TOTAL SPENDING IN FY 2012 = $3.54 TRILLION

OTHER MANDATORY $547

NON-DEFENSE (DISCRETIONARY)

$615

DEFENSE

(DISCRETIONARY) $670

SOCIAL SECURITY $768

MEDICARE $466

MEDICAID $251

INTEREST $223

DISCRETIONARY SPENDING

AUTOPILOT SPENDING

CRUSHING BURDEN OF DEBT (U.S. DEBT HELD BY THE PUBLIC AS A SHARE OF THE ECONOMY)

%

100%

200%

300%

400%

500%

600%

700%

800%

900%

1940 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 SOURCE: OMB/CBO

WORLD WAR II

CURRENT PATH

2012

WHO OWNS OUR DEBT? (DEBT HELD BY THE PUBLIC 1970 -2011)

Year Revenue Year Revenue

1994 18.0 2002 17.6

1995 18.4 2003 16.2

1996 18.8 2004 16.1

1997 19.2 2005 17.3

1998 19.9 2006 18.2

1999 19.8 2007 18.5

2000 20.6 2008 17.6

2001 19.5 2009 15.1

10%

20%

30%

40%

50%

60%

70%

80%

1947 1957 1967 1977 1987 1997 2007 2017 2027 2037 2047 2057 2067 2077

SPENDING TAX REVENUE

SOURCE: OMB/CBO

WE ARE IN A SPENDING-DRIVEN DEBT CRISIS (AS A SHARE OF THE ECONOMY)

THE PAC-MAN EFFECT AUTOPILOT SPENDING DRIVES OUR DEBT

1970

AUTO- PILOT

SPENDING 42%

ALL OTHER

SPENDING 58%

2010

AUTOPILOT SPENDING

62%

ALL OTHER

SPENDING 38%

2040

AUTOPILOT SPENDING

76%

ALL OTHER

SPENDING 24%

WHAT DRIVES OUR DEBT? (GOVERNMENT SPENDING AS A SHARE OF THE ECONOMY)

SOCIAL SECURITY

MEDICAID & OTHER HEALTH

MEDICARE

0%

5%

10%

15%

20%

25%

REVENUE

SOURCE: CBO

Medicare As We Know It – Oncoming Demographic Wave

Senator Lieberman on Medicare

“The truth is that we cannot save Medicare as we know it. We can save Medicare only if we change it.”

(6/6/2011)

President Obama on Medicare

“If you look at the numbers, Medicare in particular will run out of money, and we will not be able to sustain that program no matter how much taxes go up. I mean, it's not an option for us to just sit by and do nothing.”

(7/11/2011)

TAXPAYERS SUPPORTING EACH SOCIAL SECURITY RECIPIENT

1950

1960

2000

2009

2040

16.5

8.6

3.4

3.0

2.1

Source: Social Security Administration, The 2010 Annual Report of the Board of Trustees; Centers for Disease Control, U.S. Life Tables

RECIPIENT WORKERS

LIFE EXPECTANCY

1950 68

1960 70

2000 76

2009 78