedl
Source: OMB Historical Table 7.1, September 2020 CBO
Baseline, and Census Bureau data.
Projected New Federal Debt Added by Decade– Unless Reforms are Enacted
14
$3.9
$9.1
$15.0
$23.4
$39.3
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
1990s 2000s 2010s 2020s 2030s 2040s
Infl
ati
on
-Ad
jus
ted
(2020)
$T
rillio
ns
Decade
$1.3
Author: Brian Riedl, Manhattan Institute -- @Brian_Riedl
Source: CBO 2020 Long-Term Budget Outlook
adjusted to reflect the current-policy baseline.
15
If Interest Rates Return to 1990s or 2000s Levels, Net Interest Costs – and the Deficit – Will Soar
-$3,500
-$3,000
-$2,500
-$2,000
-$1,500
-$1,000
-$500
$0
$500
2000 2005 2010 2015 2020 2025 2030
Su
rplu
s/D
efi
cit
in
No
min
al
$B
illio
ns
Fiscal Year
Baseline2000s Interest Rates1990s Interest Rates
$-161
(2007
$-2,674
(2030)
$236(2000)
Historical and CBO Current-Policy Baseline Deficits
$-1,413(2009)
$-3,243
(2030)
$-2,025
(2030)
$-3,132(2020)
Source: Calculated using September 2020 CBO (current-policy) Baseline data, OMB
sensitivity tables, and CEA historical interest rate data. Amounts in nominal $billions.
Author: Brian Riedl,
Manhattan Institute --
@Brian_Riedl
16
Rising Interest Rates Could Push the National Debt Past 250% of GDP Within 30 Years
0%
50%
100%
150%
200%
250%
300%
2020 2025 2030 2035 2040 2045 2050
Nati
on
al
Deb
t as a
%G
DP
Fiscal Year
CBO Baseline
(Assumes rates gradually rise from
2.1% to 4.4% between 2030 and 2050)
7%
8%
6%
5%
231%
255%
281%
209%
195%
16Source: Calculations using the 2020 CBO Long-Term Baseline.
Alternative scenarios assume higher interest rates phase-in between 2031 & 2050.
Most economists agree that a steeply rising debt will raise interest rates.
Author: Brian Riedl,
Manhattan Institute --
@Brian_Riedl
Average interest paid rate on national debt:
1980s – 10.5%
1990s – 6.9%
2000s – 4.8%
2010s – 2.1%
2020s – 1.4% (CBO projection)
2050 – 4.4% (CBO projection)
Chapter 2
What is Driving the Debt?Soaring Federal Spending
17
Background: Federal Spending & Taxes: 1930-2030
18
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 2030
Perc
en
tag
e o
f G
DP
Fiscal Year
Revenues
Spending
Author: Brian Riedl, Manhattan Institute -- @Brian_Riedl
Source: OMB Historical Table 1.2 (1930-2019), and September 2020
CBO baseline, adjusted to include current-policy tax cut extensions.
Over the Next Decade, Above-Average Spending Will Drive Most of the Rising Deficit
19
10%
12%
14%
16%
18%
20%
22%
24%
26%
28%
30%
32%
34%
1960 1970 1980 1990 2000 2010 2020 2030
Perc
en
tag
e o
f G
DP
Fiscal Year
Revenues
Spending 23.2%(2030)
16.6%
(2030)1960-2019 Average: 17.3%
1960-2019 Average: 20.0%
Author: Brian Riedl, Manhattan Institute -- @Brian_Riedl
Source: OMB Historical Table 1.2 (1930-2019), and September
2020 CBO Baseline, adjusted to include tax cut extensions.
Rising Spending – Not Falling Revenues –Drives the Long-Term Deficit
20
0%
5%
10%
15%
20%
25%
30%
35%
1960 1970 1980 1990 2000 2010 2020 2030 2040 2050
Perc
en
tag
e o
f G
DP
Fiscal Year
20.0%
(1960-2019)
17.3%
(1960-2019)
Federal Spending
Tax Revenues
31.2%
(2050)
18.6%
(2050)
(17.8% if 2017 tax
cuts are extended)
Author: Brian Riedl, Manhattan Institute -- @Brian_RiedlSource: CBO 2020 Long-Term Budget Outlook.
Coronavirus Pushed 2020 Federal Spending Past $50,000 per Household
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
$45,000
$50,000
$55,000
1990 1995 2000 2005 2010 2015 2020 2025 2030
Infl
ati
on
-Ad
jus
ted
(2
02
0)
Do
lla
rs
Fiscal Year
$23,977
(1990)
$24,418
(2001)
$41,072
(2030)$28,828
(2007)
$50,868
(2020)
CBO September
2020 Baseline
Actual Spending per Household
21
Author: Brian Riedl, Manhattan Institute -- @Brian_Riedl
Source: OMB Historical Table 1.1, September 2020
CBO Baseline, and Census Bureau data.
Net Interest Costs are Set to Spike Even Despite Interest Rates Averaging Just 1.5%
22
$0
$100
$200
$300
$400
$500
$600
1990 1995 2000 2005 2010 2015 2020 2025 2030
Infl
ati
on
-Ad
juste
d (
2020)
$B
illi
on
s
Fiscal Year
$581
(2030)
CBO Current-
Policy Baseline
Spending on Net Interest
$338
(2020)$329
(1990)
Source: OMB Historical Table 3.2 and September 2020 CBO Baseline,
adjusted for tax cut extensions and for inflation into 2020 dollars. Author: Brian Riedl, Manhattan Institute -- @Brian_Riedl
Chapter 3
Discretionary Spending is Not Driving the Long-Term Debt
23
24
Despite Recent Increases, Discretionary Spending Remains Below its Historic Average
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
1962 1968 1974 1980 1986 1992 1998 2004 2010 2016 2022 2028
Fed
era
l S
pen
din
g (
%G
DP
)
Fiscal Year
Non-Defense Discretionary
Defense Discretionary
9.1%
(1968)
2.9%
(1999-2001) 3.2%
(2019)2.8%
(2030)3.3%
(1962)
5.0%
(1980)
3.1%
(2019)
2.8%
(2030)
Author: Brian Riedl, Manhattan Institute -- @Brian_Riedl
Source: OMB Historical Table 8.4, and
September 2020 CBO Baseline.
Since 1990, Non-Defense Discretionary Spending Has Grown 3 Times Faster than Defense
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
Infl
ati
on
-Ad
jus
ted
(2
01
9)
$B
illi
on
s
Fiscal Year
Non-Defense: Up 88%
Defense: Up 25%
(Includes war spending)
$356
(1990)
$670
(2019)
$533
(1990)
$664
(2019)
25
Author: Brian Riedl, Manhattan Institute -- @Brian_Riedl
Source: OMB Historical Table 8.1, and CBO January
2019 Baseline, converted into 2019 dollars.
26
Budget Deals Weakened the Budget Control Act (BCA) Discretionary Spending Caps
933
1,013
1,090
1,0501,043
1,012
975 995 1,016 1,040 1,0651,092
1,1191,146
$800
$900
$1,000
$1,100
$1,200
$1,300
$1,400
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
$B
illi
on
s o
f B
ud
get
Au
tho
rity
Fiscal Year
Black – 2008-2012 Actuals & Original 2013-2021 CBO Baseline
Blue – Original 2013-2021 BCA Caps
Red – Final Figures After Budget Deals
1,208
1,245
1,066
1,0141,012
1,070
992
1,288 1,298
Author: Brian Riedl, Manhattan Institute -- @Brian_Riedl
Source: Congressional Budget Office
Excludes OCO and emergency spending.
Amounts in nominal $billions
What Became of the $1,788 Billion in Promised 2013-2021 Discretionary Savings Under the Budget Control Act?
27
Promised
Figures assume lawmakers stick to the
2020-2021 spending deal.
*Other savings consist of mandatory
savings and revenue increases.
Lawmakers also circumvented the caps
through the ChIMPs gimmick, and by
adding extra defense money to the Iraq
& Afghanistan “emergency” bills that
do not count against these spending
caps.
$488 billion was
repealed (27%)
$1,015 billion was
enacted (57%)
$285 billion was
replaced by other
savings thru 2029
(16%)*
Author: Brian Riedl, Manhattan Institute -- @Brian_RiedlSource: Calculations based on CBO Data, as of August 2019.
Statutory Budget Caps Sharply Reduce Discretionary Spending – Until They are Ignored After a Few Years
0%
2%
4%
6%
8%
10%
12%
1969 1974 1979 1984 1989 1994 1999 2004 2009 2014 2019 2024 2029
Dis
cre
tio
na
ry S
pe
nd
ing
(%
GD
P)
Fiscal Year
Baseline
Budget Control
Act, 2013-2021Several Multi-year
Budget Deals
Covered 1986-2002
2009
Stimulus
Source: OMB Historical Table 8.4, and January 2019 CBO (current-policy) Baseline.
Author: Brian Riedl,
Manhattan Institute --
@Brian_Riedl
The Six Major Deficit-Reduction Deals Since 1983 Relied Mostly on Discretionary Savings
29
New Taxes
18.8%
Discretionary
Savings 52.8%
Medicare
Provider
Cuts
Other
Mandatory
Savings
8.0%
Interest
Savings
11.9%
8.4%
Author: Brian Riedl, Manhattan Institute -- @Brian_Riedl
The 6 Largest Deficit Reduction Deals Since 1983 Were:
1983 Social Security Deal (Saved 0.52% of GDP)
1985 Gramm-Rudman Hollings Act (1.72%)
1990 Bush “Andrew Air Force Base” Deal (1.45%)
1993 Clinton Budget Deal (1.08%)
1997 Balanced Budget Deal (0.72%)
2011 Budget Control Act (1.01%)
Savings listed as scored at time of enactment. Many cuts
were later reversed, and the 1985 law was invalidated by the
Supreme Court and replaced with a 1987 version.
Source: Brian Riedl “Getting To Yes: A History Of Why
Budget Negotiations Succeed, and Why They Fail” (2019)
Combined Components of the 6 Deals
Chapter 4
Mandatory Spending and Entitlement Costs are Rising Rapidly
30
31
Major Components of the 2019 Federal Budget
2019 Outlays $Millions Per
Household%
Social Security $1,046,955 $8,125 23%
National Defense 684,568 5,312 15%
Medicare 651,199 5,053 14%
Medicaid 418,681 3,249 9%
Net Interest 393,498 3,054 9%
Income Security Programs 349,458 2,712 8%
Veterans Benefits 200,458 1,556 4%
Education 112,863 876 2%
Justice Administration 71,780 557 2%
Health Research & Regulation 68,678 533 2%
Highways & Mass Transit 63,580 493 1%
International Affairs 54,337 422 1%
All Else 413,133 3,206 9%
Total 4,529,188 35,148 100%
2019 Revenues $Million Per
Household %
Ind. Income Taxes $1,698,353 $13,180 49%
Social Insurance Taxes 1,242,405 9,641 36%
Corporate Taxes 216,194 1,678 6%
Excise Taxes 98,669 766 3%
Customs Duties/Fees 69,469 539 2%
Fed. Reserve Earnings 48,783 379 1%
Estate/Gift Taxes 19,295 150 1%
Other Revenues 44,488 345 1%
Total Receipts 3,437,656 26,677 100%
Source: OMB Historical Tables
2.1, 2.4, 2.5, 3.2, and 8.5 Author: Brian Riedl, Manhattan Institute -- @Brian_Riedl
Mandatory Spending is Squeezing Discretionary Spending
32
1965
Mandatory
(34%)Defense
(43%)
Domestic
Discretionary
(23%)
2019
Mandatory
(70%)
Defense
(15%)
Domestic
Discretionary
(15%)
Source: OMB Historical Table 8.3Author: Brian Riedl, Manhattan Institute -- @Brian_Riedl
33
Composition of Federal Spending, 1962-2019
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1962 1966 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010 2014 2018
Fiscal Year
Social Security & Medicare
Defense (including
Antipoverty Programs
Net Interest
Other Programs
13%
38%
49%
9%
29%
6%
20
18%
15%
3%
Source: OMB Historical
Tables 3.2, 8.5, and 10.1 Author: Brian Riedl, Manhattan Institute -- @Brian_Riedl
Social Security, Health Entitlements, & Interest Costs Drive 90% of the 2008-2030 Spending Hikes
34
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030
Infl
ati
on
-Ad
jus
ted
(2
02
0)
$B
illi
on
s
Fiscal Year
$1,448
$3,289
$552
$580
$735
$467
$304
$739
Social Security & Health Entitlements
(up $1,841 billion)
Non-Defense Discretionary (up $105 billion)
Defense & Wars (up $4 billion)
$627 $732
Other Entitlements (up $113 billion)
Source: September 2020 CBO (Baseline and
historical data), adjusted for inflation Author: Brian Riedl, Manhattan Institute -- @Brian_Riedl
The 2017 Tax Cuts are a Relatively Minor Contributor to Soaring Deficits
35
-$3,500
-$3,000
-$2,500
-$2,000
-$1,500
-$1,000
-$500
$0
2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030
Bu
dg
et
Defi
cit
in
No
min
al
$B
illio
ns
Fiscal Year
$-459
(2015)
Underlying CBO Budget Deficit -
- Driven by Social Security,
Health Benefits, & Debt Interest
$-1,415
(2009)
Pandemic
Response
$-2025
(2030)
Recession
& Federal
Response
Source: Calculated using CBO September 2020 (current-policy) Baseline data.
Assumes that new tax cuts are renewed.
Resulting interest costs are incorporated into each category.
Author: Brian Riedl,
Manhattan Institute --
@Brian_Riedl
Rising Social Security & Medicare Shortfalls Drive Nearly the Entire Rising Deficit Between 2019-2030
-$3,500
-$3,000
-$2,500
-$2,000
-$1,500
-$1,000
-$500
$0
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Bu
dg
et
Defi
cit
in
No
min
al
$B
illio
ns
Fiscal Year
$-430
$-1,516
$28
$-230
$-228
$-224
Annual deficit is projected to rise
from $984 billion to $2,025 billion
All Other Policies
2017 Tax Cuts (Extended)
Discretionary Spending Cap Increases
General Revenue Transfers to Pay
Social Security & Medicare Benefits
Pandemic
Legislation
$-156
$-79
Source: Calculated using Jan 2019 CBO (current-policy) Baseline and CBO 2019 Long-Term Baseline.
Assumes that new tax cuts are renewed.
Resulting interest costs are incorporated into each category.
General revenues include interest payments on trust funds, as they represent a net cost to the rest of the budget.
Author: Brian Riedl,
Manhattan Institute -
- @Brian_Riedl
Rising Social Security & Medicare Shortfalls Drive 90% of Rising Deficit Between 2019-2030
-430 -470 -610 -722 -759 -839 -926 -1020 -1125 -1219 -1362 -1516-224-255
-259 -223 -192 -172-167 -142
-163-194
-211-230
-156-175
-159 -164 -169 -174-179 -185
-193-203
-214-228
-$3,500
-$3,000
-$2,500
-$2,000
-$1,500
-$1,000
-$500
$0
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Bu
dg
et
De
fic
it in
No
min
al $
Bil
lio
ns
Fiscal Year
-1414
Pandemic Relief Legislation
2017 Tax Cuts (Extended)
All Other Policies
-1280
-1814
-3311
-984
-1770
-1132-1275
-1596
-1180 -1225
Discretionary Spending Cap Increases
-2025
General Revenue Transfers to Pay Social Security & Medicare Benefits
Author: Brian Riedl,
Manhattan Institute -
- @Brian_Riedl
Each category includes the portion of interest on the national debt that it is responsible for.
General revenue transfers include interest payments on trust funds, which are a net cost to the rest of the budget.
Source: Calculated using Sept. 2020 CBO (current-policy) Baseline.
-$10.6
-$3.0-$2.2 -$2.0
-$0.2
-$12
-$10
-$8
-$6
-$4
-$2
$0
$T
rill
ion
s o
f N
om
inal D
oll
ars Higher
Disc. Caps2017 Tax
CutsRest of the
Budget
Impact on 2020-2030 CBO Budget Deficit
General
Revenue
Transfers
to Social
Security &
Medicare
Pandemic
Legislation
Author: Brian Riedl,
Manhattan Institute --
@Brian_Riedl
Major Components of the $18.0 Trillion Deficit Projected Over 2020-2030 Period
Source: Calculated using Sept. 2020 (current-policy) Baseline and Long-Term Baseline.
Assumes that new tax cuts are renewed.
Resulting interest costs are incorporated into each category.
General revenues include interest payments on trust funds, as they represent a net cost to the rest of the budget.
Note: General revenue transfers to Social
Security & Medicare will grow from $470 billion
to $1,516 billion between 2020 & 2030
39
Anti-Poverty Spending Has Soared Regardless of Party Control of Government
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
Fe
de
ral S
pe
nd
ing
(%
GD
P)
Fiscal Year
Cash & Other Aid
Housing
Health Care
Food Aid
3.2%
(2008)
1.8%
(1980)
0.5%
(1962)
2.6%
(2000)
4.2%
(2010)3.9%
(2019)
Source: OMB Historical Tables 3.2, 8.5, and 10.1 Author: Brian Riedl, Manhattan Institute -- @Brian_Riedl
From 2001 through 2019, SNAP (Food Stamp) Caseloads Grew 17 Times as Fast as the Poverty Population
40
3%
106%
136%
0%
20%
40%
60%
80%
100%
120%
140%
160%
Individuals in Poverty SNAP Caseloads Total Spending
Perc
en
tag
e I
ncre
ase
Sources: Department of Agriculture and Census Bureau. The
poverty rate fell from 11.7% to 10.5% over this period.
Up 1 Million
Up
18 Million
Up
$37 Billion
(After
Inflation)
Author: Brian Riedl, Manhattan Institute -- @Brian_Riedl
In 2019, Washington Made $164 Billion in Improper Payments
41
$44
$17
$17
$29
$57
$0 $10 $20 $30 $40 $50 $60
Other High-Risk Programs
Medicare Advantage (PartC)
Earned Income Tax Credit(EITC)
Medicare Fee-for-Service
Medicaid
2019 Improper Payments ($Billions)
Source: OMB at https://paymentaccuracy.gov/ Author: Brian Riedl, Manhattan Institute -- @Brian_Riedl
Veterans’ Programs Have Earned Healthy Funding Increases
42
$0
$50
$100
$150
$200
$250
2001 2010 2020
Infl
ati
on
-Ad
jus
ted
(2
02
0)
$B
illi
on
s
Fiscal Year
$129
$65
$215
Source: OMB Historical Table 3.2,
adjusted for inflation Author: Brian Riedl, Manhattan Institute -- @Brian_Riedl
Why the Debt Limit Matters All 8 Major Deficit-Reduction Laws Since 1985
Were Attached to Debt Limit Legislation
43
Year Major Deficit-Reduction Law Attached to
Debt Limit?
1985 Gramm-Rudman-Hollings Deficit Caps
1987 Gramm-Rudman-Hollings Deficit Caps II
1990 Bush Tax Increases & Spending Caps
1993 Clinton Deficit Reduction Package
1996 Line-Item Veto Act (later struck down by Supreme Court)
1997 Balanced Budget Act
2009 Statutory Pay-As-You-Go Act
2011 Budget Control Act (Cutting $2.1 Trillion)
Author: Brian Riedl, Manhattan Institute -- @Brian_Riedl
Source: Compiled by the Committee
For a Responsible Federal Budget
Chapter 5
The 30-Year Debt Estimates are Driven by Social Security and Medicare Shortfalls
44
Federal Budget, 1960-2050 (Projected)
45
0%
5%
10%
15%
20%
25%
30%
35%
1960 1970 1980 1990 2000 2010 2020 2030 2040 2050
Perc
en
tag
e o
f G
DP
Fiscal Year
15.5%
8.1%
2.0%
2.8%
Social Security &
Health Entitlements
Defense & Wars
2.8%
Source: CBO 2020 Long-Term Budget Outlook and OMB Historical Tables.
Revenue
Author: Brian Riedl,
Manhattan Institute
@Brian_Riedl
Note: This is the rosy
scenario that assumes:
• no more wars
• no more recessions
• 2017 tax cuts expire
• health costs slow
• the interest rate
paid on the national
debt remains far
below average even
as the debt rises
to195% of GDP
What is Causing $104 Trillion 2020-2050 Budget Deficit?Social Security & Medicare: $101 Trillion Deficit
The Rest of the Budget: $3 Trillion Deficit
46
-$80
-$70
-$60
-$50
-$40
-$30
-$20
-$10
$0
Su
rplu
s/D
efi
cit
in
No
min
al $
Tri
llio
ns
Social Security
$-27.0
$-3.3
Rest of the
Federal Budget
Purple – Program Deficit
Blue – Interest Costs Directly
Attributable to Program Deficit
$-30.7
$-70.5
$-11.8
$-18.9
Medicare
$-43.5
Source of $104.7 Trillion Budget Deficit Projected over 2020-2050 Period ($Nominal)
Author: Brian Riedl,
Manhattan Institute
-- @Brian_Riedl
Note: Social Security & Medicare deficits are the benefits that must
be paid from general revenues because payroll taxes, premiums,
and other non-interest trust fund revenues are insufficient. CBO
assumes full benefits will continue even after trust fund insolvency.
Source: Calculations from CBO 2020
Long-Term Budget Outlook. To inflation
adjust, trim amounts by one-third.
Projected 2050 Budget Deficits are Entirely Driven by Social Security & Medicare Shortfalls
47
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
Social Security & Medicare Systems Rest of the Federal Budget
Perc
en
tag
e o
f G
DP
5.8%
11.3%
12.8%
20.0%
Dedicated
Revenues
Revenues
Outlays
Outlays
Note: 2050 is the final year of the latest CBO 30-year budget projection.
Source: CBO 2020 Long-Term Budget Outlook.
Each outlay category includes portion of national debt interest attributed to its 2020-2050 deficits.
Author: Brian Riedl,
Manhattan Institute -
- @Brian_Riedl
48
Social Security’s Cash Shortfalls are Driven by Retiring Baby Boomer Costs and Resulting Interest Costs
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
2020 2025 2030 2035 2040 2045 2050
Pe
rce
nta
ge
of
GD
P
Fiscal Year
Social Security Revenue from Payroll Taxes & Taxation of Benefits
Social Security Outlays
8.6%
6.3%
5.3%
5.0%4.4%
Author: Brian Riedl,
Manhattan Institute
-- @Brian_RiedlSource: Calculated using CBO 2020 Long-Term Baseline. Revenues do not include trust fund interest
transfers. Interest costs are those directly attributable to Social Security’s annual deficits over this period.
49
Medicare’s Cash Shortfalls are Driven by Soaring Benefit Costs and Resulting Interest Costs
0%
2%
4%
6%
8%
10%
12%
2020 2025 2030 2035 2040 2045 2050
Pe
rce
nta
ge
of
GD
P
Fiscal Year
Medicare Payroll Taxes & Dedicated Revenues
Medicare Outlays
11.3%
6.0%
3.5%
1.5%
1.4%
Author: Brian Riedl,
Manhattan Institute
-- @Brian_RiedlSource: Calculated using CBO 2020 Long-Term Baseline. Outlays are net of premiums paid.
Interest costs are those directly attributable to Medicare’s annual deficits over this period.
Social Security Faces a $31 Trillion Shortfall over 30 Years - $28 Trillion if Including the Trust Fund
50
$51.6
$73.5
$2.9
$11.8
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
2020-50 Revenues 2020-50 Outlays
$N
om
inal
Tri
llio
ns
$85.3
$54.5
Green = Transfers from
redeeming the Social
Security Trust Fund.
The Trust Fund contains no
economic resources and
must be redeemed by new
taxes and borrowing.
In other words, it does not
future save taxpayers a
dime or reduce the true
shortfall.
Program
Outlays
Interest Costs
Payroll Taxes &
Benefit Taxes
Author: Brian Riedl,
Manhattan Institute --
@Brian_Riedl
Source: Calculated using the CBO 2020 Long-Term Budget Outlook. Interest costs reflect those
directly attributable to 2020-2050 Social Security shortfalls.
Medicare Faces a $71 Trillion Cash Shortfall Over the Next 30 years
51
$60.3
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
2020-50 Revenues 2020-50 Outlays
$N
om
inal
Tri
llio
ns
$87.3Medicare’s $71 shortfall
equals 67% of the total
federal budget deficit
projected by CBO over the
2020-2050 period.
Annual projected shortfall:
2020: 2.0% of GDP
2050: 4.6% of GDP (9.9%
including interest cost).
Program
Outlays
Interest Costs
$16.7
Payroll Taxes &
HI Trust Fund
$27.0
Author: Brian Riedl,
Manhattan Institute --
@Brian_RiedlSource: Calculated using the CBO 2020 Long-Term Budget Outlook. Benefits are net of senior premiums.
Interest costs reflect those directly attributable to 2020-2050 Medicare shortfalls.
The Typical Retiring Couple Will Receive $3 in Medicare Benefits for Every $1 Paid into the System –and Also Come Out Ahead in Social Security
52
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
$800,000
Social Security Medicare
Infl
ati
on
-Ad
jus
ted
(2
01
8)
Do
lla
rs
$599,000
$498,000
$161,000
$669,000
Taxes
Paid In
Taxes Paid In
Benefits
ReceivedBenefits
Received
(net of
premiums
paid)
Represents typical, average-income married couple turning 65 in 2020
Calculations represent expected present values.
Source: Urban Institute (2018) Author: Brian Riedl, Manhattan Institute -- @Brian_Riedl
Cost of 2017 Tax Cuts vs. Major Entitlements Over 30 Years
53
$6.8$18.9
$43.5
$5.2
$11.8
$27.0
$0
$10
$20
$30
$40
$50
$60
$70
$80
2017 Tax Cuts(Extended)
Social SecurityCash Deficit
MedicareCash Deficit
$N
om
inal
Tri
llio
ns
$30.7
$70.6
$12.0
Blue – Interest Costs
Purple – Principal Costs
Author: Brian Riedl,
Manhattan Institute --
@Brian_RiedlSource: Calculated using the CBO 2020 Long-Term
Budget Outlook earlier CBO tax estimates
2020-2050 Projected Totals
Social Security’s Deficits Will Steeply Increase, While Medicare Also Faces Rising Deficits
54
-$400
-$350
-$300
-$250
-$200
-$150
-$100
-$50
$0
$50
2016 2018 2020 2022 2024 2026 2028 2030
No
min
al $
Bil
lio
ns
Fiscal Year
$-11
$-398
$-113
Medicare Part A (HI)
Social Security (DI)
Source: September 2020 CBO Baseline Supplemental Trust Fund Tables.
Excludes general revenue transfers into the programs, such as interest payments.
Author: Brian Riedl,
Manhattan Institute --
@Brian_Riedl
Medicare and Social Security Trust Funds Face Bankruptcy in 4 and 11 Years, Respectively
55
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$0
$50
$100
$150
$200
$250
2015 2017 2019 2021 2023 2025 2027 2029 2031
No
min
al $
Bil
lio
ns
No
min
al $
Bil
lio
ns
Medicare Part A (HI)
Trust Fund Balance
Social Security (OASI)
Trust Fund Balance
Fiscal Year
2024 2031
Source: September 2020 CBO Baseline
Supplemental Trust Fund Tables. Author: Brian Riedl, Manhattan Institute -- @Brian_Riedl
Chapter 6
Can’t We Just Raise Taxes, Cut Defense, and Nationalize Health Care Instead?
56
No “Easy” Pay-Fors for Social Security & Medicare:Programs Face Shortfalls of 6% of GDP by 2040s
57
Author: Brian Riedl,
Manhattan Institute
@Brian_Riedl
Tax Proposals (static scoring) 10-Yr Savings
($Billions)
Long-Term Savings
(%GDP)
Raise Payroll Tax by 10 Percentage Points, no wage limit $8,982 3.60%
Impose a 20% Value-Added Tax (VAT) – like a national sales tax $7,680 3.35%
Raise Income Tax Rates Across-the-Board by 10 Percentage Points $9,054 3.30%
Double 35% and 37% Tax Brackets to 70% and 74% (plus 15% state/payroll) $4,504 1.70%
Impose Bernie Sanders’ 8% Wealth Tax (data from Penn-Wharton) $2,809 1.07%
Eliminate FICA Cap – 15.3% Payroll Tax on All Wages (data from SSA) $2,180 0.84%
Raise Corporate Tax Rate by 20 Percentage Points $1,926 0.87%
Repeal All Itemized Tax Deductions $1,312 0.99%
Carbon Tax of $25/Metric Ton – no rebate for households hit $1,099 0.43%
Impose a 0.1% Tax on Financial Transactions $777 0.37%
Repeal Entire 2017 Tax Law (data from CBO/JCT) $455 (Mostly scheduled)
Tax Dividends & CapGains as Income over $1M & End Step-Up (data from TPC) $448 0.19%
Impose Bernie Sanders’ 77% Estate Tax (data from Sanders) $336 0.13%
Impose a 0.15% "Bank Tax" on Large Financial Institutions $103 0.03%
30% Minimum "Buffett Tax" for Millionaires $66 0.03%
Tax Carried Interest as Ordinary Income $14 0.01%
Spending Proposals
Cut Defense Budget to European Target of 2% of GDP (data from CBO baseline) $2,899 0.80%
Source: Dec. 2018 CBO “Budget Options” book unless otherwise noted.
These static estimates do not account for revenues lost to the economic impact. Combining policies
may also create interaction effects or duplicate the same policies, so these cannot be summed.
It Would Take Nearly All Progressive Hikes Just to Balance the Budget
Progressive Tax Proposal 2021-2030 Source
Repeal All 2017 Tax Cuts, Including Low-Income $455 CBO Data (dynamic)
8% Wealth Tax (Sanders) $2,809 Penn-Wharton (dynamic)
Lift Social Security Tax Wage Cap $2,180 Social Security Admin.
70% Income Tax Rate Over $10 Million (AOC) $189 Tax Foundation (dynamic)
Mark-to-Market Taxation & Higher Capital Gains Rates $2,000 CRS, Warren campaign
77% Estate Tax (Sanders) $336 Sanders campaign
“Real Corporate Profits Tax” (Warren) $476 Tax Foundation (dynamic)
Repeal Major Corporate Tax Preferences $2,000 Various (dynamic)
Financial Transactions Tax of 0.1% $777 CBO Options
Financial Institutions Tax of 0.15% $103 CBO Options
Repeal Oil & Gas Tax Breaks $9 CBO Options
Carbon Tax ($25/metric ton) – No Household Rebate $1,099 CBO Options
Interest Savings (net of add'l econ/interaction losses) $500 Author estimate
Total Savings Over Decade $12,933
Author: Brian Riedl,
Manhattan Institute
-- @Brian_Riedl
All figures in $billions
Policies would balance 10-year budget, but 2030s deficits would re-emerge.
CBO Forecasts $13 Trillion Deficit over 2021-2030
Defense is Not Driving the Deficit – and Even Eliminating It Completely Would Not Come Close to Financing Soaring
Long-Term Entitlement Costs
59
0%
2%
4%
6%
8%
10%
12%
14%
16%
1970 1980 1990 2000 2010 2020 2030 2040 2050
Fed
era
l S
pen
din
g (
%G
DP
)
Fiscal Year
Defense
Social Security and Health Entitlements
Author: Brian Riedl,
Manhattan Institute --
@Brian_Riedl
Source: OMB Historical Tables 3.2, and 10.1;
and CBO 2020 Long-Term Outlook.
Even 100% Tax Rates on Small Businesses and Upper-Income Families Could Not Come Close to
Balancing the Long-Term Budget
60
16.0%
6.6%
10.4%
14.5%
4.0%
5.5%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
2020 2030 2040 2050 $1 million $500,000
Pe
rce
nta
ge
of
GD
P
----- Projected Budget Deficit -----
All untaxed personal &
small business adjusted
gross income (AGI)
annually earned above the
listed income threshold
Source: CBO September 2020 Long-Term Budget Outlook adjusted into current-
policy baseline and analysis of IRS 2018 (latest year) income tables.
Author: Brian Riedl,
Manhattan Institute
-- @Brian_Riedl
61
$13,970 $12,552$13,248
$21,078
$5,371 $7,973
$13,248
$14,203
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
Colorado Plan(failed referendum)
Vermont Plan(abandoned)
California Plan(abandoned)
Bernie SandersNational Plan
Ave
rag
e A
nn
ua
l C
os
t P
er-
Ho
us
eh
old
$20,524
$35,280
$26,497
$19,340
New Spending & Taxes
Redirect Existing Govt. Funds
Source: Public scores of Vermont and California bills, and Colorado Health
Institute data. Sanders calculated from Urban Institute 2016 score of plan
Author: Brian Riedl,
Manhattan Institute
@Brian_Riedl
Single-Payer Health Plans Do Not Save MoneyThey Would Require Huge Per-Household
Tax Increases
Chapter 7
Progressive Proposals Would Dig the Debt Even Deeper
62
Joe Biden has Proposed $11 Trillion in New Spending Over the Decade
Spending Proposal ($Billions) 2021-2030 Source
Health & ACA Expansions (net of spending offsets) $1,450 CRFB
Reduce Medicare Eligibility Age to 60 $300 Author Estimate
Climate and Infrastructure Initiative $2,000 Biden Campaign Website
Expand Social Security and SSI $1,000 CRFB
K-12 and Preschool Expansions $750 CRFB
College and Post-Secondary Education $750 Biden Campaign
Buy American Initiative (net*) $400 Biden Campaign Website
Housing Assistance $640 Biden Campaign Website
Family Leave Assistance $550 CBO Score of Family Act
Combat Opioid Addiction $125 Biden Campaign
Economic Stimulus (Endorsed Heroes Act) $3,000 CBO Score of Heroes Act
Total Spending Over Decade $10,965
Author: Brian Riedl,
Manhattan Institute
-- @Brian_Riedl
*Some of this $700 billion initiative would take place within climate/infrastructure spending.
CRFB = Committee for a Responsible Federal Budget
Figures do not include additional interest costs of new borrowing
Biden’s Spending Increase Proposals Dwarf Recent Democratic Pres. Candidates
$2
$1
$2
$11
$2
$1
$2
$3.6
$0
$1
$2
$3
$4
$5
$6
$7
$8
$9
$10
$11
$12
Kerry 2004 Obama 2008 Clinton 2016 Biden 2020
No
min
al
$T
rillio
ns
Purple = Spending Increases
Red = Tax Increases
Source: Tax Policy Center, Committee For a Responsible Federal Budget,
American Enterprise Institute, and public scores of Biden plans
Author: Brian Riedl,
Manhattan Institute --
@Brian_Riedl
Ten-Year Budget Estimates of Candidate Plans ($Trillions)
Common Far-Left Proposals Would Cost Between $36 Trillion and $95 Trillion Over the Decade
65
Author: Brian Riedl,
Manhattan Institute
@Brian_Riedl*All figures are over ten years, and in $trillions.
Common Spending Proposal Low* High* Notes
Medicare-For-All 30.0 38.0 Sanders has conceded “between $30 to $40 trillion”
Government Job Guarantee — 30.1 Sanders proposal
Climate and Clean Energy 2.0 16.3 Sanders is the high figure
Free Public College Tuition & Loan Forgiveness 1.5 3.0 Low figure reflects partial loan forgiveness
Affordable Housing 0.1 2.5 Sanders is the high figure
Social Security Expansion 0.5 1.8 Warren & Sanders are the high figure
Teacher Pay and K-12 funding 0.3 1.2
Infrastructure Buildup 1.0 1.0
Universal Child Care & Paid Family/Medical Leave 0.3 1.0
Subtotal: New Spending Proposals 35.7 94.9 Baseline is $60 trillion spending over 2020-2029
CBO Baseline Budget Deficit, 2021-2030 13.0 13.0
Total Federal Budget Deficit 48.7 107.9 Out of a $257 trillion projected GDP (CBO)
Popular Spending Offsets
Cut Defense to European Levels -2.9 -2.9 Baseline is 3% of GDP. NATO target is 2%
Medicare-For-All - Capture State Govt Savings -3.0 -3.0 It is not clear Washington could capture this
Remaining Budget Shortfall To Fill 42.8 102.0 Requires > Doubling $45T in Federal Revenues
66
Medicare-For-All’s 11% of GDP Cost is on Top of Current Medicare’s Large and Growing Shortfall
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
2020 2025 2030 2035 2040 2045 2050
Perc
en
tag
e o
f G
DP
Fiscal Year
Medicare Payroll Taxes & Dedicated Revenues
14.8%
6.0%
3.5%
1.5% 1.4%
Current Medicare Outlays
17.0%
Medicare’s
Growing
Baseline
Shortfall
Added M4A
Cost – Still
Needs a
Dedicated
Funding
Source
Author: Brian Riedl,
Manhattan Institute
-- @Brian_Riedl
Source: Calculated using CBO 2020 Long-Term Baseline and Medicare-For-All Estimates from the
Committee For A Responsible Federal Budget (CRFB). Other health spending like Medicaid will
rise from 2.6% to 3.2% of GDP, but that portion is already fully designed for general revenues.
67
0%
5%
10%
15%
20%
25%
30%
35%
40%
All UntaxedIncome Over $1
Million
All BillionaireWealth
Entire DefenseBudget
Proposed NewSpending
Perc
en
tag
e o
f G
DP
4.7% 3.0%
37.6%
3.2%
Medicare-For-All
(12.5%)
Climate (Sanders)
(6.3%)
Job Guarantee
(11.7%)
Free College & Loan Forgiveness (1.0%)
Baseline 10-yr
Deficit (6.1%)
Author: Brian Riedl,
Manhattan Institute
-- @Brian_Riedl
No, Defense Cuts & Taxing Millionaires Cannot Finance Current Deficit or Liberal Wishlist
Sources: Author calculations using data from CBO, IRS, liberal candidates, and liberal think tanks
Several Major Progressive Proposals Overwhelmingly Benefit Upper-Income Families
Sources: Calculated using data from the Urban Institute and Tax Policy Center. SALT=State and Local Tax deduction
Also: Medicare-For-All could hurt most of the 75 million Medicaid recipients who already pay
little-to-no premiums/copays, but would likely be pay the broad based taxes required to fund full cost of law.
A carbon tax would raise costs 2% for the bottom quintile, vs. 1% for top quintile.
Zero-emission mandates will raise car/home prices & kill working-class fossil fuel jobs.
Author: Brian Riedl,
Manhattan Institute --
@Brian_Riedl
$380
$544
$597
$80
$192
$4$0
$100
$200
$300
$400
$500
$600
Free Public College Student Loan Forgiveness Repeal SALT Cap
No
min
al
$b
illio
ns
Family
income
over $120k
Top-earning
25%
Top-earning
20%
Under $30k
Bottom-
earning
25%
Bottom
60%
Ten-Year Distribution of Benefits
Chapter 8
Tax Revenues Will Continue Growing Faster Than the Economy
69
Rising Spending – Not Falling Revenues –Drives the Long-Term Deficit
70
0%
5%
10%
15%
20%
25%
30%
35%
1960 1970 1980 1990 2000 2010 2020 2030 2040 2050
Perc
en
tag
e o
f G
DP
Fiscal Year
20.0%
(1960-2019)
17.3%
(1960-2019)
Federal Spending
Tax Revenues
31.2%
(2050)
18.6%
(2050)
(17.8% if 2017 tax
cuts are extended)
Author: Brian Riedl, Manhattan Institute -- @Brian_RiedlSource: CBO 2020 Long-Term Budget Outlook.
Income Tax Revenues Have Remained Relatively Constant Regardless of the Top Tax Rate
71
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
11%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1934 1944 1954 1964 1974 1984 1994 2004 2014
Top Income Tax Rate Income Tax Revenues (%GDP)
Fiscal Year
Average Top Rate / Revenues
1950s: 90.5% / 7.2%
1960s: 80.3% / 7.6%
1970s: 70.2% / 7.9%
1980s: 48.4% / 8.2%
1990s: 36.7% / 8.1%
2000s: 36.2% / 7.8%
2010s: 37.7% / 7.8%
Correlation
1950-2020:
-0.18
Source: OMB Historical Table 2.3, and
U.S. Treasury SOI Tax Stats – Historical Table 23 Author: Brian Riedl, Manhattan Institute -- @Brian_Riedl
Individual Income Tax Revenues Will Rise – Even With the Tax Cuts – Due to Real Bracket Creep
& Taxable Retirement Distributions
6%
7%
8%
9%
10%
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030
Ind
ivid
ua
l In
co
me
Ta
x R
eve
nu
es
(%
GD
P)
Fiscal Year
Tech Bubble
& Burst
Deep
Recession
Reagan
Tax Cuts
Bracket Creep
Deep
Recession
CBO Baseline with
(Tax Cuts Extended)
72
Source: OMB Historical Table 2.3, and September 2020 CBO (current-policy) Baseline. Real bracket creep is
when rising incomes (above inflation) push taxpayers into higher tax brackets, raising their average tax rate.
Author: Brian Riedl,
Manhattan Institute
-- @Brian_Riedl
High Capital Gains Tax Rates Have Not Produced More Revenue
73
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1.2%
1.4%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
1954 1960 1966 1972 1978 1984 1990 1996 2002 2008 2014
Top Capital Gains Tax Rate Capital Gains Tax Revenues (%GDP)
Fiscal Year
Correlation: -0.31
Source: Tax Tables, U.S. Treasury Office of Tax Analysis.Author: Brian Riedl, Manhattan Institute -- @Brian_Riedl
Before the TCJA Cut it to 26% (incl. 5% State Taxes)U.S. had the Highest Corporate Tax Rate in the OECD
74
39%
32%32%
30%30%30%
30%28%28%
28%
26%26%
25%
25%
25%
25%
25%
25%
24%23%
22%
22%
22%
21%
21%
21%
20%20%
20%
20%
19%19%
19%19%
15%
13%
9%
0%
10%
20%
30%
40%
Un
ite
d S
tate
s -
201
7
Fra
nc
e
Po
rtu
ga
l
Au
str
alia
Me
xic
o
Ge
rma
ny
Jap
an
Ne
w Z
ea
lan
d
Ita
ly
Ko
rea
Ca
na
da
Un
ite
d S
tate
s -
202
0
Au
str
ia
Be
lgiu
m
Ch
ile
Ne
the
rla
nd
s
Sp
ain
Lu
xem
bo
urg
Gre
ece
Isra
el
De
nm
ark
No
rwa
y
Tu
rke
y
Sw
ed
en
Sw
itze
rla
nd
Slo
va
k R
ep
ub
lic
Es
ton
ia
Fin
lan
d
Icela
nd
Latv
ia
Cze
ch
Rep
ub
lic
Po
lan
d
Slo
ve
nia
Un
ite
d K
ing
do
m
Lit
hu
an
ia
Ire
lan
d
Hu
ng
ary
To
p C
orp
ora
te T
ax
Ra
te
Source: OECD Stats (2020), Tax Table II.1. Tax rates
include federal, state, province and local corporate taxes.
Notes: While all countries allow businesses to reduce their taxes through
exemptions, deductions, and credits, the U.S. has been among the highest
effective corporate tax rates too.Author: Brian Riedl, Manhattan Institute -- @Brian_Riedl
The U.S. has Finally Caught Up With the Rest of the OECD on Corporate Tax Competitiveness
75
32%31%30%
30%29%
28%27%26%25% 25%25% 25% 25% 25% 25%25% 24%24% 24%24% 23%
0%
5%
10%
15%
20%
25%
30%
35%
40%2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
To
p C
orp
ora
te T
ax
Ra
te
United States – 39%
Average of Other
34 OCED Nations
26%
Source: OECD Stats (2020), Tax Table II.1. Tax rates
include federal, state, province and local corporate taxes. Author: Brian Riedl, Manhattan Institute -- @Brian_Riedl
The Economy Matters More: President Obama Oversaw $500 Billion in New Taxes –and Also Lost $3.2 Trillion to Economic Downgrades
76
-$822
$1,328
-$3,153-$3,500
-$3,000
-$2,500
-$2,000
-$1,500
-$1,000
-$500
$0
$500
$1,000
$1,500
No
min
al $
Bil
lio
ns
Added Revenue from
Tax Hikes
Lost Revenue from
Economic
Downgrades and
Technical
Re-estimates
Lost Revenue from
Tax Cuts
Figures reflect 2009-2019 estimates, as of
January 2017 when Pres. Obama left office
Source: Congressional Budget Office data. Between January 2009 and January 2017, Congress and President Obama enacted legislation
adding $516 billion to 2009-2019 revenues (against a current-policy baseline). During that same period, the unexpectedly-weak economic
recovery and related technical estimates reduced 2009-19 revenues by $3,153 billion. Note that the initial January 2009 CBO baseline had
already incorporated the projected 2009-19 revenue losses from the recession. These additional economic downgrades reflect the weak
recovery, particularly in the later years. Author: Brian Riedl, Manhattan Institute -- @Brian_Riedl
Taxes Cannot Easily Close Security & Medicare Shortfall:Will Need Added Revenues of 6% of GDP by 2040s
77
Author: Brian Riedl,
Manhattan Institute
@Brian_Riedl
Tax Proposals (static scoring) 10-Yr Savings
($Billions)
Long-Term Savings
(%GDP)
Raise Payroll Tax by 10 Percentage Points, no wage limit $8,982 3.60%
Impose a 20% Value-Added Tax (VAT) – like a national sales tax $7,680 3.35%
Raise Income Tax Rates Across-the-Board by 10 Percentage Points $9,054 3.30%
Double 35% and 37% Tax Brackets to 70% and 74% (plus 15% state/payroll)* $4,504 1.70%
Impose Bernie Sanders’ 8% Wealth Tax (data from Penn-Wharton) $2,809 1.07%
Eliminate FICA Cap – 15.3% Payroll Tax on All Wages (data from SSA) $2,180 0.84%
Raise Corporate Tax Rate by 20 Percentage Points $1,926 0.87%
Repeal All Itemized Tax Deductions $1,312 0.99%
Carbon Tax of $25/Metric Ton – no rebate for households hit $1,099 0.43%
Impose a 0.1% Tax on Financial Transactions $777 0.37%
Repeal Entire 2017 Tax Law (data from CBO/JCT) $455 (Mostly scheduled)
Tax Dividends & CapGains as Income over $1M & End Step-Up (data from TPC) $448 0.19%
Impose Bernie Sanders’ 77% Estate Tax (data from Sanders) $336 0.13%
Impose a 0.15% "Bank Tax" on Large Financial Institutions $103 0.03%
30% Minimum "Buffett Tax" for Millionaires $66 0.03%
Tax Carried Interest as Ordinary Income $14 0.01%
Source: Dec. 2018 CBO “Budget Options” book unless otherwise noted.
These static estimates do not account for revenues lost to the economic impact. Combining policies
may also create interaction effects or duplicate the same policies, so these cannot be summed.
Chapter 9
The Tax Code Has Become Increasingly Progressive
78
The Federal Tax Code Remains Progressive
1.0%
-4.7%
-0.6%
4.5%
8.6%11.3%
13.4%15.9%
18.8%21.5%
22.9%
27.3%
31.1%
-8.7%
-13.2%
-9.7%
-4.9%-1.1%
1.7%
3.6% 5.6%
8.2%10.8%
14.0%
20.6% 23.1%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
35%
0-10$5k
10-20$17k
20-30$25k
30-40$34k
40-50$45k
50-60$60k
60-70$79k
70-80$105k
80-90$145k
90-95$204k
95-99$344k
99-99.9$1006k
Top.1%$8M
20
19
Ave
rag
e T
ax
Ra
te
Income Distribution Range and Average Family Cash Income
Average Tax Rate Paid For Federal Income Taxes
Average Tax Rate Paid for All Federal Taxes
Source: U.S. Treasury, Office of Tax Analysis.
Data represents 2019 Distribution of Tax Burden, Current Law
Author: Brian Riedl,
Manhattan Institute -
- @Brian_Riedl
Average Federal Tax Rate Paid by Income Category, 1979-2017
80
0%
5%
10%
15%
20%
25%
30%
35%
40%
1979 1983 1987 1991 1995 1999 2003 2007 2011 2015
Ave
rag
e F
ed
era
l Ta
x R
ate
Pa
id
Fiscal Year
27%
19%
26%
18%
15%
9%
22%
1%
9%
Second 20%
14%
Bottom 20%
Fourth 20%
Middle 20%
Top 20%
32%Top 1%35%
Note: Includes federal income, payroll,
corporate, and excise taxes paid.
Author: Brian Riedl, Manhattan Institute -- @Brian_RiedlSource: Calculations using CBO "Distribution
of Household Income, 2017” (2020)
The Federal Tax Burden (For All Combined Taxes) Has Grown More Progressive Over Time
81
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1979 1983 1987 1991 1995 1999 2003 2007 2011 2015
Pe
rce
nta
ge
of
Fe
de
ral Ta
x B
urd
en
P
aid
by Q
uin
tile
Fiscal Year
55%
14%
69%
17%
7%2%
22%
0%
4%
Second 20%
9%
Bottom 20%
Fourth 20%
Middle 20%
Top 20%
Percentage of Federal Tax Burden Financed by Income Quintile, 1979-2017
Author: Brian Riedl, Manhattan Institute -- @Brian_RiedlSource: Calculations using CBO "Distribution
of Household Income, 2017” (2020)
The Highest-Earning 20 Percent of Taxpayers Pay 87 Percent of All Federal Individual Income Taxes
82
-10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015
Pe
rce
nta
ge
of
Inc
om
e T
ax
Bu
rde
n
Pa
id b
y Q
uin
tile
Fiscal Year
65%
11%
87%
13%
4%
0%
20%
-4%
-1%
Second 20%
4%
Bottom 20%
Fourth 20%
Middle 20%
Top 20%
Percentage of Federal Income Tax Burden
Financed by Income Quintile, 1979-2017
Author: Brian Riedl, Manhattan Institute -- @Brian_RiedlSource: Calculations using CBO "Distribution
of Household Income, 2017” (2020)
Even Controlling for Income Inequality, Income Taxes Have Become More Progressive, With the Highest-Earning 20
Percent Increasing Their Income Tax Share
-2
-1
0
1
2
3
1979 1983 1987 1991 1995 1999 2003 2007 2011 2015
Sh
are
of
Inc
om
e T
ax
es
Pa
id D
ivid
ed
b
y t
he
Sh
are
of
Inc
om
e E
arn
ed
Fiscal Year
1.36
0.67
1.47
0.67
0.42
-0.03
0.88
-1.26
-0.11
Second 20%
0.34
Bottom 20%
Fourth 20%
Middle 20%
Top 20%
Top 1%1.92
2.10
83Source: Calculations using CBO "Distribution
of Household Income, 2017” (2020)
“Progressivity ratio” refers to the share of all individual income taxes paid divided by the share of pre-tax income earned. So a group that pays
40% of the taxes while earning 20% of the income has a progressivity ratio of 2. Ratios above 1 represent tax burdens exceeding their share
of the income, while ratios below 1 represent tax burdens below their income share. Negative figures reflect a negative tax burden.
Author: Brian Riedl, Manhattan Institute -- @Brian_Riedl
Progressivity Ratio by Income Rank, 1979-2017
0.800.84
0.900.940.95
1.001.011.02
1.071.101.101.11
1.141.15
1.171.171.181.191.201.20
1.221.26
1.281.29
1.35
0.5 0.6 0.7 0.8 0.9 1.0 1.1 1.2 1.3 1.4 1.5
SwitzerlandPolandIceland
BelgiumNorwaySweden
JapanDenmarkGermany
AustriaFrance
OECD-24Slovak Republic
LuxembourgCzech Republic
KoreaItaly
New ZealandUnited Kingdom
FinlandCanadaIreland
NetherlandsAustralia
United States
Progressivity Ratio
Note: For the highest-earning
10% of taxpayers, these figures
refer to their share of the nation’s
taxes paid, divided by their share
of the nation’s pre-tax income
earned.
So if the top decile pays 30% of
the taxes and earns 20% of the
income, its ratio is 1.5.
Even Controlling for Income Inequality, the U.S. Has the Most Progressive Income/Payroll Tax Code in the OECD
84
Source: OECD (2008) and Tax Foundation. The U.S tax code has since
become even more progressive. Figures also exclude value-added taxes
that make many other OECD nations’ tax codes even less progressive.Author: Brian Riedl, Manhattan Institute -- @Brian_Riedl
Chapter 10
Countering Tax, Spending, & Deficit Myths of the 1980s Through 2008
85
The Reagan Tax Cuts Did Not Starve the Government –Spending Worsened the 1980s Deficits
86
16.8%
17.3% 17.4%17.8%
17.2%
18.1%
19.4%
21.6%
15%
16%
17%
18%
19%
20%
21%
22%
1950s 1960s 1970s 1980s
Pe
rce
nta
ge
of
GD
P
Purple = Spending
Taxes
Paid In
Red = Revenues
Source: OMB Historical Table 1.3 Author: Brian Riedl, Manhattan Institute -- @Brian_Riedl
Why Did 1980s Budget Deficits Exceed the 1970s Deficits?
87
5.7%
4.3% 4.4%
3.6%
1.4%
5.6%
4.0%
5.8%
3.6%
2.7%
0%
1%
2%
3%
4%
5%
6%
Fe
de
ral S
pe
nd
ing
(P
erc
en
tag
e o
f G
DP
)
Fell during
1970s,
rose back
during 1980s
1970s
1980s increase:
60% - added debt
40% - higher
interest rates
1970s1970s1970s 1970s 1980s1980s1980s1980s 1980s
Source: OMB Historical Table 8.4, and interest rate calculations
using the Economic Report of the President Table B-25.
Author: Brian Riedl,
Manhattan Institute -
@Brian_Riedl
Non-Defense
Discretionary
Other
Entitlement
Programs
Defense Social
Security &
Medicare
Interest on
Debt
1970s Average Percentage of GDP: Revenue 17.4%, Spending 19.4%, Deficit: 2.0%
1980s Average Percentage of GDP: Revenue 17.8%, Spending 21.6%, Deficit: 3.8%
To the Extent it Contributed to the Soviet Collapse,the 1980s Defense Buildup Eventually Paid for Itself
88
0%
1%
2%
3%
4%
5%
6%
7%
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000
De
fen
se
Sp
en
din
g (
%G
DP
)
Fiscal Year
Initial 1980 Baseline of 4.8% of GDP
1992-2001 Post-Cold War Wind Down:
Average of 3.5% of GDP
(1.3% below 1980 baseline)
1981-1991 Cold War Buildup:
Average of 5.5% of GDP
(0.7% above 1980 Baseline)
Author: Brian Riedl,
Manhattan Institute
-- @Brian_Riedl
Source: OMB
Historical Tables
3.2, and 10.1
Note: Some believe that America’s 1980s defense buildup pushed the
Soviets into an unaffordable arms race that contributed to its economic
problems and ultimately a more accommodating posture towards the West,
each of which contributed to Soviet destabilization and collapse.
The 1990s Budget Was Balanced by an Economic Boom and the Cold War Peace Dividend
(and by Washington Not Spending All the Savings)
0.7%
2.2%
-1.7%
-0.9%
-0.4% -0.4% -0.5%
-2%
-1%
0%
1%
2%
3%
Ch
an
ge
in
Pe
rce
nta
ge
of
GD
P
Change Between 1992 Peak Deficit of 4.5% of GDP,and 2000 Peak Surplus of 2.3% of GDP
Revenues Jumped 2.9% of GDP Spending Fell 3.9% of GDP
Defense
cuts after
Cold War
ends
Interest
savings
Reduced
unemployment
costs
Grew faster than
Social Security
benefits
Strong Economy
Various
small
savings1993 Clinton
tax hike
Economic
growth &
small tax
changes
89Author: Brian Riedl, Manhattan Institute -- @Brian_Riedl
Source: OMB Historical Tables 2.3, 3.2, and 10.1;
and the CBO (1993) score of tax increases
The May 2003 Supply-Side Tax Rate Cuts Were More Successful Than They are Credited For
90
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
7%
-10%
-5%
0%
5%
10%
15%
2001 2002 2003 2004 2005 2006
Business Investment
Growth
Real GDP
Growth
Source: BEA, BLS, S&P. The 2003 tax cuts reduced marginal tax rates for families, small
businesses, & investors. The less-successful 2001 tax cuts were more rebate-based.
The 2007 housing crash that ended this mini-boom was unrelated to these tax policies.
Author: Brian Riedl,
Manhattan Institute
@Brian_Riedl
93.0%
93.5%
94.0%
94.5%
95.0%
95.5%
96.0%
800
900
1,000
1,100
1,200
1,300
1,400
2001 2002 2003 2004 2005 2006
S&P 500Employment (and
Unemployment) Rate
May
/ 5.0%
/ 4.0%
/ 4.5%
/ 6.0%
/ 5.5%
/ 6.5%
/ 7.0%
May
The “Bush Tax Cuts” for Upper-Income Taxpayers Caused Only 7% of the 2001-2011 Fiscal Decline Under President Bush
91
Economic & Technical Downgrades, 32%
"Bush Tax Cuts" -Earners Over $250k,
7%
"Bush Tax Cuts" -Earners Under
$250k, 16%
2008 Economic Stimulus Act, 2%
Other Tax Policies, 5%
Defense Spending, 21%
Non-Defense Discretionary Spending, 8%
Other Entitlement Reforms, 4%
Medicare Prescription Drug Program, 3%
TARP, 2%
Note: When President Bush
took office, CBO forecast a
$5.9 trillion surplus over the
FY 2001-2011 period.
When he left office in
January 2009, CBO was
showing a $4.4 trillion deficit
over that same decade.
This chart accounts for the
$10.3 trillion fiscal decline.
Green – Tax Legislation
Blue – Spending Legislation
Red – Non-Legislative
Author: Brian Riedl,
Manhattan Institute
@Brian_Riedl
Source: Calculations based on a CBO June 2012 report, and CBO baseline updates over
2001-11 period. Tax distribution data was estimated using Treasury data accumulated by the
Tax Policy Center. Each category’s cost includes its resulting net interest expenses.
President Bush Oversaw a $10.3 Trillion Decline from the Inherited 2001-2011 Budget Projections
(All numbers in nominal $billions) 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2001-2011
CBO January 2001 Projected Surplus 281 313 359 397 433 505 573 635 710 796 889 5,891
Legislative Changes
"Bush Tax Cuts" - Earners Over $250k -22 -12 -48 -82 -74 -71 -72 -78 -81 -88 -71 -699
"Bush Tax Cuts" - Earners Under $250k -52 -27 -112 -191 -172 -165 -169 -181 -189 -206 -167 -1,631
Defense Spending -5 -36 -85 -130 -165 -195 -229 -294 -332 -343 -357 -2,171
Non-Defense Discretionary Spending 2 -17 -34 -46 -74 -91 -83 -107 -120 -118 -114 -802
AMT Patch, Tax Extenders, Other Tax Changes -1 -44 -44 -33 -12 -12 -55 -89 -129 -42 -30 -489
Medicare Prescription Drug Program 0 0 0 -4 -6 -29 -44 -50 -56 -62 -70 -321
TARP Financial Bailouts 0 0 0 0 0 0 0 0 -194 -16 -12 -221
Economic Stimulus Act of 2008 0 0 0 0 0 0 0 -160 -25 3 0 -181
Other Entitlement Reforms -8 -14 -36 -29 -36 -51 -44 -41 -74 -52 -46 -432
Economic & Technical Re-estimates
Economic/Technical Downgrades -67 -319 -377 -295 -212 -140 -39 -95 -696 -577 -520 -3,337
CBO January 2009 Budget Surplus/Deficit 128 -158 -378 -413 -318 -248 -161 -459 -1,186 -703 -498 -4,394
Memorandum
Legislative Changes -87 -150 -358 -514 -540 -614 -696 -1,000 -1,199 -923 -867 -6,947
Economic & Technical Re-estimates -67 -319 -377 -295 -212 -140 -39 -95 -696 -577 -520 -3,337
Total Deficit Changes -154 -469 -735 -809 -752 -754 -735 -1,095 -1,895 -1,500 -1,386 -10,285
Revenue Changes -144 -383 -561 -573 -416 -282 -248 -431 -750 -738 -622 -5,148
Spending Changes -10 -88 -176 -237 -335 -471 -486 -663 -1,147 -761 -765 -5,138
92
Source: Author calculations based on a CBO June 2012 report, and CBO baseline updates over 2001-11 period. Positive
numbers add to deficit, negative numbers reduce deficit. Legislative changes include associated interest costs and
savings. Ending 2090-2011 figures represent estimates on January 2009 when President Bush left office.
See “Obama's Fiscal Legacy: A Comprehensive Overview of Spending, Taxes, and Deficits,” by Brian Riedl.
Author: Brian Riedl,
Manhattan Institute
@Brian_Riedl
Chapter 11
A Comprehensive Accounting of the Obama Fiscal Record
93
President Obama Oversaw 2009-2019 Budget Deficits $4.6 Trillion Beyond the Inherited Baseline
-$1,600
-$1,400
-$1,200
-$1,000
-$800
-$600
-$400
-$200
$0
2006 2008 2010 2012 2014 2016 2018
No
min
al $
Bil
lio
ns
Fiscal Year
Actual Budget Deficits
CBO Baseline Deficit, January 2009
Note: The January 2009 CBO
baseline already incorporated the
10-year effects of the 2007-2009
recession, and the policies
inherited from President Bush.
The added Obama deficits consist
of $5 trillion in new legislation,
partially offset by $400 billion saved
by the sluggish recovery, as lower
interest rates and thus interest
costs offset the lower revenues
94
Source: CBO data. FY 2017-2019 "actuals" reflect CBO baseline as of January 2017, and thus reflect the
deterioration of the full ten-year budget picture.
See “Obama's Fiscal Legacy: A Comprehensive Overview of Spending, Taxes, and Deficits,” by Brian Riedl.
Author: Brian Riedl,
Manhattan Institute
@Brian_Riedl
Under President Obama, the 2009-2019 Deficit Worsened by $4.6 Trillion Relative to the Inherited
January 2009-19 Baseline
95
-$4,988
-$3,153
$397$820
$2,314
-$5,000
-$4,000
-$3,000
-$2,000
-$1,000
$0
$1,000
$2,000
$3,000
No
min
al $
Bil
lio
ns
2009-2019 Deficit Impact
Revenue
Downgrades
(Weak Recovery
& Technical
Re-estimates)
Automatic
Entitlement
Savings Due to
Weak Economy
& Technical
Re-estimates
New
Legislation
Signed by
President
Obama
Automatic
Interest Savings
Due Mostly to
Falling Interest
Rates from Weak
Recovery
Faster Recovery
of Financial
Bailout Costs
Purple = Deficit changes unrelated to 2009-17 legislation.
Sum to $378 billion in deficit reduction
Source: Author calculations based on CBO baseline updates and bill scores. Positive figures reduce the deficit, negative figures worsen
the deficit. The January 2009 baseline already incorporated the long-term effects of the recession. Subsequent economic downgrades
reflect the unexpectedly-weak recovery after the recession ended. See “Obama's Fiscal Legacy: A Comprehensive Overview of
Spending, Taxes, and Deficits,” by Brian Riedl.Author: Brian Riedl, Manhattan Institute -- @Brian_Riedl
President Obama Oversaw a $4.6 Trillion Decline from the Inherited 2009-2019 Budget Projections
96
Source: “Obama's Fiscal Legacy: A Comprehensive Overview of Spending, Taxes, and Deficits,” by Brian Riedl (based on CBO data).
Positive numbers add to deficit, negative numbers reduce deficit. Legislative changes include associated interest costs and savings. Ending
2017-2019 figures represent estimates as of January 2017 when President Obama left office.
Author: Brian Riedl,
Manhattan Institute
@Brian_Riedl
(All numbers in nominal $billions) 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2009-19
CBO January 2009 Baseline Budget Deficit -1,186 -703 -498 -264 -257 -250 -234 -272 -234 -188 -235 -4,321
Legislative Changes
Renewing Pre-2009 Tax Policies -27 -114 -239 -273 -382 -363 -421 -528 -539 -596 -654 -4,135
2009 ARRA Stimulus -163 -311 -175 -63 -58 -55 -39 -29 -33 -39 -46 -1,010
Subsequent Stimulus and Recession Relief -7 -106 -233 -269 -93 -15 -17 -41 -44 -56 -67 -948
Renewing Pre-2009 Health Laws 0 -3 -16 -20 -19 -15 -16 -19 -19 -15 -12 -154
Other Mandatory Spending Legislation -7 -7 -16 -25 -29 -13 1 -1 4 12 13 -69
Hurricane Sandy Relief 0 0 0 0 -5 -13 -12 -11 -10 -7 -6 -64
BCA Mandatory Sequesters 0 0 0 0 10 14 16 16 18 20 22 117
Affordable Care Act 0 -7 -2 19 44 51 51 30 17 30 41 275
Other Revenue Legislation 4 18 -4 21 7 35 27 56 37 39 41 282
Other Discretionary Spending and OCO Reforms -18 -49 -84 -59 36 89 124 144 150 183 202 718
Economic and Technical Re-estimates
Revenue Effect - Economic Changes -33 27 3 -17 -180 -197 -256 -329 -287 -299 -352 -1,920
Revenue Effect - Techncial Re-estimates -159 -178 -118 -254 -54 -125 -7 -33 -121 -92 -93 -1,233
Financial Bailout Cost Re-Estimates -1 126 5 -28 113 89 33 25 26 7 0 397
Mandatory Spending - Economic/Technical Re-estimates 176 10 65 30 -23 24 1 71 125 151 190 820
Interest Spending - Economic/Technical Re-estimates 8 1 12 113 210 261 309 332 350 363 356 2,314
Actual Deficits and January 2017 Baseline Deficit -1,413 -1,294 -1,300 -1,087 -680 -485 -438 -587 -559 -487 -601 -8,931
Memorandum
Total Legislative Changes -219 -577 -768 -668 -488 -286 -286 -382 -418 -429 -467 -4,988
Total Economic and Technical Re-estimates -8 -14 -33 -155 66 51 81 67 93 130 101 378
Total Deficit Changes -227 -592 -801 -823 -423 -235 -205 -315 -325 -299 -366 -4,610
Tax Revenue Impact of CBO Economic Growth Downgrades (and Upgrades) Under President Obama
97
-$33
$27$3
-$17
-$180-$197
-$256
-$329
-$287 -$299
-$352-$400
-$300
-$200
-$100
$0
$100
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
No
min
al $
Bil
lio
ns
Fiscal Year
Source: CBO budget baselines between March 2009 and January 2017. See “Obama's Fiscal
Legacy: A Comprehensive Overview of Spending, Taxes, and Deficits,” by Brian Riedl.
Note: Consists of gained/lost revenues specifically resulting from
economic growth upgrades and downgrades between March 2009 and
January 2017. Post-2016 figures reflect latest estimates.
Author: Brian Riedl,
Manhattan Institute
@Brian_Riedl
CBO Economic Downgrades Under President Obama Have Sharply Lowered Interest Rates
and Therefore Net Interest Costs
98
-$4 -$2-$26
-$121
-$206
-$252
-$319-$346
-$363-$398
-$418
-$500
-$400
-$300
-$200
-$100
$0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019Inte
res
t S
avin
gs
in
No
min
al $
Bil
lio
ns
Fiscal Year
Source: CBO budget baselines between March 2009 and January 2017. See “Obama's Fiscal
Legacy: A Comprehensive Overview of Spending, Taxes, and Deficits,” by Brian Riedl.
Note: Consists of net interest savings directly attributed to lower interest rates
from economic downgrades occurring between March 2009 and January 2017.
Post-2016 figures reflect latest estimates.Author: Brian Riedl,
Manhattan Institute
@Brian_Riedl
President Obama’s Eight Annual Budget Requests Proposed Large Tax and Spending Increases
99
$1,844
$988
-$265-$500
$0
$500
$1,000
$1,500
$2,000
No
min
al
$B
illio
ns
Proposed Tax
Increases &
Immigration
Revenues
Proposed
Spending
Program
IncreasesNet Interest
Impact of
Proposals
Source: OMB, President's Budget Proposals, FY 2010 - FY 2017. Includes new proposals hidden in the
budget baseline, and excludes OCO proposals due to the lack of a plausible baseline to score them
against. Also excludes current-policy extensions of long-time tax cuts and Medicare payment rates.
See “Obama's Fiscal Legacy: A Comprehensive Overview of Spending, Taxes, and Deficits,” by Brian Riedl.
Author: Brian Riedl,
Manhattan Institute
@Brian_Riedl
The Obama Spending Spree Ended When the GOP Took the House in 2011
100
$338
$515
-$216
-$23
-$70
-$18-$38
-$3
$314$16
-$34
-$39-$130
-$102-$119
-$95
-$300
-$200
-$100
$0
$100
$200
$300
$400
$500
$600
$700
111-1st(2009)
111-2nd(2010)
112-1st(2011)
112-2nd(2012)
113-1st(2013)
113-2nd(2014)
114-1st(2015)
114-2nd(2016)
No
min
al $
Bil
lio
ns
Mandatory Spending Enacted (rolling 10-year score)
New Spending Enacted by Year – Excluding Basic Renewals of
Existing Tax, Health, and Unemployment Policies
Yearly Discretionary Budget Authority Relative to
January 2009 CBO Baseline
Congressional Session and Year Enacted
Source: Author calculations based on CBO and JCT bill scores. Discretionary spending figures exclude emergency
appropriations for OCO (which would otherwise show even larger 2011-2016 savings) and Hurricane Sandy.
See “Obama's Fiscal Legacy: A Comprehensive Overview of Spending, Taxes, and Deficits,” by Brian Riedl.
Author: Brian Riedl,
Manhattan Institute
@Brian_Riedl