EXHIBIT 1 Major Steps in the Federal Budgetary Process 23 EXHIBIT 1 Major Steps in the Federal Budgetary Process F o r m a t i n f b u d g e y – D c ( p v s ) P r e s i d n t a l b u g m o J y B u d g e t r s o l i n M a y B u d g e t p a s S m b r

23 EXHIBIT 2 U.S. Federal Budget Expenditures, Revenues, and Budget Surpluses or Deficits, 1960–2000 ( a ) F e d e r a l e x p e n d i t u r e s a n d t a x r e v e n u e s 2 , 2 2 , 1 , 8 1 , 6 F e d e r a l 1 , 4 e x p e n d i t u r e s a n d t a x 1 , 2 E x p e n d i t u r s r e v e n u e s ( b i l l i o n s o f 1 , d o l l a r s ) 8 R e v n u s 6 4 2 1 9 6 1 9 6 5 1 9 7 1 9 7 5 1 9 8 1 9 8 5 1 9 9 1 9 9 5 2 Y e a r ( b ) F e d e r a l b u d g e t s u r p l u s e s a n d d e f i c i t s + 2 5 + 2 + 1 5 + 1 + 5 S u r p l s B u d g e t s u r p l u s o r D e f i c t d e f i c i t – 5 ( b i l l i o n s o f d o l l a r s ) – 1 – 1 5 – 2 – 2 5 – 3 – 3 5 1 9 6 1 9 6 5 1 9 7 1 9 7 5 1 9 8 1 9 8 5 1 9 9 1 9 9 5 2 Source: Economic Report of the President, 2001, http://w3.access.gpo.gov/eop, Table B-78. Y e a r

23 EXHIBIT 3 Federal Expenditures, Revenues, and Deficits as a Percentage of GDP, 1985–2000 2 3 2 2 E x p e n d i t u r s F e d e r a l 2 1 e x p e n d i t u r e s a n d r e v e n u e s F e d r a l f i c t a s a p e r c e n t a g e 2 o f G D P 1 9 R e v n u s 1 8 1 7 1 9 8 5 1 9 9 1 9 9 5 2 Y e a r Source: Economic Report of the President, 2001, http://w3.access.gpo.gov/eop, Table B-79.

EXHIBIT 4 The National Debt, 1930–2000 ( a ) N t i o n l d e b 6 5 4 T r i l o n s f d a N a t i o n l d e b 3 2 1 1 9 3 1 9 4 1 9 5 1 9 6 1 9 7 1 9 8 1 9 9 2 Y e a r ( b ) N a t i o n l d e s p r c g f G D P 1 4 W o r l d a I 1 2 1 8 P e r c n t a g o f G D 6 N a t i o n l d e b / G D P 4 2 1 9 3 1 9 4 1 9 5 1 9 6 1 9 7 1 9 8 1 9 9 2 Source: Economic Report of the President, 2001, http://w3.access.gpo.gov/eop, Tables B-78 and B-1; and Survey of Current Business, GDP and Other Major NIPA Series 1929–2000, http://www.bea.doc.gov/bea/dn1.htm, Table 1. Y e a r

EXHIBIT 5 An International Comparison of National Debt Ratios, 2000 23 EXHIBIT 5 An International Comparison of National Debt Ratios, 2000 1 2 3 % 1 2 1 % 1 5 % 1 8 6 5 % N a t i o n l d e b s p r c g f G D P 6 % 5 6 % 6 5 4 % 4 2 J a p a n I t a l y C a n a d a F r a n c e G e r m a n y U n i t e d U n i t e d S t a t e s K i n g d o m C o u n t r y Source: Organization for Economic Cooperation and Development, Economic Outlook, June 2001, http://www.sourceecd.org/content/html/index.htm, Annex Table 34.

EXHIBIT 6 Federal Net Interest as a Percentage of GDP, 1940–2000 23 EXHIBIT 6 Federal Net Interest as a Percentage of GDP, 1940–2000 3 . 5 3 . 2 . 5 N e t i n r s a p c g o f G D P 2 . 1 . 5 1 . . 5 1 9 4 1 9 5 1 9 6 1 9 7 1 9 8 1 9 9 2 Y e a r Source: Economic Report of the President, 2001, http://w3.access.gpo.gov/eop, Tables B-1 and B-80.

EXHIBIT 7 Ownership of the National Debt, 2000 23 EXHIBIT 7 Ownership of the National Debt, 2000 P u b l i c - S e t o r D F d a , s n g v m R k 4 9 % P r i v a t e - S c o D b I n d u l s , k p m 3 % F o r e i g n s 2 1 % Source: U.S. Treasury Bulletin, June 2001, http://www.fms.treas.gov/bulletin/index.html, Table OFS-2.

EXHIBIT 8 Zero, Partial, and Complete Crowding Out 23 EXHIBIT 8 Zero, Partial, and Complete Crowding Out A S A D 2 ( z e r o c w d i n g u t ) A D ¢ ( p a r t i l c o w d n g u ) 2 2 A D 1 ( c o m p l e t r w d i n g u ) E 2 P r i c e l e v e l 1 5 E ¢ 2 ( C P I , 1 9 8 2 – 1 9 8 4 E 1 = 1 ) 1 5 F u l e m p o y n t 2 4 6 8 1 1 2 1 4 1 6 R e a l G D P ( t r i l l i o n s o f d o l l a r s p e r y e a r )