The Campaign to Fix the Debt

1. The Campaign to Fix the Debt October 2012

2. The Campaign to Fix the Debt • The Campaign to Fix the Debt is a national bipartisan effort to encourage our elected leaders to enact a comprehensive debt deal within the next year. • Participants of the Campaign include many of the nation’s top business and thought leaders, as well as tens of thousands of Americans from all walks of life. • The Campaign seeks to create an environment where voting ‘yes’ on a comprehensive debt solution reflects both good policy and safe politics. • To achieve this goal, the Campaign will work at the grassroots and grasstops levels through a combination of state and local coalition building, business leader support, social media efforts, Congressional outreach, and both earned and paid media. • The Campaign believes that the national debt is the most serious economic and national security threat facing this country, and we must come together as a nation to fix it. 1 1

3. Background on Our Fiscal Challenges: Between a "Mountain of Debt" and a "Fiscal Cliff"

4. On One Hand . . . A Mountain of Debt What Debt Is Likely to Be (Percent of GDP) Realistic Projections 2005: 37% 2012: 73% 2025: 106% 2040: 225% 2060: 460% What Debt Is Likely to Reach Source: CRFB extrapolations of Congressional Budget Office data, Alternative Fiscal Scenario. 2

5. Surpluses Turning Into Growing Deficits… Spending and Revenues (Billions of Dollars) $860B $1.4T $220B $1.1T $5.1T $4.6T $236B $223B $3.3T $2.4T $2.0T $1.6T 2000 2022 2012 Interest Costs Will Reach $1 Trillion By 2024 Source: Congressional Budget Office, Alternative Fiscal Scenario 3

6. Debt Drivers Why It Will Get So Much Worse How We Got Here • Rapid Health Care Cost Growth • (Causing Medicare and Medicaid costs to rise) • Population Aging • (Causing Social Security and Medicare costs to rise, and revenues to fall ) • Growing Interest Costs • (From continued debt accumulation) • Insufficient Revenue • (To meet the costs of funding government) • Economic Crisis • (Lost revenue and increased spending on safety net programs, like unemployment benefits and food stamps) • Economic Response • (Stimulus spending/tax breaks and financial sector rescue policies ) • Tax Cuts • (2001, 2003, and 2010) • War Spending • (Iraq and Afghanistan) • Spending Increases • (General ramp up in spending) 4

7. Growing Entitlement Spending Federal Spending and Revenues (Percent of GDP) Source: CRFB extrapolations of Congressional Budget Office data, Alternative Fiscal Scenario. 5

8. Consequences of Rising Debt “Crowding out” of private investment, leading to slower economic growth Higher interest rates for families purchases, such as houses, cars, college tuitions, etc. Higher federal interest payments Intergenerational inequity – passing the bill onto our kids along with a worse economy Uncertain policy and economic environment making it harder for families and businesses to plan for the future Risk of eventual fiscal crisis 6

9. On the Other Hand . . . A Fiscal Cliff Kicking the can down the road and continuing to borrow like we do today will create a Mountain of Debt. Expiring tax cuts combined with simultaneous across-the-board spending cuts will create a Fiscal Cliff. Note: Estimates based on CBO’s current law and AlternativeFiscal Scenario deficits. 7

10. What the Fiscal Cliff Entails At the end of 2012, the following is scheduled to occur: All of the 2001/2003/2010 tax cuts will expire at once. The “sequester” will immediately cut defense spending across-the-board by over 9% and non-defense discretionary spending by 8%. The payroll tax holiday and extended unemployment benefits will expire. The Alternative Minimum Tax (AMT) will hit 30 million taxpayers rather than 4 million. All of the tax extenderswill expire. Physicians will see a 30% cut in their Medicare payments. Tax increases from the Affordable Care Act will begin. The country will once again hit the debt ceiling. 8

11. The Size of the Fiscal Cliff Note: Congressional Budget Office estimates and CRFB calculations. 9

12. The Economic Impact of the Fiscal Cliff As a result of the Fiscal Cliff, CBO estimates the economy will shrink by 3.9 percent in first quarter of 2013 and 1.9 percent in the second quarter. The unemployment rate will increase by nearly 1 percent, which could exacerbate existing long-term unemployment significantly. The Fiscal Cliff would help reduce deficits; however, it would do so through mindless and abrupt increases in tax rates and nearly across-the-board spending cuts that do not address growing entitlement costs or reform the tax code. Source: Congressional Budget Office. 10

13. A Better Path Forward Go Big Enact at least $4 trillion of deficit reduction in order to stabilize and reduce the debt relative to GDP. Go Smart Replace mindless, abrupt deficit reduction with thoughtful changes that reform the tax code and cut low-priority spending. Go Long Keep debt under control over the long-term by focusing on the long-term growth of entitlement programs. Instead of a Fiscal Cliff or Mountain of Debt, we should enact a comprehensive and thoughtful plan which would: 11

14. Background on the Campaign to Fix the Debt Overview and Opportunity for Citizen Involvement

15. Objectives of the Campaign to Fix the Debt • Create a political environment in which policymakers and political candidates become champions of balanced and bipartisan fiscal reform • Build a national movement to demonstrate to policymakers that supporting a comprehensive bipartisan debt solution is now the politically safe, non-career-threatening vote • Educate members of Congress about the key elements of a comprehensive solution, building support for substantial fiscal reform and making clear the consequences of inaction • Enact a comprehensive debt reduction plan no later than July 4, 2013 12

16. What Makes the Campaign Different • Unprecedented National Movement • - Bipartisan support at the local, state and national levels • - Volunteers across the country mobilized through new social media and digital strategies • National Leadership of CEOs and Business Leaders • - Unprecedented business community support for a comprehensive plan that will reduce the debt while strengthening the economy • Bipartisan Leadership in Washington • - Collaboration with members from both parties and both Houses of • Congress to help create the environment for bipartisan fiscal • reform • - Readiness to shift from partisanship and politics as usual to solve this problem 13

17. The Campaign Leadership Leadership of the Campaign includes national bipartisan leaders from business, government and policy: • Erskine Bowles, Co-Chair, National Commission on Fiscal Responsibility and Reform • Senator Alan Simpson, Co-Chair, National Commission on Fiscal Responsibility and Reform  Founders Senator Judd Gregg Governor Ed Rendell Co-Chairs: Governor Phil Bredesen David Cote, CEO, Honeywell Congressman Vic Fazio James B. Lee Jr., Vice Chairman, JPMorgan Chase & Co. Congressman Jim McCrery Senator Sam Nunn Congressman Jim Nussle Michael Peterson, President and COO, Peterson Foundation Steven Rattner, Chairman, Willett Advisors Ambassador Bob Zoellick, Former President, World Bank Steering Committee: 14

18. Campaign Progress Thus Far • In a few short weeks, the campaign has: • Garnered over 220,000 signatures for the Citizen’s Petition to Fix the Debt on FixtheDebt.org, engaging potential volunteers in every state • Continued behind the scenes work with a diverse group of members on options for passing a comprehensive debt deal • Increased media presence in national and local print and TV, finding ways to spotlight the impressive contributions of CEOs who lead on this issue • Begun to build diverse partnerships consisting of both existing and new organizations that will support leaders who work toward reaching a debt deal 15

19. Sign the petition to “Fix the Debt” at FixtheDebt.orgor text “sign” to 877877 Visit FixtheDebt.org to download the Citizen's Toolkit to learn how to get involved Send a letter to your elected member of Congress voicing your concern and desire for a solution Spread the word to your friends, family, neighbors, and colleagues, as well as local clubs and associations How You Can Help: 16

20. Useful Resources The Citizen’s Petition and Campaign Information: http://www.fixthedebt.org Policy Papers (Committee for a Responsible Federal Budget): http://crfb.org Between a Mountain of Debt and a Fiscal Cliff Primary Numbers: The GOP Candidates Going Big Could Improve the Chances of Success Slideshow on Our Fiscal Challenges: Averting a Fiscal Crisis Congressional Budget Office Federal Debt and the Risk of a Fiscal Crisis 17