1. America’s Looming Debt Crisis Executive MBA George Mason University Spring 2012

2. Uncle Sam in Debt

3. Federal Debt: Then and Now September 30, 1991$ 3,665,303,351,697.03 Per Person 1991 $14,505 October 11, 2011$14,822,787,487,080.00 Per Person2011$47,445

4. Who Holds U.S. Debt? Debt Held by Public$9.946 Trillion by Foreign Governments $4.499 Trillion Debt Held by U.S. Gov’t$4.669 Trillion Net Debt = Debt Held by Public

5. Agencies Holding U.S. Debt: Social Security Trust Fund

6. Agencies Holding U.S. Debt: Federal Reserve Banks

7. GOVERNMENT AGENCYAMOUNT HELD Social Security Administration$2.6 Trillion Federal Reserve System$1.5 Trillion Medicare$0.5 Trillion Total$4.6 Trillion Agencies Holding Debt (2011)

8. US Debt Held by Foreign Governments (In $U.S. Billions)

9. U.S. Debt to GDP Ratio, 1790-2010

10. U.S. Surplus & Deficit, 1800-1859 (In Millions) FY$ $ $ $ $ 18000.06181210.4818240.95183619.9618489.64 18013.54181317.3418255.98183712.29184913.84 18027.13181423.5418268.2318387.5618504.06 18033.21181516.9818276.8318394.5818514.85 18043.11181617.0918288.3718404.8418525.65 18053.05181711.2618299.6218419.71185313.40 18065.7618181.7618309.7018425.23185415.76 18078.0418193.14183113.2818433.5618555.61 18087.1318200.38183214.5818446.9818564.49 18092.5118211.24183310.9318457.0318571.17 18101.2318225.2318343.1618461.93185827.53 18116.3718235.83183517.86184730.79185915.59

11. U.S. Surplus & Deficit, 1860-1909 (In Millions) FY$ $ $ $ $ 18607.071870101.60188065.88189085.04190046.38 186125.04187191.151881100.07189126.84190163.07 1862422.77187296.591882145.5418929.91190277.24 1863602.04187343.391883132.8818932.34190344.88 1864600.7018742.351884104.39189461.17190442.57 1865963.84187513.38188563.46189531.47190523.00 186637.22187629.00188693.96189614.04190624.78 1867133.09187740.071887103.47189718.05190786.73 186828.30187820.801888111.34189838.05190857.33 186948.0818796.88188987.76189989.11190989.42

12. U.S. Surplus & Deficit, 1910-1959 (In Millions) FY$ $ $ $ 191018.111920291.221930737.6719403484.0019504702.00 191110.631921509.011931461.8819415594.0019514259.00 19122.731922736.5019322735.29194221333.0019523383.00 19130.401923712.5119332601.65194355595.0019538259.00 19140.411924963.3719343629.63194448735.0019542831.00 191562.681925717.0419352791.05194548720.0019554091.00 191648.481926865.1419364424.55194616964.0019562494.00 1917853.3619271155.3719372777.4219472861.0019572639.00 19189032.121928939.0819381176.62194810548.0019583315.00 191913362.621929734.3919393362.001949684.00195912149.00

13. U.S. Surplus & Deficit, 1960-2009 (In Millions) FY$ $ $ $ $ 1960510197086941980731411990277626200086422 196137661971260521981738591991321435200132445 19625881197226068198212059319923404082002317417 19633966197315246198320769219933003982003538418 1964654619747198198418526919942588402004567961 19651605197554148198522152919952263672005493611 19663068197669427198623791519961740192006434494 196712620197749933198716835719971032482007342153 19682774219785541619881922651998299252008641848 196950719793963319892053931999192020091549681

14. Expenditure/GDP 1790-2010

15. Expenditure-GDP Ratio 1810 1% 1910 2% 2010 24%

16. Revenue/GDP 1791-2010

17. Revenue to GDP 1910 2% 2010 15%

18. Government Expenditures 2010 ItemAmount Total Expenditures3,207.7 National Defense 719.2 International Affairs 51.1 Science, Space, Technology 33.0 Natural Resources & Environment47.0 Agriculture26.6 Transportation106.5 Education142.5 Health372.3 Medicare457.2 Income Security685.9 Social Security721.5 Interest on Debt425.1

19. Gov’t Expenditures 2010 ($3.2 Trillion)

20. Government Receipts 2010 (in millions) Item Amount Individual Income Taxes 1,051,431 Social Insurance & Retirement 940,370 Corporate Income Taxes 178,933 Excise Taxes 74,745 Other 87,166 Total Receipts 2,332,645

21. Revenues (%GDP)

22. Government Receipts 2010 $(2.33 Trillion)

23. Debt to GDP Ratio, 2011-2031 CBO Projections*

24. Alternative Projection

25. Spending Drivers (as a Per Cent of GDP)

26. Economists Advocating Deficits KeynesKeynesians KrugmanSummers

27. The Keynesian Logic GDP = C + I + G + (X-M) Marginal Propensity to Consume (MPC) MPC = ΔC ÷ ΔY Δ GDP = Δ G ÷ (1-MPC) (Income Multiplier)

28. Economists Against Deficits Smith Marx Buchanan Hayek Marx

29. Reasons Opposed to Deficits 1.Governments default on loans. 2.Wasteful expenditures. 3.Financiers get rich on taxes 4.Financiers influence policy 5.Crowds out private investment 6.Creates trade deficits 7.Burdens future generations

30. Debt to GDP by Country (EIU Estimates) 201020112012 Japan200%205%209% Greece143%153%154% Italy119%121%121% U.S.* 95% 98% 101% Germany 83% 81% 80% China* 41% 41% 41%