CHAIRMEN CRFB Stabilize the Debt Simulator – Highlights of Initial Results

BILL FRENZEL
July 8, 2010
TIM PENNY
CHARLIE STENHOLM
In May of 2010, the bipartisan Committee for a Responsible Federal Budget
PRESIDENT unveiled the “Stabilize the Debt” online budget simulator. The simulator is
MAYA MACGUINEAS
designed to educate the public and policymakers about what will be required
DIRECTORS to put the United States on a sustainable fiscal path and give them an
BARRY ANDERSON opportunity to share their preferences.
ROY ASH
CHARLES BOWSHER
STEVE COLL Since its release, the interest in the simulator has been remarkable; with over
DAN CRIPPEN 60,000 visits. Over 3,000 participants submitted their results and demographic
VIC FAZIO
WILLIS GRADISON
information to be shared with policymakers. The preliminary data provides
WILLIAM GRAY, III an essential snapshot of the choices that Americans are willing to support.
WILLIAM HOAGLAND
DOUGLAS HOLTZ-EAKIN
JIM JONES Five Most Popular Simulator Budget Choices
LOU KERR
JIM KOLBE
1. Eliminate certain outdated programs (91%)
JAMES LYNN
JAMES MCINTYRE, JR. 2. Cut earmarks in half (88%)
DAVID MINGE 3. Reduce farm subsides (81%)
JIM NUSSLE
4. Raise the normal retirement age for Social Security to 68 (79%)
MARNE OBERNAUER, JR.
JUNE O’NEILL 5. Reform the international tax system (78%)
PAUL O’NEILL
RUDOLPH PENNER Fig. 1: Most Popular Options Among All Users (Percent Supporting)
PETER PETERSON
ROBERT REISCHAUER
95
ALICE RIVLIN
CHARLES ROBB
MARTIN SABO 90
GENE STEUERLE
DAVID STOCKMAN 85
LAURA TYSON
PAUL VOLCKER
CAROL COX WAIT 80
DAVID M. WALKER
JOSEPH WRIGHT, JR. 75

SENIOR ADVISORS
70
ELMER STAATS
Eliminate Cut Earmarks in Reduce Farm Raise NRA to Reform
ROBERT STRAUSS
Certain Half Subsidies 68 International
Outdated Tax System
Programs

1899 L Street NW • Suite 400 • Washington, DC 20036 • Phone: 202-986-2700 • Fax: 202-986-3696 • www.crfb.org
 Much can also be learned from the options that simulator users did not choose. The two
least popular options involved the health care reform legislation passed earlier this year.

Five Least Popular Simulator Budget Choices

1. Repeal the entire health care reform bill passed earlier this year (5%)
2. Repeal the excise tax on high-cost employer-sponsored health care plans (6%)
3. Increase the average federal Medicaid match to states from 57 percent of costs to
60 percent (6%)
4. Grow discretionary spending with GDP (7%)
5. Institute a minimum Social Security benefit (9%)

Fig. 2: Least Popular Options Among All Users (Percent Supporting)

10

0
Repeal Entire Repeal Excise Increase Avg Grow Institute a
Health Care Tax on High Match from Discretionary Minimum
Legislation Cost Plans 57% to 60% Spending Benefit
W/GDP

Not surprisingly, users who self-identified as Democrats or Republicans diverged in

their support for some high-profile proposals.

Five Most Contentious Budget Choices Between Democrats and Republicans

1. Enact carbon tax (cap and trade) (85% D, 21% R)

2. Repeal health care legislation, but keep cuts to Medicare and Medicaid (4% D,
63% R)
3. Cancel missile defense system (77% D, 21% R)
4. Cancel TARP and rescind unused stimulus funds (35% D, 90% R)
5. Reduce food stamps to 2008 levels (32% D, 86% R)

While Republicans and Democrats intensely disagree on some highly-charged measures,

there appears to be wide consensus on a range of ideas. The broad support for modest

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Committee for a Responsible Federal Budget │2

 changes to Social Security – raising the retirement age and including new state and local
workers – portends that agreement can be reached on reform that strengthens the long-
term finances of the program while also contributing to improving the overall budget
outlook.

Fig. 3: Least Divide Between the Two Parties (Percent Supporting)

(Red = Rep., Blue = Dem., Gray = All users)

95
90
85
80
75
70
65
60
55
50
Eliminate Increase Raise NRA to Reduce Farm Include all
Certain User Fees 68 Subsidies New State
Outdated Across the and Local
Programs Board Workers In
Social
Security

NRA = Normal Retirement Age

Additional analysis reveals where users of each party found their savings. The
difference among the parties is telling.

Fig. 4: Debt Reduction by Category for Democratic Users ($ Billions)

Misc. Social Security

-166 -233 Healthcare

Tax -172
Expenditures -545

-139
Defense, -1,130
Diplomacy, and Revenue
Security

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 Democrats favored changes in revenues and tax expenditures to reduce the debt. They
did not, on average, save in the Domestic Social and Economic Spending category,
which is why it is not present in the chart.

Fig. 5: Debt Reduction by Category for Republican Users ($ Billions)

Misc. Social Security

-320
-311
Tax
-490 Healthcare
Expenditures
-728

-499

Defense, -154 Domestic and

Diplomacy, and -626 Economic
Security
Revenue

On the other hand, Republicans found significant savings in the Domestic/Economic

area. Notably, they also found more savings in tax expenditures than Democrats did.

Fig. 6: Debt Reduction by Category for Independent Users ($ Billions)

Misc. Social Security

-244 -270
Tax Healthcare
Expenditures -321
-620

Domestic and
-290 Economic

-170
Defense,
-857
Diplomacy, and
Security

Revenue

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 Those that identified themselves as Independents tended to choose a middle course. In
most categories the debt reduction achieved by Independents fell between those of
Democrats and Republicans. The one exception was Defense, Diplomacy and Security,
where Independents outpaced both parties.

The “Stabilize the Debt” simulator challenges the user to stabilize U.S. debt at 60 percent
of GDP by 2018. Seventy-eight percent of the sample achieved that target. The positive
response to the simulator and the high success rate indicate that Americans are
embracing the need for a fiscal goal to guide budget decisions.

A refrain in Washington has been that while the solutions for dealing with the debt are
available, the political will is simply not there to make the changes. The reaction to the
“Stabilize the Debt” budget simulator indicates that the public is willing to take on these
challenges and politicians need to follow suit.

The “Stabilize the Debt” budget simulator is quickly becoming an important tool in
informing the debate on deficits and debt in the U.S. It can be accessed at
http://crfb.org/stabilizethedebt.

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