2012 Budget Charts

7/27/2019 2012 Budget Charts

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Federal Budgetin Pictures

2012

FederalRevenue

Debt andDefcits

FederalSpending

Budget Chart Book Entitle


2/62

Federal Budgetin Pictures

2012

FederalRevenue

Debt andDefcits

FederalSpending

Budget Chart Book Entitle


3/62

The Thomas A. Roe Institute for Economic Policy Studies

Copyright 2012 The Heritage Foundation

214 Massachusetts Avenue, NEWashington, DC 20002

(202) 546-4400

heritage.org


4/62

Federal spending and debt are out o control,

and i America does not change course, the

uture will be dramatically worse. Now more than

ever, it is crucial that Americans understand what

our nations spending, taxes, and debt mean or

them and their amilies. The Heritage Foundations

Federal Budget in Pictures oers a unique tool

to learn about the ederal budget in a clear and

compelling way.These pictures reveal the urgent need to

rein in spending. The ederal budget is on an

unsustainable course, becausePublicly Held Debt

Is Set to Skyrocket(p. 30) despite Taxes Soaring

Past Highest Level Ever(p. 24).Federal Spending

per Household Is Skyrocketing (p. 2), andFederal

Spending Exceeds Federal Revenue by Morethan $1 Trillion (p. 3). I Congress ails to adopt

the transormational reorms necessary to cut

spending and stabilize the debt, U.S. Debt Is on

Track to Fuel an Economic Crisis (p. 38).

Runaway Spending, Not Inadequate Tax Reven

Is Responsible or Future Defcits (p. 7).Medicare

Is Adding to Federal Defcits Faster Than Other

Government Spending Programs (p. 44), andSocia

Security Defcits Are Permanent and Growing (p.

45). Meanwhile,Medicare and Other Entitlements

Are Crowding Out Spending on Deense (p. 8), a corconstitutional unction o government.

Some suggest raising taxes to cover budget

decits. However,Balancing the Budget Without

Cutting Spending Would Cause Taxes to Skyrocket

(p. 50) to the point whereHiking Taxes to Balance

the Budget Would Require Doubling Tax Rates (p. 5

Taxing the Wealthy to Balance the Budget Will NotWork (p. 52), as this would necessitate raising tax

rates to mathematically impossible levels.

About the Federal Budget in Pictures


5/62

iv

President Obamas Budget Hikes Taxes by $2

Trillion (p. 23) even thoughIncreasing Tax Rates

Does Not Necessarily Lead to Higher Income Tax

Receipts (p. 25). Higher taxes on working, saving,

and investing would, however, discourage the

productive activities that enable the American

economy to fourish and the American people

to prosper. American businesses are already

hamstrung internationally, as the U.S. Has theHighest Corporate Tax Rate (p. 21).

Bold, transormational reorms are needed

to solve Americas spending and debt crises.

The Heritage plan,Saving the American Dream,

achieves this through spending, entitlement, and

tax reorms. It reduces the size o government,

encourages personal scal responsibility, and

osters economic growth. It balances the ederal

budget in ten yearswithout raising taxes.

The Federal Budget in Pictures will help all

Americans understand the severity o the nations

current scal situation and appreciate the growingmagnitude o decisions that lawmakers must

conront to x the debt, cut spending, and restore

prosperity in America.


6/62

FEDERAL SPENDING

Federal Spending per Household Is Skyrocketing.........................................................................................................................................................................................................................................

Federal Spending Exceeds Federal Revenue by More than $1 Trillion.........................................................................................................................................................

Federal Spending Grew Nearly 12 Times Faster than Median Income ........................................................................................................................................................

What i Families Handled Finances Like the Federal Government Does?..........................................................................................................................................

Mandatory Spending Has Increased Nearly Six Times Faster than Discretionary Spending...............................................................

Runaway Spending, Not Inadequate Tax Revenue, Is Responsible or Future Decits.......................................................................................

Medicare and Other Entitlements Are Crowding Out Spending on Deense ...............................................................................................................................

National Deense Spending Would Plummet Under Obamas Budget ..........................................................................................................................................................

Budget Control Act Sequestration Would Hit Deense Hardest...................................................................................................................................................................................

Obama Budget Would Make Deense the Lowest Budget Priority..........................................................................................................................................................................

More than Hal o All Federal Spending Will Be on Entitlement Programs in 2012 ....................................................................................................

Total Welare Spending Is Rising Despite Attempts at Reorm ......................................................................................................................................................................................

More than 70 Percent o Federal Spending Goes to Dependence Programs ..................................................................................................................................

Cut Spending, Fix the Debt, and Restore Prosperity................................................................................................................................................................................................................................

FEDERAL REVENUE

Taxes per Household Have Risen Dramatically...................................................................................................................................................................................................................................................

Table of Contents


7/62

vi

Top 10 Percent o Earners Paid 71 Percent o Federal Income Taxes ................................................................................................................................................................19

Federal Revenues by Source .................................................................................................................................................................................................................................................................................................................................20

U.S. Has the Highest Corporate Tax Rate ................................................................................................................................................................................................................................................................................21

Obamacares Barrage o Tax Hikes .........................................................................................................................................................................................................................................................................................................22

Obamas Budget Hikes Taxes by $2 Trillion .....................................................................................................................................................................................................................................................................23

Taxes Soaring Past Highest Level Ever ........................................................................................................................................................................................................................................................................................24

Increasing Tax Rates Does Not Necessarily Lead to Higher Income Tax Receipts..........................................................................................................25

Tax Revenues Return to Historical Average ...................................................................................................................................................................................................................................................................26

Heritages New Flat Tax Simplies the Tax System ......................................................................................................................................................................................................................................27

DEBT AND DEFICITS

Publicly Held Debt Set to Skyrocket...................................................................................................................................................................................................................................................................................................30

Each Americans Share o Publicly Held Debt Is Skyrocketing..........................................................................................................................................................................................31

Obamas Budget Fails to Solve the Debt Crisis Despite $2 Trillion in Tax Hikes....................................................................................................................32

Obamas Budget Continues Unprecedented Decits................................................................................................................................................................................................................................33

Federal Budget Decits Will Reach Levels Never Seen in the U.S.............................................................................................................................................................................34

Rising Decits Drive U.S. Debt Limit Higher, Faster ..................................................................................................................................................................................................................................35

Interest On the Debt Will Nearly Double Over the Next Decade.................................................................................................................................................................................36


8/62

Interest on the Debt Exceeds Spending or Many Programs ................................................................................................................................................................................................

U.S. Debt on Track to Fuel Economic Crisis ..................................................................................................................................................................................................................................................................

Debt to Grow Unless Government Spending Is Reduced ..............................................................................................................................................................................................................

ENTITLEMENTS

Entitlement Spending Will Nearly Double by 2050..................................................................................................................................................................................................................................

Tax Revenues Devoured By Medicare, Medicaid, and Social Security in 2045 .........................................................................................................................

Medicare Adding to Federal Decits Faster than Other Government Spending Programs .......................................................................

Social Security Decits are Permanent and Growing.............................................................................................................................................................................................................................

Without Entitlement Reorm, Federal Spending Will Exceed 40 Percent o the Economy by 2050..................................

Discretionary Spending Cuts Alone Will Not Balance the Budget ..........................................................................................................................................................................

Even Eliminating Deense Spending Completely Would Not Balance the Budget .........................................................................................................

Letting Tax Cuts Expire Will Not Balance the Budget..........................................................................................................................................................................................................................

Balancing the Budget Without Cutting Spending Would Cause Taxes to Skyrocket ..................................................................................................

Hiking Taxes to Balance the Budget Would Require Doubling Tax Rates .............................................................................................................................................

Taxing the Wealthy to Balance the Budget Will Not Work..........................................................................................................................................................................................................

Government Policy Reorm Needed to Keep Spending Low and End Decits Without Raising Taxes........................


9/62

Federal SpendingSpending is at record levels and is stillgrowing, threatening economic reedom.


10/62

2

i.Fl Spending Chart 1 Fl B in Pics 2012

Sources: U.S. Census Bureau, Office o Management and Budget, and Congressional Budget Office.

INFLatIoN-adJuSted doLLarS (2012)Federal Spendingper HouseholdIs Skyrocketing

t fl vnmn is

spnin m psl n v bf.

Sinc 1965, spnin p

sl s wn by 152

pcn, fm $11,900 in 1965

$30,015 in 2012. Fm

2012 2022, i is pjc

is $34,602 15

pcn incs.

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020

2022: $34,602

$11,900

2009Simls pc n bils: $31,5422012:

$30,015

Actual Projected


11/62

iFl Spending Chart 2 Fl B in Pics 2012

Source: Office o Management and Budget.

INFLatIoN-adJuSted doLLarS (2012)Federal SpendingExceeds FederalRevenue by Morethan $1 Trillion

Sinc 1965, spnin sisn cnsnly. Wil

fl vns

cvin fm cn

cssin, spnin is

win sply, slin in

f cnsciv ys f

ficis xcin $1 illin.

1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

$0

$1 trillion

$2 trillion

$3 trillion

$4 trillion

es. 20

$1.0trilliodefic

$3.60illin

$2.52illin

Spnin

rvn


12/62

4


Sources: U.S. Census Bureau and Office o Management and Budget.

PerCeNt ChaNge IN INFLatIoN-adJuSted doLLarS (2012)Federal SpendingGrew Nearly12 Times Fasterthan Median Income

Wn fl spninws fs n amicns

pyccs, bn f

vnmn n xpys

bcms . ov

ps f cs,

min-incm amicns

nins v isn nly 24

pcn, wil spnin s

incs 288 pcn.

+287.5%1970: $926 billin2010: $3.6 illin

+24.2%1970: $41,3582010: $51,360

1970 1975 1980 1985 1990 1995 2000 2005 2010

0%

50%

100%

150%

200%

250%

300%

tl FlSpnin

Min hslIncm


13/62


Sources: Congressional Budget Office and U.S. Census Bureau.

INFLatIoN-adJuSted doLLarS (2012)What if FamiliesHandled FinancesLike the FederalGovernment Does?

In 2010, min fmilyincm ws $51,360. If

ypicl fmily fllw

fl vnmns l, i

wl spn $73,319 n p

30 cns f vy ll spn

n ci c. tis fmily

wl v c p

$325,781 in ci c

bli m, nlywi s. W

ci c cmpny wl

cnin lnin mny

is fmily?

I a typicalamily spent likethe government,it would spend$73,319

(equivalent to$3.6 trillion) ...

... even thoughit had onlyearned $51,360($2.5 trillion)...

... which wouldleave it with aone-year deficit o$21,959

($1.08 trillion).

That decitandborrowing to payor itwould be apart o itsgrowing amilydebt o$325,781($16 trillion).

Each blockrepresents $1,000


14/62

6



INFLatIoN-adJuSted doLLarS (2012)MandatorySpending HasIncreased NearlySix Times Fasterthan DiscretionarySpending

Mny spnin

pimily nilmns n

insis s n by

pil, win wi

cnssinl b. I s

incs lms six ims

fs n iscinyspnin, inclin fns,

wic is p f fl

spnin sbjc nnl

bs.

$0

$1 trillion

$2 trillion

$3 trillion

$4 trillion

1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

Discretionary

Mandatory

2012: $3.57 illin l(Mny spnin: 63%)

1965: $633.6 billin l(Mny spnin: 29%)


15/62


Source: Heritage Foundation calculations based on Congressional Budget Office data.

PerCeNtage oF gdPRunaway Spending,Not InadequateTax Revenue,Is Responsiblefor Future Deficits

t min iv bin

ln-m ficis is

vnmn spnin, n

lw vn. Wil vn

will spss is isicl

v f 18.1 pcn f

gdP by 2018, spnin

mins bv is isicl

v f 20.2 pcn,

cin 22.1 pcn by

2022, vn f $2.1 illin

in spnin cs in

B Cnl ac.12%

14%

16%

18%

20%

22%

24%

26%

28%

Spending

Revenue

.1

20.2%

evenue

Spending

avs19602008:

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020

Actual Projected

2012:23.3%

2022:22.1%

2022: 18.3%

2012:16.1%


16/62

8



PerCeNtage oF gdPMedicare and OtherEntitlements AreCrowding OutSpending onDefense

ev-incsin nilmn

spnin is pin pss

n y spnin piiis,

sc s ninl fns,

c cnsiinl fncin

f vnmn. dfns

spnin s clin

sinificnly v im, vn

wn ws in Iq n

afnisn incl, s

spnin n mj

nilmnsScil

Sciy, Mic, n

Micis m n

ipl.1965

Note: 2012 fgures estimated.

1970 1975 1980 1985 1990 1995 2000 2005 2010

2%

4%

6%

8%

10%2012:9.7%

2012:4.5%

7.4%

2.5%

1976 ws fis y

nilmnspninxcfns

spnin

EntitlementsMic, Mici,n Scil Sciy

Defense


17/62



PerCeNtage oF gdPNational DefenseSpending WouldPlummet UnderObamas Budget

Psin obms lnfns sy wl

c llw fc n

xcb ys inss

cisis. dcss in fnin

f c fns pm

mn lsin cpbiliis

ccil f miliy

flfill is cnsiinl y

pvi f cmmnfns.

1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020

0%

2%

4%

6%

8%

10%

2022:2.5%

4.1%

Ps-9/av

9.5%

2012:4.5%

Actual Projected


18/62

10


Source: Congressional Budget Office.

NoMINaL doLLarSBudget Control ActSequestrationWould Hit DefenseHardest

t B Cnl acs$1.2 illin mic

sqsin cs, f

$46.3 illin in l

spnin, wl imps

cnin cs n fns

(n p f n sim $407

billin in cs fm is

spnin cps). tis wl

sls fns b njpiz u.S. miliys

biliy fn nin.

enilmn spnin

bis p f b

wl sccly b c by

cmpisn.

Entitlement SpendingTotal Spending, 20132021Budget Authority

Cuts due to sequestration

$26.1 trillion

$171 billion

Non-DefenseDiscretionary

Spending

$11.3 trillion

$322 billion

DefenseSpending

$5.3 trillion

$492billion

Net Interest

$3.6trillion

$169 billion

Share oF totaLSeQueStratIoN CutS

EntitlementSpending

4.

Non-DefenseDiscretionary Spending

27. %

DefenseSpending

42.6%

NetInterest

4.6%


19/62



NoMINaL doLLarSObama BudgetWould MakeDefense the LowestBudget Priority

Psin obms bwl lw fns

spnin blw mj

b piiis, fcin cs

psnnl lvls n

wnin miliy

inss. By 2018, u.S.

wl spn m n

ins n b n n

pcin cny.

$0

$0.5 trillion

$1.0 trillion

$1.5 trillion

$2.0 trillion

$2.5 trillion

$3.0 trillion

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

DefenseN Ins

all oSpnin

Mic,Mici, Scil Sc

$631 billin

$602 billin


20/62

12



PerCeNtage oF FY2012 SPeNdINgMore than Halfof All FederalSpending Will Beon EntitlementPrograms in 2012

Mic, Mici, n

Scil Sciyln wi

nilmns sc s

f smps, nmplymn,

n sin ssisnc

m p 62 pcn f ll

fl spnin. In cns,

spnin n fin i

psns b 1 pcn.

Mic,Mici, no hl

C

62%Entitlement Programs

ScilSciy

WlfPmsn o

enilmns

22% 21% 19%all oSpnin

8%

N Ins 6%

ecin 4%

Fin affis 1%

Ninl dfns 19%

50%


21/62


Source: Heritage Foundation calculations based on data rom current and previous White House Office o Management and Budget documents

and other official government sources.

INFLatIoN-adJuSted doLLarS (2011)Total WelfareSpending Is RisingDespite Attemptsat Reform

tl mns-s wlfspnin (cs, f,

sin, micl c, n

scil svics p)

s incs m n

17-fl sinc binnin f

Lynn Jnsns W n

Pvy in 1964. t

cn n is

nssinbl, obmaminisin wl

incs f wlf

spnin n nc

plicy fms.

1950 1960 1970 1980 1990 2000 2010

$0

$200 billion

$400 billion

$600 billion

$800 billion

$1 trillion

1964W nPvybins

1981rn

slsswlf

1996rfm

nswlf

2011: $910 billi


22/62

14


Source: The Heritage Foundations Index o Dependence on Government.

Share oF totaL FederaL SPeNdINgMore than 70Percent of FederalSpending Goes toDependencePrograms

gvnmn pnnc is

ivin b ficis n

fl b. M n 70

pcn f fl spnin

s 47 vnmn

pnnc pms,

inclin sin, fm

sbsiis, n

ls nilmns,Mic, Mici, n

Scil Sciy.

0%

10%

20%

30%

40%

50%

60%

70%

80%

1962 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

1962:28.3%

1990:48.5%

2003:68.3%

2010:70.5%


23/62


Sources: Current projections: Heritage Foundation calculations based on data rom the Congressional Budget Office (Alternative Fiscal Scenario). Heritage

Plan: Calculations by the Center or Data Analysis based on data provided by the Peter G. Peterson Foundation. For more inormation, go to savingthedream.or

PerCeNtage oF gdPCut Spending,Fix the Debt, andRestore Prosperity

By pily lwin l

fl spnin, Saving theAmerican Dream: The Heritage

Plan to Fix the Debt, Cut

Spending, and Restore

Prosperitywl blnc

b by 2021 n p i

blnc pmnnly,

wi isin xs.

CURRENT PROJECTIONS HERITAGE PLAN

10%

15%

20%

25%

30%

35%

2010 2015 2020 2025 2030 2035

10%

15%

20%

25%

30%

35%

2010 2015 2020 2025 2030 2

33.9%

18.7%17.6%

18.5%

Spending

Revenue

Spending

Revenue


24/62

Federal RevenueAmericas growing tax burden is a drag

on the economy and will reach record

levels without policy changes.


25/62

18

i.Fl rvnue Chart 1 Fl B in Pics 2012

Sources: U.S. Census Bureau and Office o Management and Budget.

INFLatIoN-adJuSted doLLarS (2011)Taxes perHousehold HaveRisen Dramatically

t cnmic

wnn s mpilylw vll x vns,

x bn n amicns

is sill i.

1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

$0

$5,000

$10,000

$15,000

$20,000

$25,000

1965:$11,554

2000:$24,701

2007:$23,610

2011:$19,409


26/62

iFl rvnue Chart 2 Fl B in Pics 2012

Source: Internal Revenue Service.

PerCeNtage oF FederaL INCoMe taXeS aNd INCoMe earNed (2009)Top 10 Percent ofEarners Paid 71Percent of FederalIncome Taxes

tp ns fnw x incss, b

fl incm x sysm is

ly ily pssiv.

t p 10 pcn f incm

ns pi 71 pcn f ll

fl incm xs in 2009

y n 43

pcn f ll incm. t

bm 50 pcn pi 2pcn f incm xs b

n 13 pcn f l

incm. ab lf f x

fils pi n fl incm

x ll.

This

group of

income

earners ...

... earned

this share

of all

income ...

... and paid

this share

of federal

income

taxes.

2%5%

15%

22%

Bottom50%

13%

2%

25%50%

21%

10%

10%25%

23%

17%

5%10%

11%

12%

Top 1%

17%

37%


27/62

20



PerCeNtage oF totaL FederaL reVeNue (2011)Federal Revenuesby Source

Ms fl vns cm

fm inivil xpys.

Psnl incm xs

ls pin f l

x vns. Scil Sciy

n Mic pyll xs

scn-ls

sc.

0%

10%

20%

30%

40%

50%

0%

10%

20%

30%

40%

50%

Iniviltxs

ScilInsnc(Pyll)

Cptxs

Csmsdis,Misc.

excistxs

esn gif

txs

47.4%

35.6%

7.9% 5.7% 3.1%0.3%

$1,091.5 billin

$818.8

$181.1$131.3

$72.4$7.4

Total: $2.3 trillion


28/62


Source: Organisation or Economic Co-operation and Development (OECD).

CoMBINed CorPorate taX rateSU.S. Has theHighest CorporateTax Rate

hi fl n s

cp x s m iifficl f u.S.

q bsinsss

cmp inninlly. u.S.

s v bn cnsisnly

i n v f

insiliz nins. In

apil 2012, Jpn c is

cp x 36.8

pcn, min u.S. l

cp x

is.

24%

26%

28%

30%

32%

34%

36%

38%

40%

42%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 (est.)

39.26%United State

25.47%

OECD averag

(comprisesdevelopednations, such

as Canada,France, UniteKingdom, andSwitzerland)

36.8% Jp


29/62

22


Source: Joint Committee on Taxation.

BILLIoNS oF NoMINaL doLLarSObamacaresBarrage of TaxHikes

obmc impss

nms x is wicl m n $500 billin

v 10 ys. obmcs

i x s n incm

n invsmn will slw

cnmic w, lvin

win amicn

fmilis n bsinsss

ws ff. a piclly

mfl nw pyll x n

invsmn incm s in

ffc in Jny 2013.

$0

$20

$40

$60

$80

$100

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

$0.1

$12.4

$42.1

$62.8

$68.7

$101.5

$9.8

Tax on Cadillac plans

Individual and employer mandates

Health insurance tax

Increase in Medicare HI tax andapplication to investment incomefor high earners

Fee on medical device manufacturers

New restrictions and penaltieson HSA and FSA accountsFee on pharmaceutical companies

Revenue from 8 other new taxes

$91.1

$37.9

$74.9


30/62


Sources: Heritage Foundation calculations based on data rom the Office o Management and Budget and the U.S. Department o the Treasury.

BILLIoNS oF NoMINaL doLLarSObamas BudgetHikes Taxes by$2 Trillion

Psin obms FY 2013

b incls b $1.5

illin in x is. o

ppsls bin siz

f obms x is

v $2 illin. tis

incls lin Bs x

cs xpi f i-incm

ns n smll

bsinsss n impsin

iinl xs n s

ps. obm ls

ppss i x

n insiin f nw

xs, sc s pniiv

bn x.

$0 $500 billion $1 trillion $1.5 tri

tx incss n i-incm ns n smll bsinsss

Nw x cs

hi xs n bsinsss pin inninlly

hi d tx

rpl invny vlin ls

Incs nmplymn insnc x

Imps bn x

hi xs n ny cmpnis

IrS pm iniy cp, insnc cmpny x incs,n miscllns x incss

$1,433.1

$147.5

$143.3

$86.8

$61.8

$61.3

$51.2

$98.0

$75.3


31/62

24


Sources: Heritage Foundation calculations based on data rom the Congressional Budget Office and Office o Management and Budget.

PerCeNtage oF gdPTaxes Soaring PastHighest Level Ever

txs pjc

incs pily n

iffn plicy scnis. If

2001 n 2003 x csxpi n m

mil-incm amicns

qi py

lniv minimm x

(aMt), xs will c

npcn lvls. t

x bn will climb vn if

s x bs

xn. Psin obmsb, wic cs sm

xs n iss s,

incss vll x

bn.12%

13%

14%

15%

16%

17%

18%

19%

20%

21%

22%

23%

24%

1975 1980 1985 1990 1995 20002005 2010 2015 2020 2025 2030 2035 20402045 2050 2055

hIStorICaL taXreVeNue

his x bnin u.S. isy:20.6% (2000)

av txBn (19592008): 18.1%

TAX CUTS EXPIRE(current law)

OBAMA BUDGETFY 2013

Actual Projected

Tax cuts madepermanent,AMT fixed


32/62


Sources: Office o Management and Budget and the Tax Foundation.

PerCeNtage oF gdPIncreasing TaxRates Does NotNecessarily Leadto Higher IncomeTax Receipts

tx cs cn c

incnivs f inivils

w, sv, n invs, wic

cn n m vn.

t ms mic clin in

p inivil incm x

, fm 70 pcn 28

pcn, cc in

rn aminisin,in wic x cips

min livly cnsn

s s f cnmy.

0%

25%

50%

75%

100%

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 20

* Projec

70%

7.1%

91%

50%

28% 39.6%

7.7%

35% 35%

7.8% 9.2% 8% 7.2% 7.5%

toP INdIVIduaLtaX rate

INdIVIduaL taXreCeIPtS


33/62

26


Sources: Office o Management and Budget and Congressional Budget Office (Alternative Fiscal Scenario).

PerCeNtage oF gdPTax RevenuesReturn to HistoricalAverage

Sinc Wl W II, x

cips v v

n 18.1 pcn f gdP.

rcips v flln

cssin, b s

cnmy cvs, y will

is bv isicl

v lvl by n f

c, vn if ll

2001 n 2003 x cs

m pmnn.

10%

15%

20%

25%

1945 1950 1960 1970 1980 1990 2000 2010 2020 2022

1945:

20.4%

1950:14.4%

2000:

20.6%

2010:15.1%

2022:18.3%

av hisicl rvn(19592008):

18.1%

Actual Projected


34/62


Sources: Heritage Foundation calculations and the Internal Revenue Service.

MargINaL taX rateS (2012)Heritages New FlatTax Simplifies theTax System

t hi Fnins

Nw Fl tx (NFt), p f

Saving the American Dream,

plcs ys cmplx x

sysm wi n is

simpl n fi. t Nw Fl

tx wl lp m

amicns sv n invs,

n i wl nc

cnmic w wi

isin xs.

TYPICAL TAX RATES TODAY NEW FLAT TAXIn s w xmpls, l minl x s incl

inivil incm n pyll xs.t NFt plcs ll incmpyll, n xs, n

slw f xciss.

30.3% 28%

40.3%

Payroll Tax

15.3%

Income Tax

15.0%

Income Tax

25.0%

Payroll Tax

15.3%


35/62

Debt and DefcitsExcessive spending has created record

levels o debt and defcits, and the worst

is yet to come, threatening opportunity

and prosperity or younger generations.


36/62

30

i.Debt and Deficits Chart 1 Fl B in Pics 2012

Sources: Heritage Foundation calculations based on Office o Management and Budget and Congressional Budget Office data.

PerCeNtage oF gdPPublicly Held DebtSet to Skyrocket

rnwy spnin n

Mic, Mici, n

Scil Sciy will iv

fl b nssinbllvls v nx fw

cs. tl ninl b

cnsiss f pblicly l b

n invnmnl b.

Invnmnl b is

mn

vnmn ws spcific

pms ncis, sc

s Scil Sciy tsFn. Pblicly l b is

m lvn ci

ms.

1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 2030 2036

0%

50%

100%

150%

200%

World War I

GreatDepression

World War II

War on Terrorism

Global Recession

1946: 108.6% 2021: 101%

2036: 195%

Wor War I

GreatDepression

orld War II

ar on Terrorism

Global Recession

1946: 108.6% 2021: 101%

2036: 195%


37/62

iDebt and Deficits Chart 2 Fl B in Pics 2012

Sources: U.S. Census Bureau and Congressional Budget Office (Alternative Fiscal Scenario).

INFLatIoN-adJuSted doLLarS (2012)Each AmericansShare of PubliclyHeld Debt IsSkyrocketing

as Wsinn cnins spn miclly m

n i cn ff, vy

amicn will b n

f incsin lvls f b.

Wi inin in spnin,

mn f b p

ciizn will syc.

1970 1980 1990 2000 2010 2020 2030 203

$0

$30,000

$60,000

$90,000

$120,000

$150,000

Actual Projected

1970: $6,435

2001:$14,534

2031: $102,108

2036: $135,547

2012: $36,267


38/62

32


Sources: Congressional Budget Office and Office o Management and Budget.

PerCeNtage oF gdPObamas BudgetFails to Solve theDebt CrisisDespite $2 Trillionin Tax Hikes

In 2008, pblicly l b

s pcn f

cnmy (gdP) ws 40.5

pcn, nly f pins

blw ps-Wl W II

v. Sinc n, b

s incs by 45 pcn.

t Psins FY 2013

b wl incs b 76.5 pcn by 2022,

spi $2 illin in x

is.

1940 1950 1960 1970 1980 1990 2000 2010 2020

0%

20%

40%

60%

80%

100%

120%

1946: 108.7%

Ps-WWIIav: 44.2%

1993:49.3%

2008:40.5%

2012:

74.2%

2022:

76.5%

Actual Projected


39/62



Budget deFICItS aS a PerCeNtage oF gdP, BY adMINIStratIoNObamas BudgetContinuesUnprecedentedDeficits

t Psin is spnsiblf sbmiin n nnl

b Cnss n s

iy v

lislin, inclin

ispnsibl spnin.

Ms aminisins v

n smll b mnbl

ficis, b Psin

obms npcn

b ficis ps sis

cnmic iss.

8%

6%

4%

2%

0%Kennedy Johnson Nixon Ford Carter Reagan Bush Clinton Bush Obam

1.0% 0.9%

2.4%

4.3% 4.3%

0.1%

3.2%

8.3%

1.6%

3.5%

d l d


40/62

34


Source: Congressional Budget Office (Alternative Fiscal Scenario).

PerCeNtage oF gdPFederal BudgetDeficits Will ReachLevels Never Seenin the U.S.

unlss nilmns

fm, spnin n

Mic, Mici, n

Scil Sciy will iv

ficis cspic

lvls. Wil cn b

ficis v c

npcn lvls,

f ficis will b

miclly ws.

1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080

0%

10%

20%

30%

40%

50%

60%

2000:

2.4%

2009:

10.1%

2085: 57.5%

hisicl av(19592008): 2.1%

Ri i D fi it D i


41/62


Sources: Congressional Research Service, U.S. Treasury, and Office o Management and Budget.

NoMINaL doLLarSRising Deficits DriveU.S. Debt LimitHigher, Faster

t B Cnl ac,

sl f cnnis 2011

b cilin b,incs b limi by

$2.1 illin, b fil in

in y iv f spnin

n b: nilmn

spnin. Cnss fis

plc sy limi n

ninl b in 1917, in

Scn Liby Bn ac.

I s bn is 13 imssinc 2001.

$0

$2 trillion

$4 trillion

$6 trillion

$8 trillion

$10 trillion

$12 trillion

$14 trillion

$16 trillion

1940 1950 1960 1970 1980 1990 2000 2012

Ls n-y cn: +$1.9 illin, 2010

B Cnl ac, 2011: +$900 billin

Note: Figure or 2012 is current as o April 6.

2012: $16.39 trillionB Cnl ac, 2012: +$1.2 illin

uncn f 5 ys,19972001 ($5.95 illin)

Sinc 200 blimi s

bn is13 ims, f l f$10.4 trill

I t t O th


42/62

36


Sources: Congressional Budget Office and Office o Management and Budget.

INFLatIoN-adJuSted doLLarS (2012)Interest On theDebt Will NearlyDouble Over theNext Decade

as pblicly l b

ws, n ins pymns

will incs miclly,

vn ssmin ins

s min lw. un

cn pjcins, l n

ins css wl m

n bl v nx

c.

1990 1995 2000 2005 2010 2015 2020 2022

$0

$100

$200

$300

$400

$500

Actual Projected

1990:$294 billin

2022: $524 billion

2012: $224 billion

Interest on the Debt


43/62



BILLIoNS oF doLLarS (2011)Interest on the DebtExceeds Spendingfor Many Programs

In 2011, u.S. spn m

n n insins pi

n pblicly l bn ispn n mny fl

pmns, inclin

ecin n Lb.

$0

$50

$100

$150

$200

$250

NetInterest

Department ofAgriculture

Department ofLabor

Department ofVeteransAairs

Department ofTransportation

Department ofEducation

Department oHomelandSecurity

$227.1

$132.0 $126.9

$77.3$65.5

$45.7

$139.4

PerCeNtage oF gdPU S Debt on Track


44/62

38


Sources: International Monetary Fund and Congressional Budget Office (Alternative Fiscal Scenario).

PerCeNtage oF gdPU.S. Debt on Trackto Fuel EconomicCrisis

Mny epn cnis,

li gc n Ily,

sffin finncil bciss s sl f mnin

b. Cnis sc s Spin

n f bin. unlss

u.S. cnls spnin,

amics b will spss

s f bl nins,

lin simil cnmic

ws.

2000 2005 2010 2015 2020 2025 2030 2035

2035: U.S.debt at187% GDP

0%

50%

100%

150%

200%

U.S.D

EBTT

RAJECT

ORY

2011: U.S. debt at 67% GDP(Credit rating downgraded by S&P)

2000: U.S. debtat 34% GDP

gc

153%

56%

Jpn

131%

u.k.

73%Ily

100%

Comparisonsare to othernations 2011levels o debt.

PerCeNtage oF gdPDebt to Grow


45/62


Sources: Current projections: Congressional Budget Office (Alternative Fiscal Scenario). Heritage Plan: Calculations by the Center or Data Analysis based o

data provided by the Peter G. Peterson Foundation. For more inormation, go to savingthedream.org .

PerCeNtage oF gdPDebt to GrowUnless GovernmentSpending IsReduced

Wi sinificn spnin

fms, pblicly l b is

pjc c 187

pcn f gdP by 2035.

un hi pln,


f fl spnin

wl b c by b

lf, wic wl

miclly lw b

29 pcn f gdP.

0%

50%

100%

150%

200%

2010 2015 2020 2025 2030 2035

68%2011:

187%2035:

29%2035:

CurreNtProJeCtIoNS

SaVINg theaMerICaN

dreaM


46/62

EntitlementsMedicare, Medicaid, and Social Security

spending is set to explode, placing enormous

pressure on other priorities such as deense

and the rest o the budget.

PerCeNtage oF gdPEntitlement


47/62

42

i.Entitlements Chart 1 Fl B in Pics 2012


PerCeNtage oF gdPEntitlementSpending WillNearly Doubleby 2050

Spnin n Mic,

Mici, Scil Sciy,

n obmc

sbsiis will s s 78

millin bby bms i

n l c css climb.

tl spnin n fl

l c pms will

m n bl. F

nins will b lf wi

n nnbl b bn.

0%

5%

10%

15%

20%

2010 2020 2030 2040 2050

3.6% 4.2%5.9%

7.4%8.6%1.9% 2.7%

3.4%

4.0%

4.5%

4.8%

5.2%

6.0%

6.0%

5.9%

10.3%

12.1%

15.3%

17.4%

Mic

Mici,obmcSbsiis

ScilSciy

tl19.0%

PerCeNtage oF gdPTax Revenues


48/62

iEntitlements Chart 2 Fl B in Pics 2012


PerCeNtage oF gdPTax RevenuesDevoured ByMedicare, Medicaid,and Social Securityin 2045

Spnin n Mic,

Mici, obmc

sbsiis, n Scil Sciy

will v ll vns by

2045. enilmn spnin

is ly cwin vil

cnsiinl fncins, sc

s fns.

1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2085

0%

5%

10%

15%

20%

25%

30%

Mic

MiciobmcSbsiiChIP

Scil

Sciy

acl

rvn

av

hisiclrvn: 18.1%

1970:3.9%

2011:10.4%

2085:25.7%2045: Entitlement spending

matches tax revenue average

Actual Projected

PerCeNtage oF gdPMedicare Adding


49/62

44



PerCeNtage oF gdPMedicare Addingto Federal DeficitsFaster than OtherGovernmentSpending Programs

enilmn spnin is

min cs f ln-m

nwy fl ficis.

Mic is

fss-win pm

iin bby bms,

ffcs f n in

pplin, n isin

lc css.

0%

2%

4%

6%

8%

10%

12%

14%

2011 2015 2020 2030 20402025 2035 2045 2050

Medicare

all oNn-InsSpnin

ScilSciy

Mici,

obmcSbsiis

BILLIoNS oF doLLarS (2011)Social Security


50/62


Source: Social Security Administration (OASI and DI Trust Fund Data and 2011 Trustees Report).

( )yDeficits arePermanent andGrowing

Scil Sciy bn nnin

ficis in 2010, pyin

$48.9 billin m in bnfis

n i civ

pyll xs. N will s

ficis v n, mnin

wi fms, Scil

Sciy will cnin

billins fici n

b c y.

$350

$300

$250

$200

$150

$100

$50

$0

$50

$100

Def

Surp

1987 1990 1995 2000 2005

2010 2015 2020 2025 2030 2035

2010: $48.9 billion deficit

2035: $344 billin fici

PerCeNtage oF gdPWithout


51/62

46



Entitlement Reform,Federal SpendingWill Exceed 40Percent of the

Economy by 2050t mj nilmns

Mic, Mici,

obmc sbsiis, n

Scil Sciy psin

spnin nssinbl

lvls. ts pms ms

b sc pvn

cipplin b x bnsn f nins.

0%

10%

20%

30%

40%

2000 2010 2020 2030 20402005 2015 2025 2035 2045 2050

Actual ProjectedMic

Mici,obmcSbsiis,ChIP

ScilSciy

dfns

o

N Insacl

rvnav hisicl

rvn (1959

2008): 18.1%

2050: 42.8%

aNNuaL SPeNdINg (2012)Discretionary


52/62



Spending CutsAlone Will NotBalance the Budget

annl spnin n

nilmn pms ismssiv cmp

fl spnin piiis.

Cin isciny

spnin is ncssy, b

cs fin i ln

pllin f afnisn

will n cls fici.

enilmn pms ms

b fm.

glbl Wn tism$115.1 billin

Fin ai$24.2 billin

NaSa$17.6 billin

Cpin fPblic Bcsin

$445 millinEntitlements

(Medicare, Medicaid,Social Security, and other

mandatory programs,plus their net interest)

$2.48 TRILLION

PerCeNtage oF gdPEven Eliminating


53/62

48


Source: Heritage Foundation calculations based on Congressional Budget Office data.

Defense SpendingCompletely WouldNot Balance theBudget

unssinbl nilmn

spnin is y iv f

f ficis. r n

cl m icly, sm

wl c fns. B vn

if spnin n is ccil

ninl piiy ws

limin cmplly,

nilmns wl cnin

iv ficis

nmnbl lvls.

1975 1980 1990 2000 2010 2020 2030 2040 2050

0%

5%

10%

15%

20%

25%

30%

35%tl

Spnintl Spnin wi Ndfns SpninBinnin in 2013

tlSpnin

tl Spnin wi Ndfns SpninBinnin in 2013

Mic

Mici,obmcSbsiis,ChIP

ScilSciy

all oSpnin

N Ins

33.8%

DEFENSE

ActualRevenue

Historical Revenue: 18.1%

PerCeNtage oF gdPLetting Tax Cuts


54/62



Expire Will NotBalance the Budget

Sm cll f lin ll 2001

n 2003 x cs xpi,

inclin sbjcin mil clss

lniv minimm x, in

blnc b.

un is scni,

nffbl spnin wl

sill is, n cnmic

w n jb cin

wl sff.

0%

5%

10%

15%

20%

25%

30%

2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2055

Spninhisiclrvn: 18.1%

rvn

2055: 29.9

Mic

MiciobmcSbsii

ChIP

ScilSciy

dfns

o

N InSpninhisicl rvn

vn: .

Actual Projected

DefcitSpe

nding

PerCeNtage oF gdPBalancing theB d Wi h


55/62

50


Source: Heritage Foundation calculations based on Congressional Budget Office data (Alternative Fiscal Scenario).

Budget WithoutCutting SpendingWould Cause Taxesto Skyrocket

amic is nnin mssiv

ficis, n blnc

b qimn is fn

cnsi wy in in

in. Wi sis

nilmn n spnin

fms, lvl f xs

qi blnc

b wl c

cnmiclly snin

lvls.

0%

5%

10%

15%

20%

25%

30%

1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035

aclrvn

rvn N Blnc Brvn Blnc B

aclSpnin

Actual Projected

2013: 23.2%

2036: 27.4%

2012: 16.2%

Mic

Mici,obmc

Sbsiis,ChIP

ScilSciy

all oSpnin

N Ins

MARGINAL INCOME TAX RATESHiking Taxes toB l th B d t


56/62

heritageEntitlements Chart 10 Federal Budget in Pictures 2012


Balance the BudgetWould RequireDoubling Tax Rates

The costs of Medicare,

Medicaid, and Social Securityare rising substantially.

Paying for this spending

solely through federal

income tax increases would

require more than a two-fold

increase of current tax rates,

even for the lowest tax

bracket.

0%

20%

40%

60%

80%

100%

2008 2050 2082

Lowest Bracket Middle Bracket Highest Bracket Corporate Taxes

2008 2050 2082 2008 2050 2082 2008 2050 2082

10%

19%

25% 25%

47%

63%

35%

66%

88%

35%

66%

88%

CurreNt taX rateS aNd taX rateS NeCeSSarY to CLoSe deFICItTaxing the Wealthyt B l th


57/62

52


Sources: Internal Revenue Service and Congressional Budget Office (Alternative Fiscal Scenario).

to Balance theBudget Will NotWork

Sm f xin

wly c flficis. hwv, iin

xs n xpys in w

is bcs wl

incs i x s

mmiclly impssibl

lvls. t cls 2035

fici, p w x s

wl incs 159

pcn n 166 pcn, nin 2050 y wl c

236 pcn n 246 pcn.

0%

50%

100%

150%

200%

250%

CURRENT TAX RATE

Second-HighestBracket

HighestBracket


HighestBracket


HighestBracket

33% 35%

159% 166%

236%246%

RATES NEEDED TOCLOSE THE DEFICIT

IN 2035

RATES NEEDED TOCLOSE THE DEFICIT

IN 2050

reVeNue aNd SPeNdINg aS a PerCeNtage oF gdPGovernment PolicyReform Needed to


58/62


Sources: Heritage Foundation calculations by the Center or Data Analysis based current projections, data provided by the Peter G. Peterson Foundation, andCDA policy models.

Reform Needed toKeep Spending Lowand End DeficitsWithout Raising

TaxesBl, nsfminl

fms n slv

amics spnin n b

ciss. t hi pln,


slvs s ciss

spnin, nilmn, n

x fms. I cs siz f vnmn,

ncs psnl fiscl

spnsibiliy, n fss

cnmic w. I blncs

fl b by 2021

n s n is xs.2010 2015 2020 2025 2030 2035

0%

5%

10%

15%

20%

25%

enilm

(Medicaid,Medicare,ObamacarSubsidies,SocialSecurity)

dfns

all o

N In

2011: 24.7%

SPeNdINg

reVeNue

T h i l N t


59/62

54

The charts in this publication are based primarily on data available as o February 2012 rom theOfce o Management and Budget (OMB) and the Congressional Budget Ofce (CBO). The chartsusing OMB data display the historical growth o ederal spending, revenue, and debt to 2011, while the

charts using CBO data show both historical and projected growth rom as early as 1940 to as ar as 2085.

Projections based on OMB data are taken rom the Presidents budget or scal year 2013.

The charts show annual data except where calculations are made or Administration averages. Debt

limit data are based on the limit in eect at the end o the calendar year. All spending and revenue data

are based on the ederal scal year. Prior to 1976, the scal year was rom July 1 to June 30. That year, the

current ormat o October 1 to September 30 was implemented. In the charts, the transition is omitted or

simplicity.

Charts designating presidential Administrations begin with the scal year in which the Administration

presented its rst budget. In the case o 2009an atypical year in which much was spent beore the

Administrations rst scal year budget (FY 2010), all revenue and spending up to the CBO January 2009

Budget and Economic Outlook is attributed to President George W. Bush. All revenue and spending

thereater is attributed to President Obama.

There are dierent ways to calculate average historic levels o revenue, spending, and debt. Such

averages vary due to the time periods covered. In this publication, these averages span 50 years (1959

2008), encompassing postWorld War II and pre Great Recession years.

Technical Notes


60/62

Emily Gof

Research Associate, Thomas A. Roe Institute or Economic Policy Studies

Romina Boccia

Research Coordinator, Thomas A. Roe Institute or Economic Policy Studies

John Fleming

Senior Data Graphics Editor

Authors


61/62

56

The Entitlements Initiative is one o 10 Transormational Initiatives making up The Heritage Founda-

tions Leadership or America campaign. For more products and inormation related to this initiative or to

learn more about the Leadership or America campaign, please visit heritage.org.

The Heritage Foundation is a research and educational institutiona think tankwhose mission is to

ormulate and promote conservative public policies based on the principles o ree enterprise, limited gov-

ernment, individual reedom, traditional American values, and a strong national deense.

Our vision is to build an America where reedom, opportunity, prosperity, and civil society ourish. As

conservatives, we believe the values and ideas that motivated our Founding Fathers are worth conserving.

As policy entrepreneurs, we believe the most eective solutions are consistent with those ideas and values.

The Federal Budget in Pictures Online


62/62

The Federal Budget in Pictures is available online withenhanced features. Go to heritage.org/FederalBudget

Embedordownloadtheentirebookorindividualcharts for blogs and presentations

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SharechartswithyoursocialnetworksthroughFacebook,Twitter,andmore

Viewtheinteractivecharts

Readin-depthresearchontaxes,spending,debt,and the budget

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2012 Budget Charts