1. presented by Robert L. Bixby, Executive Director The Concord Coalition www.concordcoalition.org Daunting Budget Outlook United States Naval Academy March 8, 2007

2. Composition of Actual FY 2006 Federal Government Revenues and Outlays (Deficit: $248 Billion) Interest Other Social Security Medicare & Medicaid Defense Domestic* Estate & Gift Taxes Other Taxes Corporate Taxes Social Insurance Taxes Individual Income Taxes Outlays: $2.65 trillionRevenue: $2.41 trillion *Includes all appropriated domestic spending such as education, transportation, homeland security, housing assistance, and foreign aid. Source: CBO & Treasury, 2006 Billions of Dollars

3. 66% 27% 7% 44% 14% 42% 38% 9% 53% MandatoryDiscretionaryNet Interest Source: Congressional Budget Office, January 2007 Mandatory spending is consuming a growing share of the budget NOTE: Numbers may not add up due to rounding.

4. Outlays of Select Mandatory Spending Programs (FY 2007 Projected) Source: Congressional Budget Office, January 2007

5. Change in composition of discretionary spending 66% 34% 61% 39% 49%51% DefenseNon-defense Source: Congressional Budget Office, Jan. 2007

6. Defense Discretionary Spending as a Percentage of GDP Source: Congressional Budget Office, January 2006 As a Percentage of GDP

7. Outlays of Select Discretionary Non-Defense Programs (FY 2007 Projected) Source: Congressional Budget Office, January 2007 *includes ground, air, and water

8. Federal Spending vs. Revenues as a Percent of GDP (FY 1980-2006) Source: Congressional Budget Office, January 2007 and Office of Management and Budget, 2007 Average outlays: 21% Average revenues: 18.3% Percentage of GDP

9. Debt Held by the Public as a Percent of GDP 1980-2006 Source: Office of Management and Budget; Forecast: Congressional Budget Office, January 2007

10. Percent of Debt Held by the Public Owned by Foreigners Source: United States Treasury Department (1980-2006)

11. Current Policy Trends Lead to Large Sustained Deficits Fiscal Years 2008-2012 2008 2009 2010 2011 2012 Fiscal Year Source: Congressional Budget Office, January 2007 and Concord Coalition analysis. Billions of Dollars President’s Proposed 2008 Budget: -$513 billion deficit President’s Budget with AMT Reform and Plausible War Spending: -$1.342 trillion deficit

12. Non-defense Spending as a Percent of GDP under the President’s Budget Source: Office of Management and Budget, February 2006 1980-2005 Historical average: 3.77%

13. Current Policy Trends Lead to Large Sustained Deficits Fiscal Years 2008-2017 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Fiscal Year CBO January 2007 Baseline The Concord Coalition Plausible Baseline assumes that discretionary spending grows at the rate of nominal GDP, that war costs slow gradually, and that all expiring tax provisions are extended with AMT relief. Source: Congressional Budget Office, January 2007 and Concord Coalition analysis. Billions of Dollars $4.9 Trillion Deficit $800 Billion Surplus

14. Social Security and Medicare Part A Cumulative Cash Surpluses and Deficits In Constant 2006 Dollars—2006 through 2080 In Billions of Constant 2006 Dollars 2006 2010 2020 2030 2040 2050 2060 2070 2080 Calendar Year Source: Social Security Trustees’ Report—March 2006 (Intermediate Projections) $692 Billion: Cumulative Social Security Cash Surplus -$27.4 Trillion: Cumulative Social Security Cash Deficits -$44.4 Trillion: Cumulative Medicare Part A Cash Deficits -71.8 Trillion: Cumulative Social Security and Medicare Part A Cash Deficits

15. Medicare Costs Soar in the Coming Decades Calendar Year As a Percentage of GDP General Revenues required to fund the program Income from dedicated taxes, premiums, and state transfers Source: Medicare Trustees’ Report, 2006

16. Current Fiscal Policy is on an Unsustainable Path The simulation assumes that discretionary spending grows with the economy after 2007 and that all expiring tax provisions are extended. After 2017, revenue is held constant as a share of GDP. Net Interest Social Security Medicare and Medicaid All other spending Revenue Source: Government Accountability Office, February 2007.

17. Source: Government Accountability Office, September 2006 Policy Changes Matter Projected Debt Held by the Public as a Percent of GDP Under Alternative Scenarios (2006-2040)

18. Washington Needs a Fiscal Wake-Up Call From “We The People” The Fiscal Wake-Up Tour consists of speakers from diverse perspectives who are increasingly alarmed by the nation’s long-term fiscal outlook. Our mission is to cut through the usual partisan rhetoric and stimulate a more realistic public dialogue on what we want our nation’s future to look like, along with the required trade-offs. Elected leaders in Washington know there is a problem, but they are unlikely to act unless their constituents — We The People — demand it.

19. Key Points of Agreement Members of the Fiscal Wake-Up Tour do not necessarily agree on the ideal levels of spending, taxes and debt, but we do agree on the following key points: Current fiscal policy is unsustainable There are no free lunch solutions, such as cutting waste fraud and abuse or growing our way out of the problem. The best way to make the hard choices is through a bipartisan process with all options on the table. Public engagement and understanding is vital in finding solutions. This is not about numbers. It is a moral issue.