CHARTS MAY 7, 2013 WASHINGTON, D.C.
America s long-term debt outlook is unsustainable. Unless we change course, in coming decades rising debt and interest payments will weigh down our economy and divert resources from critically needed public and private investments. Our ability to meet the needs of the future, from education to transportation to research and development to national security, could suffer. Vital safety net programs like Social Security, Medicare, and Medicaid could face sharp cuts that hurt the most vulnerable Americans. And federal borrowing could take up precious resources that could be invested in the private economy. The question is: Are we ready to face the future and act now to lay a foundation for growth, opportunity, and security in the years ahead? To date, policymakers haven t been sufficiently focused on the long term. Over the past two years, Congress and the President have taken a number of measures to lower deficits, including reducing spending and raising taxes. But these measures have focused on this year and the next ten years and, because they ignored the structural issues, they have had only a modest effect on long-term projections of federal debt. Policymakers can help the economy and prepare for the future by agreeing on a plan to reform the structural drivers of our long-term debt. Budget reforms that are gradually implemented once our economy is stronger will add certainty to our long-term fiscal outlook and help to build confidence in today s economy. And a plan that reduces future debt and interest costs will help to ensure that we can make the investments necessary to meet the challenges of the decades ahead. The charts in this book show how dramatically debt is projected to rise, how high interest costs could climb, and why it is essential to improve our fiscal outlook and prepare for the future. The Peter G. Peterson Foundation regularly produces charts and analyses to explain the scope of America s fiscal challenges and to help policymakers, experts, and the public make progress toward solutions. To view and share these charts and other materials, please visit www.pgpf.org.
Future U.S. debt held by the public is projected to soar to unsustainable levels if current policies remain unchanged.
By 2060, federal revenues will not even be sufficient to cover interest payments on the federal debt. If interest rates are just 2% higher, that will occur 17 years sooner.
By 2040, interest costs on the debt are projected to be more than three times what the federal government has historically spent on education, R&D, and infrastructure combined.
U.S. dependency on foreign lenders to finance the public debt has risen sharply.
Various policy changes since 2011 have had only a modest effect on long-term projections of federal debt.
Solutions do exist: PGPF Solutions Initiative plans from five think tanks show declining federal debt through 2037.
Mandatory programs and interest costs are taking over more and more of the federal budget, crowding out important discretionary programs.
Federal entitlement programs are projected to more than double as a percentage of GDP under current policies.
Social Security has transitioned from annual surpluses to annual deficits.
Healthcare is the major driver of the projected federal spending growth over the long term.
Total U.S. health expenditures (both public and private) are projected to soar to more than one-quarter of the economy by 2037.
Healthcare expenditures in the U.S. are twice those of other developed countries.
countries, its health outcomes are generally no better. Although the U.S. spends more on healthcare than other
The population of the United States is aging rapidly. Soon we will be a nation of Floridas.
Low-income seniors rely on Social Security benefits for a major share of their retirement income.
Although the incomes of the wealthy are volatile, they have grown much faster than those of other households.
Corporate and individual tax expenditures deductions, credits, and exclusions are large in comparison to annual taxes collected, as well as the government s major programs.
Five individual tax breaks account for about $700 billion in annual income tax expenditures.
Discretionary spending funds a wide range of government programs.
The U.S. spent more on defense in 2012 than did the countries with the next 10 highest defense budgets combined.