1. business and industrial
2. company
3. annual report

CHARTS
MAY 19, 2015
WASHINGTON, D.C.
America’s economic recovery is finally taking hold and current deficits are down from their highs during the recession. But at the same time, far too many
American families are being left out of the recovery, and our nation still faces an unsustainable long-term fiscal outlook. It is in this context—with progress
made, but work still to be done—that America has an important opportunity to secure its fiscal and economic future.
On the economic side, while lower unemployment and improvements in growth are fueling renewed optimism, the recovery is uneven and longer-term trends
of income stagnation are of great concern. There is widespread agreement that we need to ensure continued access to opportunity for Americans.
When it comes to our fiscal challenges, many said that the fragile nature of the recovery meant that fiscal action needed to be delayed until the economy was
stronger. Now, as the economic recovery strengthens, lawmakers have a new and important opportunity to address America’s unsustainable long-term fiscal
outlook. The current economic environment allows more room to maneuver, and provides a window to plan for success—making smart, reasoned decisions
that will benefit America over the long term.
The charts in this book outline the nature of the long-term challenges we face and what we have to gain if we take action to stabilize our fiscal outlook. It’s
clear that the United States is on an unsustainable fiscal path, driven by a structural long-term imbalance between spending and revenue. Without action,
rising debt and interest payments will weigh down the economy and undermine investments in our future, including in key areas like education, research, and
infrastructure. Moreover, unless we change course, critically important safety net programs could be threatened by sharp cuts that hurt the most vulnerable
Americans.
The charts also show that we can choose a better path. There’s no shortage of good solutions to stabilize our long-term fiscal outlook and ensure our future
isn’t diminished by our past.
The Peter G. Peterson Foundation regularly produces charts and analyses to explain the scope and seriousness 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.
© 2015 Peter G. Peterson Foundation
#FiscalSummit
1
PGPF.org
FiscalSummit.org
U.S. debt held by the public is on an unsustainable path
DEBT HELD BY THE PUBLIC (% OF GDP)
Actual
200%
Projected
183% in 2039
(Alternative
Fiscal Scenario)
175%
150%
125%
World
War II
106% in 2039
(Current Law)
100%
75%
50%
25%
0%
1930
1940
1950
1960
1970
1980
1990
2000
2010
2020
2030
SOURCE: Congressional Budget Office, The 2014 Long-Term Budget Outlook, July 2014. Compiled by PGPF.
NOTE: Data for the alternative fiscal scenario include economic feedback.
© 2015 Peter G. Peterson Foundation
#FiscalSummit
4
PGPF.org
FiscalSummit.org
The growing debt is caused by a structural mismatch
between spending and revenues
FEDERAL REVENUES AND SPENDING (% OF GDP)
30%
Actual
Projected
Spending
Average Spending
(1980-2014)
25%
20%
15%
Revenues
Average Revenues
(1980-2014)
10%
5%
0%
1980
1985
1990
1995
2000
2005
2010
2015
2020
2025
2030
2035
SOURCE: Congressional Budget Office, The 2014 Long-Term Budget Outlook, July 2014, and Updated Budget Projections: 2015 to 2025, March 2015.
Compiled by PGPF.
NOTE: Projections are from CBO’s extended baseline scenario.
© 2015 Peter G. Peterson Foundation
#FiscalSummit
5
PGPF.org
FiscalSummit.org
Healthcare is the major driver of the projected growth in
federal spending over the long term
FEDERAL SPENDING (% OF GDP)
10%
Actual
Projected
Major Health Programs
9%
8%
7%
Social Security
6%
5%
4%
3%
Defense Discretionary
2%
Nondefense Discretionary
1%
Other Mandatory
0%
1980
1990
2000
2010
2020
2030
2040
2050
SOURCE: Congressional Budget Office, Historical Budget Data, April 2014, and The 2014 Long-Term Budget Outlook, July 2014; and PGPF
projections based on CBO data. Calculated by PGPF.
NOTE: Projections are based on CBO’s extended baseline scenario. Major health programs include Medicare, Medicaid, Children’s Health Insurance
Program (CHIP), and the health exchanges.
© 2015 Peter G. Peterson Foundation
#FiscalSummit
6
PGPF.org
FiscalSummit.org
The elderly population is growing rapidly and living
longer
U.S. POPULATION AGE 65+ (MILLIONS)
100
Baby Boomers Turn
65
90
80
85+
70
60
75-84
50
40
30
65-74
20
10
0
1990
2000
2010
2020
2030
2040
2050
2060
SOURCE: U.S. Census Bureau, National Intercensal Estimates, and 2014 National Population Projections, December 2014. Compiled by PGPF.
© 2015 Peter G. Peterson Foundation
#FiscalSummit
7
PGPF.org
FiscalSummit.org
Social Security moved from annual surpluses to annual
deficits in 2010
SOCIAL SECURITY SURPLUSES/DEFICITS (% OF GDP)
1.0%
Actual
0.5%
Projected
Trust Fund Depleted
Total Deficit
$2.8 Trillion
0.0%
-0.5%
-1.0%
-1.5%
-2.0%
1975
1985
1995
2005
2015
2025
2035
2045
2055
2065
2075
2085
SOURCE: Social Security Administration, The 2014 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and
Federal Disability Insurance Trust Funds, July 2014. Compiled by PGPF.
NOTE: Surplus/deficit numbers exclude interest income. The total deficit of $2.8 trillion is the present value of the cash deficits between 2014 and
2033.
© 2015 Peter G. Peterson Foundation
#FiscalSummit
8
PGPF.org
FiscalSummit.org
As the population ages, fewer workers will be paying
taxes to support each Social Security beneficiary
WORKERS PER BENEFICIARY
5
4
3.7
3.4
3
2.9
2
2.2
1
0
1970
1990
2010
2030
SOURCE: Social Security Administration, The 2014 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and
Federal Disability Insurance Trust Funds, July 2014. Compiled by PGPF.
© 2015 Peter G. Peterson Foundation
#FiscalSummit
9
PGPF.org
FiscalSummit.org
The United States spends more than twice as much per
capita on healthcare as the average developed country
does
HEALTHCARE COSTS PER CAPITA (DOLLARS)
$10,000
$8,745
$8,000
$6,000
$6,080
$4,000
$2,000
$3,209 $3,289
$3,649
$4,288
$3,997 $4,106
$4,602 $4,811
$3,484
OECD Average
United States
Switzerland
Germany
Canada
France
Sweden
Australia
Japan
U.K.
Italy
$0
SOURCE: Organization for Economic Cooperation and Development, OECD Health Statistics 2014, June 2014. Compiled by PGPF.
NOTE: Per capita health expenditures are for 2012, except Australia for which 2011 data are the latest available. Chart uses purchasing power parities
to convert data into U.S. dollars.
© 2015 Peter G. Peterson Foundation
#FiscalSummit
10
PGPF.org
FiscalSummit.org
Life expectancy at birth in the United States is lower than
in other developed countries, despite higher healthcare
costs
LIFE EXPECTANCY (YEARS)
86
Japan
84
Italy
82
France
Canada
U.K.
80
Germany
78
United States
76
74
72
$0
$2,000
$4,000
$6,000
$8,000
$10,000
HEALTHCARE SPENDING PER CAPITA
SOURCE: Organization for Economic Cooperation and Development, OECD Health Statistics 2014, June 2014. Compiled by PGPF.
NOTE: The trend line comes from a logarithmic regression.
© 2015 Peter G. Peterson Foundation
#FiscalSummit
11
PGPF.org
FiscalSummit.org
Medical spending increases rapidly with age
ANNUAL HEALTHCARE SPENDING PER CAPITA (DOLLARS)
$40,000
$35,000
$34,783
$30,000
$25,000
$20,000
$15,000
$15,857
$10,000
$8,370
$5,000
$0
$3,628
$4,422
0-18
19-44
45-64
65-84
85+
SOURCE: Centers for Medicare and Medicaid Services, National Health Expenditures by Age and Gender, May 2014. Data are for 2010. Compiled by
PGPF.
© 2015 Peter G. Peterson Foundation
#FiscalSummit
12
PGPF.org
FiscalSummit.org
Total U.S. health expenditures (both public and private)
are projected to rise to nearly one-quarter of the
economy by 2039
NATIONAL HEALTH SPENDING (% OF GDP)
25%
Actual
Projected
22%
20%
18%
15%
15%
11%
10%
7%
5%
5%
0%
1960
1975
1990
2005
2020
2039
SOURCE: Centers for Medicare and Medicaid Services, National Health Expenditures, December 2014; and the Congressional Budget Office, The
2014 Long-Term Budget Outlook, July 2014. Compiled by PGPF.
NOTE: CMS data are for 1960–2020. The 2039 figure is based on the latest projection from CBO. National spending on healthcare is health
consumption expenditures as defined in the national health expenditure accounts and excludes spending on medical research, structures, and
equipment.
© 2015 Peter G. Peterson Foundation
#FiscalSummit
13
PGPF.org
FiscalSummit.org
Corporate and individual tax expenditures are large in
comparison to annual taxes collected, as well as to the
government’s major programs
BUDGETARY COST (BILLIONS OF DOLLARS)
$1,800
$1.7
Trillion
$1,500
$1,200
$1.4
Trillion
$900
$845
Billion
$600
$596
Billion
$505
Billion
$300
$0
All Tax Expenditures
Individual &
Corporate Tax
Revenues
Medicare
Social Security
Defense
SOURCE: Office of Management and Budget, Budget of the United States Government, Fiscal Year 2016, February 2015. Data are for 2014. Compiled
by PGPF.
NOTE: Medicare spending is net of premiums and payments from the states. Those receipts were $95 billion in 2014. Defense represents discretionary
defense spending. Income tax revenues includes both individual and corporate income tax receipts. Tax expenditures are deductions, credits,
exclusions, and preferential rates. The estimates include effects on income, payroll, and excise tax revenues, as well as effects on outlays.
© 2015 Peter G. Peterson Foundation
#FiscalSummit
14
PGPF.org
FiscalSummit.org
The U.S. tax system is progressive, with higher-income
taxpayers facing higher tax rates
AVERAGE TAX RATE (% OF CASH INCOME)
40%
30%
Estate Tax
Corporate Income Tax
Payroll Tax
Individual Income Tax
33.4%
35.7%
23.8%
20%
16.6%
18.8%
20.3%
13.7%
10%
8.0%
3.1%
0%
Lowest
Quintile
Second
Quintile
Middle
Quintile
Fourth
Quintile
80-90th 90-95th 95-99th
Percentile Percentile Percentile
Top 1
Percent
Top 0.1
Percent
SOURCE: Tax Policy Center, Baseline Average Effective Federal Tax Rates by Cash Income Percentile; 2014, July 2013. Compiled by PGPF.
NOTE: Data are for 2014. Individual income tax rates for the lowest and second lowest quintiles are negative and are netted against the payroll tax
rate. A quintile is one fifth of the population. In 2013 dollars, the income breaks are 20%: $24,191; 40%: $47,261; 60%: $79,521; 80%: $134,266; 90%:
$180,482; 95%: $261,471; 99%: $615,048; 99.9%: $3,170,865.
© 2015 Peter G. Peterson Foundation
#FiscalSummit
15
PGPF.org
FiscalSummit.org
Compared with other major countries, the United States
has had a low national saving rate
NET NATIONAL SAVING RATE (% OF GDP)
8%
6%
G-7 Average
(Excluding U.S.)
4%
2%
0%
United States
-2%
-4%
2000
2002
2004
2006
2008
2010
2012
SOURCE: Organization for Economic Cooperation and Development, National Accounts at a Glance, November 2014. Compiled by PGPF.
NOTE: The G-7 is a group of seven advanced economies: Canada, France, Germany, Italy, Japan, the U.K., and the United States.
© 2015 Peter G. Peterson Foundation
#FiscalSummit
16
PGPF.org
FiscalSummit.org
Interest costs are projected to grow to unsustainable
levels if current policies aren’t changed
% OF GDP
Actual
60%
Projected
Revenues
Noninterest Spending
50%
Net Interest Spending
40%
Total Spending
30%
20%
10%
0%
1965
1975
1985
1995
2005
2015
2025
2035
2045
2055
2065
2075
SOURCE: Congressional Budget Office, The 2014 Long-Term Budget Outlook, July 2014; and Office of Management and Budget, Budget of the
United States Government, Fiscal Year 2016, Historical Tables, February 2015. Calculated by PGPF.
NOTE: Projections are based on CBO’s alternative fiscal scenario.
© 2015 Peter G. Peterson Foundation
#FiscalSummit
18
PGPF.org
FiscalSummit.org
By 2066, interest costs on the federal debt will exceed
federal revenues. If the economic effects of debt on
interest rates are included, that date will occur in 2048.
INTEREST COSTS (% OF GDP)
40%
35%
Interest Costs with
Economic Effects
30%
Interest Costs without
Economic Effects
25%
20%
Revenues
15%
10%
5%
0%
2010
2020
2030
2040
2050
2060
2070
2080
SOURCE: Congressional Budget Office, The Budget and Economic Outlook: 2014 to 2024, February 2014, and The 2014 Long-Term Budget Outlook,
July 2014. Calculated by PGPF.
NOTE: Projections are based on CBO’s alternative fiscal scenario and CBO’s assumptions about the effects of high debt levels on interest rates. The
effective interest rate on federal debt rises gradually until it is one-and-one-third percentage points higher in 2039 than in CBO’s economic benchmark
projections.
© 2015 Peter G. Peterson Foundation
#FiscalSummit
19
PGPF.org
FiscalSummit.org
Interest costs will be the third largest category of the
budget in 2023
FEDERAL SPENDING IN 2023 (BILLIONS OF DOLLARS)
$1,500
$1,394
$1,000
$852
$704
$697
$677
$659
$500
$519
$0
Social
Security
Medicare
Interest
Other
Mandatory
Defense
Nondefense
Discretionary Discretionary
Medicaid
SOURCE: Congressional Budget Office, Updated Budget Projections: 2015 to 2025, March 2015. Compiled by PGPF.
NOTE: Medicare is net of offsetting receipts.
© 2015 Peter G. Peterson Foundation
#FiscalSummit
20
PGPF.org
FiscalSummit.org
Mandatory spending and interest costs will climb
significantly, while discretionary spending will fall to well
below historical averages
% OF FEDERAL SPENDING
100%
61%
68%
90%
80%
% of GDP
77% Mandatory
Spending
and Net
Interest
Costs
16%
Actual
Projected
14%
12%
70%
10%
60%
8%
50%
40%
30%
6%
39%
32%
20%
4%
23%
10%
2015
Discretionary
Spending
Discretionary
Spending 2%
0%
1995
0%
2005
20-Year Average
(1995-2014)
2025
2001
2007
2013
2019
2025
SOURCE: Congressional Budget Office, Updated Budget Projections: 2015 to 2025, March 2015. Compiled by PGPF.
© 2015 Peter G. Peterson Foundation
#FiscalSummit
22
PGPF.org
FiscalSummit.org
By 2050, interest costs on the debt are projected to be
four times what the federal government has historically
spent on education, R&D, and infrastructure combined
FEDERAL SPENDING (% OF GDP)
12%
10.7%
10%
8%
Alternative
Fiscal
Scenario
7.0%
6%
4%
2.6%
2%
0%
R&D
Infrastructure
Education
Current
Law
1.3%
2014
2039
Average Spending
(1965-2014)
2050
Interest Costs
SOURCE: Congressional Budget Office, The 2014 Long-Term Budget Outlook, July 2014; and Office of Management and Budget, Budget of the
United States Government, Fiscal Year 2016, Historical Tables, February 2015. Compiled by PGPF.
NOTE: Infrastructure excludes defense. Data for the alternative fiscal scenario does not include economic feedback.
© 2015 Peter G. Peterson Foundation
#FiscalSummit
23
PGPF.org
FiscalSummit.org
Discretionary spending funds a wide range of
government programs
DISCRETIONARY BUDGET
Defense
Transportation
Education
Income Security
Veterans Benefits and Services
Health (Discretionary Only)
Administration of Justice
International Affairs
Natural Resources and Environment
General Science, Space and Technology
Community and Regional Development
General Government
Energy
Medicare Administrative Costs
Social Security Administrative Costs
Agriculture
Defense
SOURCE: Office of Management and Budget, Budget of the United States Government, Fiscal Year 2016, February 2015. Data are for 2014. Compiled
by PGPF.
NOTE: Data excludes function 900, 990, and functions with negative outlays. Health (discretionary only) includes National Institutes of Health, Center
for Disease Control and Prevention, veterans’ healthcare, and administrative costs for Medicaid.
© 2015 Peter G. Peterson Foundation
#FiscalSummit
24
PGPF.org
FiscalSummit.org
The United States spends more on defense than the next
seven countries combined
DEFENSE SPENDING (BILLIONS OF DOLLARS)
$700
$600
$500
$610 Billion
$601 Billion
China
$400
Russia
United States
$300
Saudi Arabia
$200
$100
$0
France
United Kingdom
India
Germany
SOURCE: Stockholm International Peace Research Institute, SIPRI Military Expenditure Database, April 2015. Data are for 2014. Compiled by PGPF.
NOTE: Figures are in U.S. dollars, converted from local currencies using market exchange rates.
© 2015 Peter G. Peterson Foundation
#FiscalSummit
25
PGPF.org
FiscalSummit.org
The United States lags in the percentage of university
students earning science and engineering degrees
SCIENCE AND ENGINEERING DEGREES (% OF UNDERGRADUATE DEGREES)
50%
44%
40%
30%
31%
23%
20%
16%
10%
0%
United States
European Union
Asia
China
SOURCE: National Science Foundation, Science and Engineering Indicators 2014, February 2014. Compiled by PGPF.
NOTE: This chart includes natural sciences (physical, biological, agricultural, computer science, and mathematics) and engineering but excludes social
sciences.
© 2015 Peter G. Peterson Foundation
#FiscalSummit
28
PGPF.org
FiscalSummit.org
The United States ranks only 16th in quality of overall
infrastructure according to the World Economic Forum
Best
QUALITY OF OVERALL INFRASTRUCTURE
Switzerland
UAE
Hong Kong
Singapore
Finland
Austria
Japan
Netherlands
Iceland
Germany
France
Spain
Portugal
Belgium Denmark
Luxembourg
U.S.
Canada
Sweden
Worst
Malaysia
SOURCE: World Economic Forum, The Global Competitiveness Report 2014-2015, 2014. Compiled by PGPF.
NOTE: The World Economic Forum score on overall infrastructure includes transport, telephony, and energy. Only the top 20 ranked countries are
shown.
© 2015 Peter G. Peterson Foundation
#FiscalSummit
29
PGPF.org
FiscalSummit.org
The median real income for families in the United States
has been relatively stagnant for two decades
MEDIAN FAMILY INCOME (2013 DOLLARS)
$80,000
$70,000
Average Income (1994-2013)
$60,000
$50,000
$40,000
$30,000
$20,000
$10,000
$0
1950
1960
1970
1980
1990
2000
2010
SOURCE: U.S. Census Bureau, Historical Income Tables, September 2014. Compiled by PGPF.
© 2015 Peter G. Peterson Foundation
#FiscalSummit
30
PGPF.org
FiscalSummit.org
The United States ranks only 13th in income mobility from
one generation to the next
Most Mobile
INTERGENERATIONAL INCOME MOBILITY
Canada
Sweden
Spain
Italy
Chile
Finland Denmark
Germany
Australia
New Zealand
Japan
U.S.
Least Mobile
U.K.
Switzerland France
Norway
SOURCE: Miles Corak, Inequality from Generation to Generation: the United States in Comparison, 2012. Compiled by PGPF.
NOTE: Mobility is measured as intergenerational earnings elasticity, an indicator of how closely children’s earnings are related to those of their
parents. In low-mobility countries, children’s earnings in adulthood depend heavily on their parents’ earnings.
© 2015 Peter G. Peterson Foundation
#FiscalSummit
31
PGPF.org
FiscalSummit.org
Although the incomes of the wealthy are volatile, they
have grown much faster than the incomes of other groups
AVERAGE ANNUAL AFTER-TAX INCOME (2011 DOLLARS)
$1,500,000
Top 1%:
Increase of
$688,200
(+200%)
$1,200,000
Top 20%:
Increase of
$87,700
(+87%)
$900,000
Middle 20%:
Increase of
$15,400
(+35%)
$600,000
$300,000
$0
1979
Lowest 20%:
Increase of
$7,800
(+48%)
1983
1987
1991
1995
1999
2003
2007
2011
SOURCE: Congressional Budget Office, The Distribution of Household Income and Federal Taxes, 2011, November 2014. Compiled by PGPF.
© 2015 Peter G. Peterson Foundation
#FiscalSummit
32
PGPF.org
FiscalSummit.org
Poverty levels among children have remained high, while
poverty levels among the elderly have declined
% IN POVERTY
30%
25%
Under 18 Years
20%
15%
10%
65 Years and Older
5%
0%
1966
1971
1976
1981
1986
1991
1996
2001
2006
2011
SOURCE: U.S. Census Bureau, Historical Poverty Tables, September 2014. Data are for 2013. Compiled by PGPF.
© 2015 Peter G. Peterson Foundation
#FiscalSummit
33
PGPF.org
FiscalSummit.org
The growing federal debt is projected to reduce average
income per person by $5,000 in 2039
AVERAGE INCOME LOSS PER CAPITA (2014 DOLLARS)
$0
-$1,000
-$2,000
-$2,000
-$3,000
-$3,000
-$4,000
-$5,000
-$5,000
-$6,000
2029
2034
2039
SOURCE: Congressional Budget Office, The 2014 Long-Term Budget Outlook, July 2014. Compiled by PGPF.
NOTE: Income is measured as real gross national product (GNP) per person. The reduction to income is the difference between the level of income if
debt rises as it does under the alternative fiscal scenario and the level of income if debt remains near its current share of GNP.
© 2015 Peter G. Peterson Foundation
#FiscalSummit
34
PGPF.org
FiscalSummit.org
Solutions do exist: PGPF Solutions Initiative III plans from
five think tanks show stable or declining federal debt
through 2040
DEBT HELD BY THE PUBLIC (% OF GDP)
200%
175%
Current Policy
150%
125%
Bipartisan Policy
Center
100%
75%
American
Enterprise Institute
50%
Economic Policy
Institute
25%
Center for
American Progress
0%
2015
2020
2025
2030
2035
2040
American Action
Forum
SOURCE: Peter G. Peterson Foundation, Solutions Initiative III, May 2015. See pgpf.org/solutions-initiative-iii for more details.
NOTE: Current policy is defined as the alternative fiscal scenario without economic feedback from CBO’s 2014 Long-Term Budget Outlook.
© 2015 Peter G. Peterson Foundation
#FiscalSummit
36
PGPF.org
FiscalSummit.org
Delaying action raises the cost of stabilizing the debt in
the long run
SIZE OF BUDGET CHANGES NEEDED TO STABILIZE THE DEBT (% OF GDP)
7%
6%
5.8%
5%
4%
3%
4.3%
3.4%
2%
1%
0%
2015
If Fiscal Reforms Begin in…
2020
2025
SOURCE: Congressional Budget Office, The 2014 Long-Term Budget Outlook, July 2014. Calculated by PGPF.
NOTE: Calculations are based on CBO’s alternative fiscal scenario.
© 2015 Peter G. Peterson Foundation
#FiscalSummit
37
PGPF.org
FiscalSummit.org