1. Government 30 Conclusions How Effective is U. S. Government

2. The Federal Deficit or Surplus, 1950- 2009

3. U.S. Federal Debt, though growing rapidly, is Smaller Than the Debt of Other Countries

4. U.S. Tax Burden is Less Than That in Many Other Democracies

5. Debt and Deficits (Percent of GDP) Debt Deficit United States: 92%11% European Community84%6% »WSJ, December 1, 2010:

6. Bowles-Simpson Com.-Tax –A. 13% Social Security Tax Increase on 90% of all Wages—increase for those above $106,800 –B. 1. Cut Income Tax to 8, 14 and 23 % but end all deductions – Or – 2. Cut Income Tax to 15, 25, and 35 % and keep most deductions except limit mortgage interest and state-local tax deductions –D. Increase Gas Tax to 15 cents

7. Bowles-Simpson Compromise— Expenditure Cuts Cap Medicaid-Medicare Expenditure Growth—force larger co-payments by individuals or later age eligibility for medicare. Extend managed care Social Security-Increase age of retirement—to 69 by the year 1975 Index to lower rate of inflation Cut S. S. Benefits to higher income retirees Eliminate Subsidized Student Loans and veterans benefits Eliminate Earmarks, Cut Targeted Programs, and Cap Domestic and Defense Spending

8. Opposition within Commission Republicans more opposed than Democrats, because tax increases seem more draconian than expenditure cuts.

9. Key Features of Tax System 1.Breadth of Tax System: How Many Tax Preferences? A.Home Mortgage B.College Expenses C.Medical Insurance D.Charitable Contributions E. Retirement Savings

10. Key Features of the Tax System (continued) 2.Progressivity of Tax System A. Progressive Tax: Tax Rate on Rich is Higher (Income Tax) B. Regressive Tax: Tax Rate on Poor is Higher (Social Security Tax) C. Flat Tax: Rate is the Same for Everyone (Total Impact)

11. Percentage of Federal Income Tax Paid by Income Percentiles (2004) Top 1%-37% Top 5%-57% Top 10%-68% Top 25%-85% Top 50%-97%

12. Major Components of the Federal Budget 35% 22% 17% 15% 11%

13. Federal Revenues by Source

14. Critiques 1. Slow 2. Incremental 3. Particularized 4. Short-sighted 5. Biased

15. Critiques (Continued) 6. Inconsistent 7. Symbolic, not substantive responses 8. Irresponsible 9. Unforeseen consequences 10. Incorrigible—mistakes reinforced, not corrected

16. Not perfect, but not as bad as all that 1. Liberties 2. Stability 3. Living standards 4. Haven 5. Tolerant 6. Care for the less fortunate?

17. The End