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What We Face
Working Group Meeting
of the Exploratory Project on
Human Services and Social
Change
Prepared by
Gary D. Bass
OMB Watch
1742 Connecticut Ave., NW
Washington, D.C. 20009
(202) 234-8494
http://www.ombwatch.org
The Budget & Tax
Picture Today
“We’ve got plenty of money in
Washington, D.C., by the way.”
President Bush in Louisville, KY
February 26, 2004
---------------------------------
“The tension is money. There’s
not enough money.”
Sen. Ted Stevens (R-AK), Chair
Appropriations Committee
March 3, 2004
Deficit as % of Economy Hits 2nd Highest
Level Since End of World War II
(Deficit excluding Social Security as % of GDP)
6.0
2.0
0.0
-2.0
-4.0
-6.0
-8.0
1983
-6.0%
2004
-5.9%
19
47
19
5
19 0
53
19
56
19
59
19
62
19
65
19
68
19
71
19
7
19 4
77
19
80
19
83
19
86
19
89
19
92
19
95
19
9
20 8
01
20
04
% of GDP
4.0
Revenue as % of Economy is
Lowest Level Since 1950
22
21
% of GDP
20
19
18
17
16
04
00
20
96
19
92
19
88
19
84
19
80
19
76
19
72
19
68
19
64
19
60
19
19
52
19
48
56
1950
14.4%
14
19
2004
15.7%
20
15
Spending NOT Out of Control
% of GDP
Outlays as % of GDP
21.5
21
20.5
20
19.5
19
18.5
1.8% of GDP =
$207 Billion in
2004
21.3
19.5
1980-2000
2001-2004
The Longer-Term Budget
& Tax Picture
“I don’t want to abolish
government. I simply want to
reduce it to the size where I can
drag it into the bathroom and
drown it in the bathtub.”
Grover Norquist, Americans for Tax Reform
June 25, 2003
"Which Federal Baseline Do We Use?"
21%
Baseline Receipts
20%
% of GDP
2001 Tax Law
Extended
19%
2002 Tax Law Extended
2003 Tax Law Extended
18%
17%
Other Tax Laws
Extended
Alternative Minimum
Tax Growth Halted
16%
1970 1977 1984 1991 1998 2005 2012 2019 2026 2033 2040 2047 2054 2061 2068 2075
Source: Steuerle, Carasso, Bishop, based on data from Gale, Orszag, and the Tax Policy Center.
Lost Federal Revenue Compared
to Philanthropic Giving
Assuming charitable giving keeps pace with the
growth in the economy, giving in 2009 will be
$341.4 billion. Charity would need to increase
142% to replace the lost federal revenue,
assuming it continues to fund existing activities.
500
$ in Billions
450
400
350
300
250
485.2
200
150
260.3
100
50
38.1
25.7
0
Lost
Revenue
Individual Foundations Bequests
Giving
17.3
Corp Giving
All figures in 2009 Dollars. Philanthropy source: American Association of Fundraising Counsel’s Trust in
Philanthropy/Giving USA 2003.
As Baby Boomers Come of Age,
the Deficit Explodes
Source: Derived from Chart 12-5, OMB, 2005 Budget, Analytical Perspectives, page 194
2001-03 Tax Cuts vs. Social Security:
Present Value of Costs Over 75 Years
14
In Trillions
12
10
8
6
12.1
4
3.8
2
0
Tax Cuts if Made
Permanent
75-Year Shortfall in
Social Security
The Long-Term Problem
• It’s a Revenue Problem. The tax cuts
since 2001 cause long-term systemic
problems. Additionally, there is a need to
develop a fairer tax system with more
revenue.
• Hard Choices Await Us. Even with
additional revenue, some hard choices
about spending priorities may be
necessary. For example, some note that
current health care policies are not
sustainable over the long-term.
OMB Watch
Tax and Budget
Internet Survey
A Look At Service
Providers
Troubling Tax & Policy
Issues to Service Providers
19
Budget Cuts
Corporate Tax Avoidance
Unfunded Mandates
Tax Cuts
Defense Spending Increases
Devolution
Privatization
Taxes Too High
18
To what extent do the
following current federal
tax and budget policy
issues trouble you?
70
28
88%
82%
54
22
59
21
81%
73%
73%
52
28
45
24
63%
39
20
0
91%
72
19
20
39%
40
60
80
%
Somewhat Troubled
Very Troubled
100
Strong Support for a
Tax & Budget Campaign
Given limited
time and
resources and
the fact that
there are
many other
important
issues, do you
agree or
disagree that it
is time to
launch a longterm offensive
campaign
around federal
tax and budget
issues?
Service
Providers
36
54
Others
33
58
0
20
40
60
90%
91%
80
%
Somewhat Agree
Strongly Agree
100
Participation May Be a
Challenge
90% of respondents say it is time to launch a campaign BUT
49% say they are unlikely to participate.
3
Launch
Campaign
5
Participate 21
-50
28
34
31
56
16
NEGATIVE 0 POSITIVE
50
100
%
Somewhat Disagree/Unlikely
Somewhat Agree/Likely
Disagree/No
Strongly Agree/Very Likely
Even Though 49% say
They Might Not
Participate in a
Campaign…
61% Say They Will Help
Redistribute Information
About the Campaign
Other Ways Groups Say
They Would Participate
45
40
35
30
25
%
20
15
10
5
0
41
39
36
39
28
22
Town Hall
Meetings
Lobby
Activities
Service Providers
Editorial
Board
Meetings
Other
26
21
Be Part of
Leadership
Getting Service
Providers to Engage
90
82%
79%
79%
79%
80
70
60
%
45
44
49
39
45%
50
40
21
30
How important
20
are the
following items 10
to get you or
your
0
organization
engaged in a
long-term
campaign about
federal tax and
budget issues?
37
35
30
40
24
Info on
Common
Info on Current Info Funding for
State/Local Messages Issue Area
on
Tax/Budget
Impacts
& Themes
Impact Tax/Budget
Work
Somewhat Important
Very Important
Service Providers
Significantly Differ From
Other Respondents On…
• Funding for Tax/Budget Work. Service
providers find funding as less of an incentive to
get involved than others.
• Information about Effect of Federal
Tax/Budget Policies on State/Local Funding.
Service providers find such information as more
of an incentive for involvement than others.
• Information about Effect of Federal
Tax/Budget Decision on Substantive Issue
Areas. Service providers find such information
as more of an incentive for involvement.
Summary of Survey
• Even though Service Providers are heavily
dependent on government resources, they
are less troubled by tax cuts or
privatization of government services than
other nonprofits.
• Service Providers are similar to other
nonprofits in levels of participation on tax
and budget issues over the past year, as
well as on objectives (with two
exceptions) of what a long-term tax/
budget campaign should be.
•
Summary of Survey
(Cont.)
Service Providers present a number of
contradictions:
(a) They are significantly more concerned
about resources for unfunded mandates
than other nonprofits;
(b) They are very concerned about federal
budget cuts;
(c) But they are more supportive of spending
cuts to reduce the deficit than other
nonprofits;
(d) And they are significantly less worried than
other nonprofits about attacks on the role
of government or the need to demonstrate
the value of a strong federal government.
Summary of Survey
(Cont.)
• Service Providers differ from other
nonprofits on incentives for
engaging on federal tax/budget
issues. Service Providers place
information about impacts of federal
issue on state/local funding as the most
important incentive. Other nonprofits
place developing common messages,
themes and principles as the top
incentive.