2011 Budget Chart Book

Page 2

Budget Chart Book2011

The Federal Budget in Pictures

The Entitlements Initiative is one of 10 Transformational Initiatives making up The Heritage Foundation’s Leadership for America campaign. For more products and information related to this initiative or to learn more about the Leadership for America campaign, please visit heritage.org.

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Copyright © 2011 The Heritage Foundation

The Thomas A. Roe Institute for Economic Policy Studies

The Federal Budget in Pictures

2011 Budget Chart Book

Page iii iii

The federal budget is on an unsustainable course, with even more runaway spending and rising debt on the horizon. Now, more than ever, it is important for Americans to understand what our nation’s spending, taxes, and debt mean to them. The Heritage Foun-dation’s Budget Chart Book is a user-friendly way to learn about the federal budget through pictures.

Federal spending was on the rise prior to the eco-nomic recession and passage of the 2009 stimulus bill, and it continues to climb steeply under President Obama. As illustrated on page 2, Federal Spending per Household Is Skyrocketing, and on page 3, Federal Spending Is Growing Faster Than Federal Revenue.

Some policymakers would pay for increased spend-ing with tax hikes. However, taxes have already risen to burdensome levels and will reach unprecedented heights. As explained on page 15, The Top 10 Percent of Earners Paid 70 Percent of Federal Income Taxes, and on page 21, Total Tax Burden Is Rising to Highest Level in History.

Record deficits will be the norm as spending con-tinues to grow faster than revenue. Absent spending

cuts and serious entitlement reforms, debt will ap-proach dangerous levels and further strain the econo-my. As emphasized on page 29, Federal Budget Deficits Will Reach Levels Never Seen Before in the U.S., and page 31, U.S. Debt on Track to Fuel Economic Crisis.

America is poised on a precipice of disastrous defi-cits due primarily to spending on the three major en-titlement programs—Social Security, Medicare, and Medicaid. Entitlement spending is growing and bold reforms are necessary to fix this massive problem. As shown on page 37, Entitlement Spending Will More Than Double by 2050, and on page 48, The Heritage Plan Keeps Spending Low and Ends Deficits Without Rais-ing Taxes.

Tough policy choices and strong entitlement re-forms are essential to get the federal budget back on track. The Budget Chart Book will help you un-derstand the current fiscal situation, and it will help Americans to appreciate the magnitude of the deci-sions that policymakers must enact to protect Ameri-ca’s fiscal future.

About the Budget Chart Book

v

PageFEDERAL SPENDING Federal Spending per Household Is Skyrocketing .................................................................................................2 Federal Spending Is Growing Faster Than Federal Revenue .................................................................................3 Federal Spending Grew More Than Ten Times Faster Than Median Income ........................................................4 Federal Spending Is Outpacing Inflation ...............................................................................................................5 Total Government Spending Has More Than Doubled Since 1965 .......................................................................6 Mandatory Spending Has Increased Five Times Faster Than Discretionary Spending ..........................................7 Defense Spending Has Declined While Entitlement Spending Has Increased .......................................................8 Obama’s Budget Would Reduce National Defense Spending .................................................................................9 More Than Half of the President’s Budget Would Be Spent on Entitlement Programs .........................................10 Total Welfare Spending Is Rising Despite Attempts at Reform .............................................................................11 Runaway Spending, Not Inadequate Tax Revenue, Is Responsible for Future Deficits ........................................12

FEDERAL REVENUE Taxes per Household Have Risen Dramatically ....................................................................................................14 The Top 10 Percent of Earners Paid 70 Percent of Federal Income Taxes ...........................................................15 Federal Revenues Have More Than Tripled Since 1965 ......................................................................................16 Federal Revenues by Source ................................................................................................................................17 Tax Receipts Return to Historical Average............................................................................................................18 Increasing Tax Rates Does Not Necessarily Lead to Higher Income Tax Receipts ................................................19 U.S. Corporate Tax Rate Is Uncompetitive...........................................................................................................20 Total Tax Burden Is Rising to Highest Level in History ........................................................................................21

Table of Contents

viDEBT AND DEFICITS National Debt Set to Skyrocket ............................................................................................................................24 Each American’s Share of National Debt Is Growing ...........................................................................................25 Obama’s Budget Would Send Federal Debt to Levels Not Seen Since World War II ............................................26 Obama’s Budget Worsens Debt Problem, but The Heritage Plan Solves It ...........................................................27 Obama’s Budget Would Deepen Already Unprecedented Deficits .......................................................................28 Federal Budget Deficits Will Reach Levels Never Seen Before in the U.S. ...........................................................29 Rising Deficits Drive U.S. Debt Limit Higher, Faster ...........................................................................................30 U.S. Debt on Track to Fuel Economic Crisis ........................................................................................................31 Net Interest Spending Will More Than Triple Over the Next Decade ..................................................................32 In One Year, Spending on Interest on the National Debt Is Greater Than Funding for Most Programs ..............33

ENTITLEMENTS Entitlements Will Consume All Tax Revenues by 2049 .......................................................................................36 Entitlement Spending Will More Than Double by 2050 .....................................................................................37 Medicare Spending Is Adding to Future Deficits Faster Than Other Program Spending .....................................38 Without Entitlement Reform, Federal Spending Could Consume One-Half of the Economy by 2056 ..............39 Letting Tax Cuts Expire Will Not Balance the Budget ..........................................................................................40 Hiking Taxes to Pay for Entitlements Would Require Doubling Tax Rates ..........................................................41 Taxing the Wealthy to Cover Future Deficits Won’t Work ...................................................................................42 Balancing the Budget Without Cutting Spending Would Cause Taxes to Skyrocket ..........................................43 Discretionary Spending Cuts Alone Are Not an Adequate Substitute for Entitlement Reform ............................44 Even Eliminating Vital Defense Spending Completely Would Not Solve the Entitlement Spending Problem.....45 The Alternative: Saving the American Dream ......................................................................................................46 The Heritage Plan Would Reverse Trajectory of Unsustainable Debt ...................................................................47 The Heritage Plan Keeps Spending Low and Ends Deficits Without Raising Taxes .............................................48

Spending has risen to unprecedented levels, threatening limited government and economic freedom.

Federal Spending

heritage.org• 2011 Budget Chart BookFederal Spending Chart 7

Heritage Foundation calculations based on Congressional Budget O ffice data.Source:

PERCENTAGE OF GDP

Percentage of GDP

runaway-spending-tax-revenue

The main driver behind long-term deficits is government spending—not low revenues. While revenue will surpass its historical average of 18.0 percent of GDP by 2021, spending will shoot past its historical average of 20.3 percent, reaching 26.4 percent in the same year.

Runaway Spending, Not Inadequate Tax Revenue, Is Responsible for Future Deficits

10%

15%

20%

25%

30%

1960 1970 1980 1990 2000 2010 2021

Projected

Spending20.3%

Revenue18.0%

Averages for 1960–2009:

24.7%26.4%

14.8%

18.4%

Spending

Revenue

heritage.or• 2011 Budget Chart BookFederal Spending Chart 4

W hite House O ffice of M anagem ent and Budget.Source:

INFLATION-ADJUSTED TRILLIONS OF DOLLARS (2010)

Inflation-Adjusted Billions of Dollars (2010)

mandatory-discretionary-spending

Only one-third of the federal budget, discretionary spending, is subject to annual budgets. The remainder, mandatory spending, is set on autopilot without congressional debate and has increased more than five times faster than discretionary spending. Most of the current increase is due to entitlement spending.

Mandatory Spending Has Increased Five Times Faster Than Discretionary Spending

$0

$0.5 trillion

$1.0 trillion

$1.5 trillion

$2.0 trillion

$2.5 trillion

$3.0 trillion

$3.5 trillion

$4.0 trillion

$609 billion

$3.6 trillion

1965 1970 1975 1980 1985 1990 1995 2000 20052011 figures are estimates

2010

Mandatory Spending

Discretionary Spending

$609 billion$609billion$$ oobb660099 nnllililiililioo6600$$$609billi

$3.6 trillion

atory Mandaatory an atand rM odaandadingSpend

yygp gS dde nn ip dd ge i

ionary Discreti ascret nD i ri r ioD ae ii ti



PERCENTAGE OF THE PRESIDENT’S FY2012 BUDGET

Percentage of the Presidents FY2012 Budget

budget-entitlement-programs

In combination with other entitlements, Medicare, Medicaid, and Social Security constitute the lion’s share of President Obama’s 2012 budget. In contrast, spending on foreign aid represents 2 percent.

More Than Half of the President's Budget Would Be Spent on Entitlement Programs

Entitlement Programs: 58%SocialSecurity:20%

Medicareand Medicaid:

20%

Income Security and O ther

Entitlements: 18%

National Defense: 19%

Net Interest:6%

Education: 3%

Foreign Aid: 2%

All O ther Spending:12%

50%

N ote: Figures have been rounded.

Page 2


U.S. Census Bureau, White House Office of Management and Budget, and Congressional Budget Office.Source:

INFLATION-ADJUSTED DOLLARS (2010)

Inflation-Adjusted Dollars (2010)

federal-spending-per-household

The federal government is spending more per household than ever before. Since 1965, spending per household has grown by nearly 162 percent, from $11,431 in 1965 to $29,401 in 2010. From 2010 to 2021, it is projected to rise to $35,773, a 22 percent increase.

Federal Spending per Household Is Skyrocketing

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020

ProjectedActual

$35,773$29,401

$11,431

Page 3


White House Office of Management and Budget.Source:



growth-federal-spending-revenue

Since 1965, spending has risen constantly. Federal revenues have dropped recently due to the economic recession, but spending has reached a record high.

Federal Spending Is Growing Faster Than Federal Revenue

$0

$1 trillion

$2 trillion

$3 trillion

$4 trillion

1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

2011figures areestimates

Est. 2011 deficit:$1.62 trillion

Spending

Revenue

$3.77 trillion

$2.15 trillion

Page 4


U.S. Census Bureau and White House Office of Management and Budget.Source:

PERCENT CHANGE OF INFLATION-ADJUSTED DOLLARS (2010)

Percent Change of Inflation-Adjusted Dollars (2010)

growth-federal-spending

When federal spending grows faster than Americans’ paychecks, the burden on taxpayers becomes greater. Over the past few decades, middle-income Americans’ earnings have risen only 27 percent, while spending has increased 299 percent.

Federal Spending Grew More Than Ten Times Faster Than Median Income

0%

50%

100%

150%

200%

250%

300% 1970 $890 billion2009 $3,551 billion

+299%

Median Household

Income

Total Federal Spending

Median Household

Income

Total Federal Spending

1970 $39,7322009 $50,255

+27%

1970 1975 1980 1985 1990 1995 2000 2005 2009

Page 5


U.S. Bureau of Labor Statistics and White House Office of Management and Budget.Source:

YEAR-TO-YEAR PERCENTAGE CHANGE

Year-to-Year Percentage Change

federal-spending-inflation

Prices of goods and services normally rise year to year, but federal spending has risen even faster. Although spending grew substantially after 9/11, less than half of the increase can be attributed to defense and homeland security spending.

Federal Spending Is Outpacing Inflation

0%

5%

10%

15%

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

+7.9%+7.4%

+6.2%

+7.8%+7.4%

+17.9%

2010

–1.7%

Federal Spending

Inflation

Average Change in Federal

Spending:

+5.3%

Average Change in Inflation:

+2.5%

+9.3%+9.3%

Page 6


U.S. Census Bureau, White House Office of Management and Budget, and 2011 Economic Report of the President.Source:

PER-HOUSEHOLD SPENDING, IN INFLATION-ADJUSTED DOLLARS (2010)

Per-Household Spending, In Inflation-Adjusted Dollars (2010)

total-government-spending

State and local government spending per household imposes a significant, and growing, burden on taxpayers on top of federal spending. In 1970, median household income was $17,839 greater than total government spending per household, compared to only $2,431 in 2009.

Total Government Spending Has More Than Doubled Since 1965

$0

$10,000

$20,000

$30,000

$40,000

$50,000 Median household income: $50,255Per-household spending: $47,824

Median household income: $39,732

1965

2009

Per-household spending: $21,893

1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

State and Local Spending

FederalSpending

Page 7





mandatory-discretionary-spending

Only one-third of the federal budget, discretionary spending, is subject to annual budgets. The remainder, mandatory spending, is set on autopilot without congressional debate and has increased more than five times faster than discretionary spending. Most of the current increase is due to entitlement spending.

Mandatory Spending Has Increased Five Times Faster Than Discretionary Spending

$0

$0.5 trillion

$1.0 trillion

$1.5 trillion

$2.0 trillion

$2.5 trillion

$3.0 trillion

$3.5 trillion

$4.0 trillion

$609 billion

$3.6 trillion

1965 1970 1975 1980 1985 1990 1995 2000 20052011 figures are estimates

2010

Mandatory Spending

Discretionary Spending

Page 8



PERCENTAGE OF GDP

Percentage of GDP

defense-entitlement-spending

Spending on national defense, a core constitutional function of government, has declined significantly over time, despite wars in Iraq and Afghanistan. Spending on the three major entitlements—Social Security, Medicare, and Medicaid—has more than tripled.

Defense Spending Has Declined While Entitlement Spending Has Increased

2%

4%

6%

8%

10%

National Defense

Entitlements(Social Security,

Medicare, Medicaid)

7.4%

2.5%

10%

5%

1976 was the first year entitlement spending exceeded defense spending

1976 was the first year entitlement spending exceeded defense spending

1965 1970 1975 1980 1985 1990 1995 2000 2005 20102011 figures are estimates

Page 9



DEFENSE SPENDING AS A PERCENTAGE OF GDP

Defense Spending as a Percentage of GDP

national-defense-spending

Adequate funding for the core defense program is crucial for the military to fulfill its constitutional duty to provide for the common defense. Yet defense spending has fallen below its 45-year historical average despite ongoing operations in Iraq and Afghanistan.

Obama’s Budget Would Reduce National Defense Spending

0%

2%

4%

6%

8%

10% 9.5%

6.2%

1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015

Actual

45-Year Average: 5.2%

Projected

5.0% 3.4%

Page 10



PERCENTAGE OF THE PRESIDENT’S FY2012 BUDGET

Percentage of the Presidents FY2012 Budget

budget-entitlement-programs

In combination with other entitlements, such as food stamps, unemployment, and housing assistance, Medicare, Medicaid, and Social Security constitute the lion’s share of President Obama’s 2012 budget. In contrast, spending on foreign aid represents 2 percent.

More Than Half of the President’s Budget Would Be Spent on Entitlement Programs

Entitlement Programs: 58%

SocialSecurity:

20%

Medicareand Medicaid:

20%

Income Security and Other

Entitlements: 18%

National Defense:

19%

Net Interest:

6%

Education: 3%

Foreign Aid: 2%

All Other Spending:

12%

50%Note: Figures have been rounded.

Page 11


Heritage Foundation calculations based on data from current and previous White House Office of Management and Budget documents and other official government sources.

Source:

WELFARE SPENDING IN INFLATION-ADJUSTED DOLLARS (2010)

Spending in Billions of Dollars (2010)

welfare-spending

Total means-tested welfare spending (cash, food, housing, medical care, and social services for the poor) has increased 17-fold since the beginning of Lyndon Johnson’s War on Poverty in 1964. Though the current trend is unsustainable, the Obama Administration plans to increase future welfare spending rather than enact true policy reforms.

Total Welfare Spending Is Rising Despite Attempts at Reform

$0

$100 billion

$200 billion

$300 billion

$400 billion

$500 billion

$600 billion

$700 billion

$800 billion

$900 billion

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

1964War onPovertybegins

1981Reagan

“slashes”welfare

1996Reform“ends

welfare”

$890 billion$890 billion

Page 12


Heritage Foundation calculations based on Congressional Budget Office data.Source:

PERCENTAGE OF GDP

Percentage of GDP

runaway-spending-tax-revenue

The main driver behind long-term deficits is government spending—not low revenues. While revenue will surpass its historical average of 18.0 percent of GDP by 2021, spending will shoot past its historical average of 20.3 percent, reaching 26.4 percent in the same year.

Runaway Spending, Not Inadequate Tax Revenue, Is Responsible for Future Deficits

10%

15%

20%

25%

30%

1960 1970 1980 1990 2000 2010 2021

Projected

Spending20.3%

Revenue18.0%

Averages for 1960–2009:

24.7%

26.4%

14.8%

18.4%

Spending

Revenue

The tax burden in America is climbing and will reach record levels without policy changes.

Federal Revenue

heritage.org• 2011 Budget Chart BookFederal Revenue Chart 2

Tax Foundation and Internal Revenue Service.Source:

PERCENTAGE OF FEDERAL INCOME TAXES (2008)

Percentage of Federal Income Taxes (2008)

top10-percent-income-earners

Top earners are the target for new tax increases, but the U.S. tax system is already highly progressive. The top 1 percent of income earners paid 38 percent of all federal income taxes in 2008, while the bottom 50 percent paid only 3 percent. Forty-nine percent of U.S. households paid no federal income tax at all.

The Top 10 Percent of Earners Paid 70 Percent of Federal Income Taxes

This Level of Income Earners ...

... Paid This Proportion of the Federal Income Tax in 2008.

Bottom 50%

3%

26%–50%

11%

11%–25%

16%

6%–10%

11%

2%–5%

21%

Top 1%

38%

heritage.or• 2011 Budget Chart BookFederal Revenue Chart 5

O rganisation for Econom ic Co-operation and Developm ent.Source:

COMBINED CORPORATE TAX RATES

Combined Corporate Tax Rates (2000-2010)

corporate-tax-rate

High U.S. federal and state corporate tax rates make it difficult for businesses to compete internationally. While other countries are reducing corporate tax rates, the U.S. has maintained rates significantly and consistently higher than the average of industrialized nations.

U.S. Corporate Tax Rate Uncompetitive

25%

30%

35%

40%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

United States: 39%

OECDAverage

United States: 39%

OECDAverage

32.9%31.9%

30.7%30.2%

29.3%28.2%

27.6% 27.2%26.2% 26.0% 26.0%


Congressional Budget O ffice.Source:

PERCENTAGE OF TOTAL FEDERAL REVENUE (2010)

Percentage of Total Federal Revenue (2010)

federal-revenue-sources

Most federal revenues come from individuals. Personal income taxes provide the largest portion of total tax revenues, though some of this is small-business income. Social Security and Medicare payroll taxes are the second-largest source.

Federal Revenues by Source

Individual($898.5 billion)

Payroll Taxes($864.8 billion)

Customs Duties, Misc.: 5.6% ($121.2 billion) Corporate: 8.9% ($191.4 billion)

Excise: 3.1% ($66.9 billion) Estate and Gift: 0.9% ($18.9 billion)

41.6% 40.0%

Page 14


U.S. Census Bureau and White House Office of Management and Budget.Source:


Inflation-Adjusted Dollars (2010)

taxes-per-household

Though the economic downturn has temporarily lowered overall tax revenues, the tax burden on Americans is still high.

Taxes per Household Have Risen Dramatically

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$11,295

$24,147 $18,400

$17,959

1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

Current levels higher than 1994

Page 15


Tax Foundation and Internal Revenue Service.Source:

PERCENTAGE OF FEDERAL INCOME TAXES (2008)

Percentage of Federal Income Taxes (2008)

top10-percent-income-earners

Top earners are the target for new tax increases, but the U.S. tax system is already highly progressive. The top 1 percent of income earners paid 38 percent of all federal income taxes in 2008, while the bottom 50 percent paid only 3 percent. Forty-nine percent of U.S. households paid no federal income tax at all.

The Top 10 Percent of Earners Paid 70 Percent of Federal Income Taxes

This Level of Income Earners ...

... Paid This Proportion of

the Federal Income Tax

in 2008.

Bottom 50%

3%

26%–50%

11%

11%–25%

16%

6%–10%

11%

2%–5%

21%

Top 1%

38%

Page 16





federal-government-revenues

Overall tax revenues have risen despite a recent decline due to the recession. Congress cut income taxes and the death tax in 2001 and capital gains taxes and dividends in 2003, yet revenues continued to surge even after the tax cuts were passed.

Federal Revenues Have More Than Tripled Since 1965

$0

$0.5 trillion

$1.0 trillion

$1.5 trillion

$2.0 trillion

$2.5 trillion

$3.0 trillion $2.15 trillion

$944 billion

$196 billion

Corporate Taxes

1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

2011 figure estimated

Total Revenue

IndividualIncome Taxes

Total Revenue

IndividualIncome Taxes

Page 17


Congressional Budget Office.Source:

PERCENTAGE OF TOTAL FEDERAL REVENUE (2010)

Percentage of Total Federal Revenue (2010)

federal-revenue-sources

Most federal revenues come from individuals. Personal income taxes provide the largest portion of total tax revenues, though some of this is small-business income. Social Security and Medicare payroll taxes are the second-largest source.

Federal Revenues by Source

Individual($898.5 billion)

Payroll Taxes($864.8 billion)

Customs Duties, Misc.: 5.6% ($121.2 billion)

Corporate: 8.9% ($191.4 billion)

Excise: 3.1% ($66.9 billion)

Estate and Gift: 0.9% ($18.9 billion)

41.6% 40.0%

Page 18



TAX RECEIPTS AS A PERCENTAGE OF GDP

Tax Receipts as a Percentage of GDP

current-tax-receipts

The overall tax burden on Americans is measured as a share of gross domestic product (GDP). Since World War II, tax receipts have averaged around 18 percent of GDP. Receipts have fallen due to the recession, but as the economy recovers, they will rise above the average level by the end of the decade.

Tax Receipts Return to Historical Average

12%

14%

16%

18%

20%

22%

24%

20.4% 20.6%19.3%

14.9%14.4%

1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015

Tax Revenue


Tax Revenue


Page 19


White House Office of Management and Budget and the Tax Foundation.Source:

PERCENTAGE OF GDP

Percentage of GDP

income-tax-receipts

Tax cuts can create incentives for individuals to generate more income, which can generate more revenue. The most dramatic decline in the top individual income tax rate, from 70 percent to 28 percent, occurred during the Reagan Administration, during which tax receipts remained relatively constant as a share of the economy.

Increasing Tax Rates Does Not Necessarily Lead to Higher Income Tax Receipts

0%

20%

40%

60%

80%

100%

1960 1970 1980 1990 2000 20102011 figures estimated

91%

7.8%

70%

9.4%

50%

28%

39.6%35%

6.3%7.7%9.2%

Top Individual Tax Rate

IndividualTax Receiptsas % of GDP

Top Individual Tax Rate

IndividualTax Receiptsas % of GDP

Page 20


Organisation for Economic Co-operation and Development.Source:

COMBINED CORPORATE TAX RATES

Combined Corporate Tax Rates (2000-2010)

corporate-tax-rate

High U.S. federal and state corporate tax rates make it difficult for businesses to compete internationally. While other countries are reducing corporate tax rates, the U.S. is virtually tied with Japan for the highest and has maintained rates significantly and consistently higher than the average of industrialized nations.

U.S. Corporate Tax Rate Is Uncompetitive

25%

30%

35%

40%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

United States: 39%

OECDAverage

United States: 39%

OECDAverage

32.9%31.9%

30.7%30.2%

29.3%28.2%

27.6%27.2%

26.2% 26.0% 26.0%

Page 21


Heritage Foundation calculations based on Congressional Budget Office and White House Office of Management and Budget data.Source:

PERCENTAGE OF GDP

Percentage of GDP

total-tax-burden

Taxes are projected to increase rapidly under various policy scenarios. If the 2001 and 2003 tax cuts expire and more middle-class Americans are required to pay the alternative minimum tax (AMT), taxes will reach unprecedented levels. The tax burden will climb even if those tax breaks are extended. President Obama’s budget, which cuts some taxes and raises others, also increases the overall tax burden.

Total Tax Burden Is Rising to Highest Level in History

1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2055

14%

16%

18%

20%

22%

24%

26%

28%Tax Cuts Expire

Obama’s Budget

Permanent Tax Cuts and Fix AMT

Highest Tax Burden in U.S. History: 20.6%

(2000)

Highest Tax Burden in U.S. History: 20.6%

(2000)

30-Year Historical Tax Burden:

(1981–2010): 18%

30-Year Historical Tax Burden:

(1981–2010): 18%

Excessive spending has created record levels of deficits and debt, and the worst is yet to come.

Debt and Deficits

heritage.or• 2011 Budget Chart BookDebt and Deficits Chart 3

W hite House O ffice of M anagem ent and Budget and Congressional Budget O ffice.Source:



budget-net-interest-spending

As the national debt grows, interest payments will consume more and more of the federal budget. Under the President’s budget, the national debt would double and real net interest costs would more than triple over the next decade.

Net Interest Spending Will More Than Triple Over the Next Decade

$0

$200 billion

$400 billion

$600 billion

$800 billion

$282.4 billion

$188.7 billion

$773.9 billion

1990 1995 2000 2005 2010 2015 2020

$282.4 billion$282.4billion$$ oobb nnlilillililii.4422 22$ 8 4 ili

$188.7 billion

$773.9 billion$7739billi$$ billiob337777 .99 linlilil$ ililiii

Actual Projected



U.S. DEBT LIMIT

Billions of Dollars

increases-us-debt-limit

Congress has raised the amount of federal debt subject to a statutory limit roughly seventy-eight times since 1940, sometimes multiple times per year. Since 1990, the debt limit has seen an average year-to-year increase of 7.8 percent and a total increase of $10.1 trillion.

Rising Deficits Drive U.S. Debt Limit Higher, Faster

$0

$5 trillion

$10 trillion

$15 trillion

0

n

n

1940 1950 1960 1970 1980 1990 2000 2010

1946–1953: $275 billion

1997–2002: $5.95 trillion

1990: $4.1 trillion(largest percentage increase: +33%)

Change from 2009 to 2010: +$1.9 trillion (largest annual dollar increase)

Change from 2007 to 2009: +$2.6 trillion

$14.29 trillion


O rganisation for Econom ic Co-operation and Developm ent and Congressional Budget O ffice (Alternative Fiscal Scenario).Source:

PROJECTED U.S. PUBLICLY HELD DEBT AS PERCENTAGE OF GDP

Percentage of GDP

us-debt

Countries like Greece and Portugal have suffered or are anticipating financial crises as a result of mounting debt. If the U.S. continues federal deficit spending on its current trajectory, it will face similar economic woes.

U.S. Debt on Track to Fuel Economic Crisis

0%

50%

100%

150%

200%

Japan: 178%

U.K.: 61.3%

2000 2005 2010 2015 2020 2025 2030 2035

U.K.: 61.3%

Greece: 109.6%

Portugal: 71%

Italy: 98%

Comparisons are to other nations’ 2008 levels of debt.

Page 24

heritage.org• 2011 Budget Chart BookDebt and Deficits Chart 1

Heritage Foundation calculations based on data from the U.S. Depar tment of the Treasury, Institute for the Measurement of Worth, Congressional Budget Office, and White House Office of Management and Budget.

Source:

PERCENTAGE OF GDP

Percentage of GDP

national-debt-skyrocket

In the past, wars and the Great Depression contributed to rapid but temporary increases in the national debt. Over the next few decades, runaway spending on Medicare, Medicaid, and Social Security will drive the debt to unsustainable levels.

National Debt Set to Skyrocket

0%

50%

100%

150%

200%

250%

300%

350%

1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050

108.6%

344%

World War II

War on Terrorism

World War I

The Great Depression

World War I

The Great Depression

100%

Page 25


U.S. Census Bureau and Congressional Budget Office (Alternative Fiscal Scenario).Source:


Inflation Adjusted Dollars (2010)

national-debt-burden

As Washington continues to spend more than it can afford, future generations of taxpayers will be on the hook for increasing levels of debt. The amount of debt per citizen will skyrocket.

Each American’s Share of National Debt Is Growing

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000 2050: $279,738

1970 1980 1990 2000 2010 2020 2030 2040 2050

Projected

2011: $31,8711970:

$6,291

2011: $31,8711970:

$6,291

2044: $206,771

2032: $103,827

Page 26


Congressional Budget Office and White House Office of Management and Budget.Source:

DEBT AS A PERCENTAGE OF GDP

Debt as a Percentage of GDP

obama-budget-debt

In 2008, publicly held debt as a percentage of the economy (GDP) was 40.3 percent, nearly four points below the postwar average. Since then, the debt has increased more than 50 percent, and the President’s FY 2012 budget would more than double it to 87.4 percent by 2021.

Obama’s Budget Would Send Federal Debt to Levels Not Seen Since World War II

0%

20%

40%

60%

80%

100%

120%

108.7%

Obama’sBudget

Average, 1946–2010: 43.8%

1940 1950 1960 1970 1980 1990 2000 2010 2020

87.4%

40.3%

Page 27


President’s Budget: Congressional Budget Office and White House Office of Management and Budget; Heritage Plan: Calculations by the Center for Data Analysis based on current projections, data provided by the Peter G. Peterson Foundation, and CDA policy models.

Source:

DEBT AS A PERCENTAGE OF GDP

Debt as a Percentage of GDP

obama-budget-worsens-debt

Spending in the President’s budget proposal for 2012 would drive the debt to 87 percent of the economy by 2021. In contrast, Saving the American Dream: The Heritage Plan to Fix the Debt, Cut Spending, and Restore Prosperity solves the debt problem through strong budget reforms, lowering debt to 58 percent of GDP in just 10 years.

Obama’s Budget Worsens Debt Problem, but The Heritage Plan Solves It

1980 1985 1990 1995 2000 2005 2010 2015 202020%

30%

40%

50%

60%

70%

80%

90%87.4%

58.2%26.1%

Average, 1981–2010:40.6%

Average, 1981–2010:40.6%

PRESIDENTOBAMA’S BUDGET

HERITAGE PLAN

Page 28



BUDGET DEFICITS AS A PERCENTAGE OF GDP, BY ADMINISTRATION

Budget Deficits As A Percentage of GDP, By Administration

budget-create-deficits

The President is responsible for submitting an annual budget to Congress and has the authority to veto legislation, including irresponsible spending. Most Administrations have run small but manageable deficits, but President Obama’s unprecedented budget deficits pose serious economic risks.

Obama’s Budget Would Deepen Already Unprecedented Deficits

–8%

–7%

–6%

–5%

–4%

–3%

–2%

–1%

0%Kennedy Johnson Nixon Ford Carter Reagan Bush Clinton Bush Obama

– 8.3%(est.)

–3.2%

– 0.1%

– 4.3%– 4.3%

–2.4%

–3.5%

–1.6%– 0.9%–1.0%

Page 29


Congressional Budget Office (Alternative Fiscal Scenario).Source:

PERCENTAGE OF GDP

Percentage of GDP

federal-budget-deficits

Recent budget deficits have reached unprecedented levels, but the future will be much worse. Unless entitlements are reformed, spending on Medicare, Medicaid, and Social Security will drive deficits to unmanageable levels.

Federal Budget Deficits Will Reach Levels Never Seen Before in the U.S.

–10%

0%

10%

20%

30%

40%

50%

60%

70%61.5%

–2.4%

9.9%

1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2084

Average Historical

Deficit: 3.0%

Average Historical

Deficit: 3.0%

Page 30


Congressional Research Service and White House Office of Management and Budget (Table 7.3, Historical Tables).Source:

U.S. DEBT LIMIT

Billions of Dollars

increases-us-debt-limit

Congress first placed a statutory limit on total federal debt in 1917, in the Second Liberty Bond Act. Since 1962, Congress has altered the debt limit through 74 separate measures, raising it 10 times since 2001. Since 1990, the debt limit has been raised a total of $10.1 trillion, but nearly half of that increase has occurred since September 2007.

Rising Deficits Drive U.S. Debt Limit Higher, Faster

$0

$5 trillion

$10 trillion

$15 trillion

1940 1950 1960 1970 1980 1990 2000 2010

1946–1953: $275 billion

1997–2002: $5.95 trillion

1990: $4.1 trillion(largest percentage increase: +33%)1940:

$50 billion

Change from 2009 to 2010: +$1.9 trillion (largest annual dollar increase)

Change from 2007 to 2009: +$2.6 trillion

$14.29 trillion

Page 31


Organisation for Economic Co-operation and Development and Congressional Budget Office (Alternative Fiscal Scenario).Source:

PROJECTED U.S. PUBLICLY HELD DEBT AS PERCENTAGE OF GDP

Percentage of GDP

us-debt

Countries like Greece and Portugal have suffered or are anticipating financial crises as a result of mounting debt. If the U.S. continues federal deficit spending on its current trajectory, it will face similar economic woes.

U.S. Debt on Track to Fuel Economic Crisis

0%

50%

100%

150%

200%

Japan: 178%

U.K.: 61.3%

2000 2005 2010 2015 2020 2025 2030 2035

Greece: 109.6%

Portugal: 71%

Italy: 98%

Comparisons are to other nations’ 2008 levels of debt.

Page 32


White House Office of Management and Budget and Congressional Budget Office.Source:



budget-net-interest-spending

As the national debt grows, interest payments will consume more and more of the federal budget, even without interest rate increases. Under the President’s budget, the national debt would double and real net interest costs would more than triple over the next decade.

Net Interest Spending Will More Than Triple Over the Next Decade

$0

$200 billion

$400 billion

$600 billion

$800 billion

$282.4 billion

$188.7 billion

$773.9 billion

1990 1995 2000 2005 2010 2015 2020

Actual Projected

Page 33



BILLIONS OF DOLLARS (2010)

Billions of Dollars (2010)

interest-spending

In 2010, the U.S. spent more on interest on the national debt than it spent on many federal departments, including Education and Veterans Affairs.

In One Year, Spending on Interest on the National Debt Is Greater Than Funding for Most Programs

$0

$200

$400

$600

$800

Department of Defense

Interest Expense

Department of Labor

Department of

Agriculture

Department of Veterans

Affairs

Department of Education

$666.7

$414.0

$173.1 $129.5 $108.3 $92.9

$666.7

$414.0

$173.1 $129.5 $108.3 $92.9

Medicare, Medicaid, and Social Security spending is on course to explode, placing enormous pressure on the budget.

Entitlements

heritage.or• 2011 Budget Chart BookEntitlem ents Chart 2

Congressional Budget O ffice.Source:

PERCENTAGE OF GDP

Percentage of GDP

entitlement-spending-double

Spending on Medicare, Medicaid and the Obamacare subsidy program, and Social Security will soar as 78 million baby boomers retire and health care costs climb. Total spending on federal health care programs will triple.

Entitlement Spending Will More Than Double by 2050

0%

5%

10%

15%

20%

Social Security

Total

Medicaid, O bamacare Subsidy Program

Medicare

2.7%

1.5%

4.2%

2005

8.3%

3.6%

1.9%

4.8%

2010

10.3%

4.1%

2.8%

5.2%

2020

12.1%

5.2%

3.5%

6.0%

2030

14.7%

6.6%

4.2%

6.1%

2040

16.9%

7.6%

4.7%

5.9%

2050

18.2%

heritage.or• 2011 Budget Chart BookEntitlem ents Chart 6

Heritage Foundation calculations based on Congressional Budget O ffice data.Source:

PERCENTAGE OF GDP

Percentage of GDP

defense-spending-entitlement-spending-problem

Long-term deficits are the result of unsustainable levels of spending on entitlement programs. Rather than tackle them directly, some would cut defense. But even if spending on this crucial national priority was eliminated completely, entitlements would continue to drive deficits to unmanageable levels.

Even Eliminating Vital Defense Spending Completely Would Not Solve the Entitlement Spending Problem

0%

5%

10%

15%

20%

25%

30%

35%

1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Historical Revenue: 18%All O ther SpendingSocial SecurityMedicaid, O bamacare Subsidy ProgramMedicare

Net Interest

Defense

Actual Revenue

Total Spending

Total Spending, W ith No Defense Spending Beginning in 2012

Total Spending

Total Spending, W ith No Defense Spending Beginning in 2012

heritage.org• 2011 Budget Chart BookEntitlem ents Chart 5


ANNUAL SPENDING (2011)

Annual Spending (2011)

discretionary-spending-cuts

Annual spending on entitlement programs is massive compared to other federal spending priorities. Cutting discretionary spending is a necessary step, but cuts to foreign aid alone or pulling out of Afghanistan will not close the deficit. Entitlement spending must be reined in.

Discretionary Spending Cuts Alone Are Not an Adequate Substitute for Entitlement Reform

$159.3 billion

Global W ar on Terrorism

$28.6 billion

ForeignAid

$19.5 billionNASA

$2.4 trillion

Entitlements(Medicare, Medicaid, Social Security, and other mandatory

programs)

N ote: Figure for entitlem ents includes net interest. W ithout net interest, the total is $2.2 trillion.

Page 36

heritage.org• 2011 Budget Chart BookEntitlements Chart 1


PERCENTAGE OF GDP

Percentage of GDP

entitlements-historical-tax-levels

If the average historical level of tax revenue is extended, spending on Medicare, Medicaid and the Obamacare subsidy program, and Social Security will consume all revenues by 2049. Because entitlement spending is funded on autopilot, no revenue will be left to pay for other government spending, including constitutional functions such as defense.

Entitlements Will Consume All Tax Revenues by 2049

0%

5%

10%

15%

20%

25% 2049: Entitlements 18.2% of GDP

3.9%

24.2%

30-Year Average Tax Revenue: 18.0%

Tax Revenue

30-Year Average Tax Revenue: 18.0%

Tax Revenue

1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080

Social Security

Medicaid, Obamacare Subsidy Program

Medicare

Page 37



PERCENTAGE OF GDP

Percentage of GDP

entitlement-spending-double

Spending on Medicare, Medicaid and the Obamacare subsidy program, and Social Security will soar as 78 million baby boomers retire and health care costs climb. Total spending on federal health care programs will triple.

Entitlement Spending Will More Than Double by 2050

0%

5%

10%

15%

20%

Social Security

Total


Medicare

2.7%

1.5%

4.2%

2005

8.3%

3.6%

1.9%

4.8%

2010

10.3%

4.1%

2.8%

5.2%

2020

12.1%

5.2%

3.5%

6.0%

2030

14.7%

6.6%

4.2%

6.1%

2040

16.9%

7.6%

4.7%

5.9%

2050

18.2%

Page 38



PERCENTAGE OF GDP

Percentage of GDP.

medicare-spending-deficits

Entitlement spending is the main cause of long-term runaway deficits. While reform must address spending within each program, Medicare is the largest driver due to the effects of an aging population and rising health care costs.

Medicare Spending Is Adding to Future Deficits Faster Than Other Program Spending

0%

3%

6%

9%

12%

15%

2010 2015 2020 2025 2030 2035 2040 2045 2050

Other Non-Interest Spending

Social SecurityMedicaid, Obamacare Subsidy Program

Medicare

Page 39



PERCENTAGE OF GDP

Percentage of GDP

entitlements-consume-economy

The major entitlements—Medicare, Medicaid, the Obamacare subsidy program, and Social Security— are on track to push spending to unsustainable levels. These programs must be reformed in order to improve the long-term budget outlook.

Without Entitlement Reform, Federal Spending Could Consume One-Half of the Economy by 2056

0%

10%

20%

30%

40%

50%

60%

53.7%2056: 50.1%

All Other SpendingDefenseSocial Security


Medicare

Net Interest

2000 2010 2020 2030 2040 20502005 2015 2025 2035 2045 2055 2060

Average Revenue,

2000–2009: 18.0%

Actual Revenue

Average Revenue,

2000–2009: 18.0%

Actual Revenue

Page 40



PERCENTAGE OF GDP

Percentage of GDP

repealing-tax-cuts

Some argue for allowing the 2001 and 2003 tax cuts to expire, including subjecting the middle class to the alternative minimum tax in order to balance the budget. Under this scenario, unaffordable deficit spending would still continue, and economic growth and job creation would suffer.

Letting Tax Cuts Expire Will Not Balance the Budget

0%

5%

10%

15%

20%

25%

30%

35%

All Other Spending

Defense

Social Security


Medicare

Net Interest

2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2055

Historical Revenue: 18.0%

Historical Revenue: 18.0% Revenue

Deficit Spending

TotalSpending

TotalSpending

Page 41



MARGINAL INCOME TAX RATES

Marginal Income Tax Rates

entitlements-double-tax-rates

The cost of Medicare, Medicaid, and Social Security is rising substantially. Paying for this spending solely through federal income tax increases would require more than a twofold increase of current tax rates, even for the lowest tax bracket.

Hiking Taxes to Pay for Entitlements Would Require Doubling Tax Rates

0%

20%

40%

60%

80%

100%

Lowest Bracket2010 2050 2082

Middle Bracket2010 2050 2082

Highest Bracket2010 2050 2082

Corporate Taxes2010 2050 2082

10%19%

25% 25%

47%

63%

35%

66%

88%

35%

66%

88%

Page 42


Internal Revenue Service and Congressional Budget Office (Alternative Fiscal Scenario).Source:

CURRENT TAX RATE AND TAX RATE NECESSARY TO CLOSE DEFICIT

Current tax rate and Tax rate necessary to cover deficit

tax-wealthy-deficits

Some argue for taxing only the wealthy to raise revenues and reduce federal deficits. However, hiking taxes on these taxpayers would increase their tax rates to mathematically impossible levels. To close the 2035 deficit, the top two rates would increase to 139 percent and 150 percent, and in 2050 they would reach 206 percent and 223 percent.

Taxing the Wealthy to Cover Future Deficits Won’t Work

0%

50%

100%

150%

200%

250%

Current Rate

2021 2035 2050 Current Rate

2021 2035 2050To Close Future Deficits To Close Future Deficits

SECOND-HIGHEST BRACKET HIGHEST BRACKET

33%

65%

139%

206%

35%

70%

150%

223%

33%

65%

139%

206%

35%

70%

150%

223%

Page 43


Heritage Foundation calculations based on Congressional Budget Office data (Alternative Fiscal Scenario).Source:

PERCENTAGE OF GDP

Percentage of GDP

balancing-budget

America is running massive deficits, and a balanced budget requirement is often considered a way to rein in red ink. Without serious entitlement and other spending reforms, the level of taxes required to balance the federal budget would reach economically stagnating levels.

Balancing the Budget Without Cutting Spending Would Cause Taxes to Skyrocket

0%

5%

10%

15%

20%

25%

30%

1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2055

Actual Spending With Balanced Budget

30.8%

Revenue

All Other Spending

Social Security


Medicare

Net Interest

Page 44



ANNUAL SPENDING (2011)

Annual Spending (2011)

spending-cuts

Annual spending on entitlement programs is massive compared to other federal spending priorities. Cutting discretionary spending is a necessary step, but cuts to foreign aid alone or pulling out of Afghanistan will not close the deficit. Entitlement spending must be reined in.

Discretionary Spending Cuts Alone Are Not an Adequate Substitute for Entitlement Reform

$2.4 trillion

Entitlements(Medicare, Medicaid, Social Security, and other mandatory

programs)

Notes: Figure for entitlements includes net interest. Without net interest, the total is $2.2 trillion. Figure for Corporation for Public Broadcasting reflects the annualized level provided by the continuing resolution (P.L. 111–242).

$159.3 billion

Global War on Terrorism

$28.6 billion

ForeignAid

$19.5 billion

NASA$516

million

Corporation for Public

Broadcasting

Page 45


Heritage Foundation calculations based on Congressional Budget Office data.Source:

PERCENTAGE OF GDP

Percentage of GDP

defense-spending-entitlement-spending-problem

Long-term deficits are the result of unsustainable levels of spending on entitlement programs. Rather than tackle them directly, some would cut defense. But even if spending on this crucial national priority was eliminated completely, entitlements would continue to drive deficits to unmanageable levels.

Even Eliminating Vital Defense Spending Completely Would Not Solve the Entitlement Spending Problem

0%

5%

10%

15%

20%

25%

30%

35%

1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Historical Revenue: 18%All Other SpendingSocial SecurityMedicaid, Obamacare Subsidy ProgramMedicare

Net Interest

Defense

Actual Revenue

Total Spending

Total Spending, With No Defense Spending Beginning in 2012

Total Spending

Total Spending, With No Defense Spending Beginning in 2012

Page 46


Current projections: Congressional Budget Office (Alternative Fiscal Scenario). Heritage Plan: Calculations by the Center for Data Analysis based on data provided by the Peter G. Peterson Foundation. For more information, go to savingthedream.org.

Source:

REVENUE AND SPENDING AS A PERCENTAGE OF GDP

Revenue and Spending as a Percentage of GDP

saving-american-dream

By rapidly lowering total federal spending, Saving the American Dream: The Heritage Plan to Fix the Debt, Cut Spending, and Restore Prosperity would balance the budget by 2021 and keep it there permanently, without raising taxes.

The Alternative: Saving the American Dream

CURRENT PROJECTIONS HERITAGE PLAN

10%

15%

20%

25%

30%

35%

2010 2015 2020 2025 2030 203510%

15%

20%

25%

30%

35%

2010 2015 2020 2025 2030 2035

35.2%

19.3%

17.7%

18.5%

Spending

RevenueSpending

Revenue

Page 47



Source:

PUBLICLY HELD DEBT AS A PERCENTAGE OF GDP

Publicly Held Debt as a Percentage of GDP

heritage-plan-debt

Without significant spending reforms, the national debt is projected to reach 185 percent of GDP by 2035. Under the Heritage plan, federal spending would be reduced by about half, which would dramatically lower the debt to 30 percent.

The Heritage Plan Would Reverse Trajectory of Unsustainable Debt

2010 2015 2020 2025 2030 20350%

50%

100%

150%

200%

CURRENT PROJECTIONS

HERITAGE PLAN

185%

30%

By 2023, our national debt is projected to

reach 100 percent of the economy

By 2023, our national debt is projected to

reach 100 percent of the economy

Page 48



Source:

REVENUE AND SPENDING AS A PERCENTAGE OF GDP

Revenue and Spending as aPercentage of GDP

heritage-plan-fiscal

Bold, transformational reforms are needed to solve America’s spending crisis. The Heritage Plan achieves this through spending, entitlement, and tax reforms. It reduces the size of government, encourages personal fiscal responsibility, and fosters economic growth. It balances the federal budget by 2021 and keeps revenue at 18.5 percent of the economy.

The Heritage Plan Keeps Spending Low and Ends Deficits Without Raising Taxes

0%

5%

10%

15%

20%

25%Total SpendingTotal Revenue

2010 2015 2020 2025 2030 2035

All Other Spending

Defense

Entitlements

Net Interest

Balanced Budget by 2021

Page 49

The charts in this book are based primarily on data available as of March 2011 from the Office of Manage-ment and Budget (OMB) and the Congressional Budget Office (CBO). The charts using OMB data display the historical growth of the federal government to 2010 while the charts using CBO data display both historical and projected growth from as early as 1940 to 2084. Projections based on OMB data are taken from the White House Fiscal Year 2012 budget.

The charts provide data on an annual basis except where calculations are made for Administration averages. Debt limit data are based on the limit in effect at the end of the calendar year. All spending and revenue data are based on a fiscal year. For simplicity, these are displayed as calendar years in the charts. Prior to 1976, the fiscal year was from July 1 to June 30. Following that year, the current format of October 1 to September 30 was implemented. In the charts, the transition is omitted for clarity. Also, in all charts in which spending or revenue is measured by taxpayer, taxpayers are counted as the number of individual income tax returns filed (according to data from the Internal Revenue Service) per year. Thus, married couples that both work but file a joint return are counted as a single combined-income unit. Most of the data are adjusted for inflation in 2010 dollars. Specific information regarding data sources is indicated at the bottom of each chart.

Charts designating Presidential Administrations begin with the fiscal year in which the Administration pre-sented its first budget. In the case of 2009, an atypical year in which much was spent before the Administration’s first fiscal year budget (FY2010), all revenue and spending up to the CBO January 2009 “Budget and Economic Outlook” is attributed to President Bush. All revenue and spending thereafter is attributed to President Obama.

Technical Notes

Emily GoffResearch Assistant

Thomas A. Roe Institute for Economic Policy Studies

Kathryn NixPolicy Analyst

Center for Health Policy Studies and Thomas A. Roe Institute for Economic Policy Studies

John FlemingSenior Data Graphics Editor

Authors

Our national debt equals nearly 70 percent of GDP and is rapidly growing. Medicare and Social Security face $40 trillion in long-term unfunded obligations.

We cannot leave these burdens for our children and grandchildren. We must begin now to solve these problems.

In Saving the American Dream, experts at The Heritage Foundation offer a detailed plan to redesign entitlement programs, simplify taxes, make health care affordable, and end government overreach.

The result? The Heritage plan would balance the budget within 10 years—and keep it balanced permanently.

“Together, let us seize the moment, change our country’s course, and save the American Dream.”—Dr. Edwin J. Feulner, President, The Heritage Foundation

See the complete plan—plus many ways to share it with charts, videos, and more—at SavingTheDream.org.

The Budget Chart Book is available at heritage.org/BudgetChartBook. Check out the following features:

heritage.org/BudgetChartBook

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