A non-political, mathematical dive into the U.S. Budget gave me a clearer view of a key hidden cause, and the path toward a surprisingly easy fix. Here is what I found.

1. 1

2. Federal Gov’t Medicare/Medicaid
$579,189,772,239 $791,009,579,504
16% 22%
Military
$668,109,289,531 Social Security
19% $743,102,667,904
21%
Federal Pensions
$213,030,279,609
6%
Income Security
Programs
Interest $365,605,593,228
$225,030,279,630 10%
6%
2

3. In 2012, the U.S. Spent $3.5 Trillion
and Borrowed $1.2 Trillion
$3.5 Trillion Tax Revenue
$2.3 Trillion
Deficit Spent
$1.2 Trillion
 The Deficit is our shortfall -- $1.2 Trillion
 The Debt is what we owe -- $16 Trillion
3

4. Remove 8 zeroes
2012 U.S. 2012
Like a family
Income $2,300,000,000,000 Income $23,000
Minus
Minus Expense $3,500,000,000,000 $35,000
Expense
Over
Equals Deficit $1,200,000,0000,000 $12,000
Spending
Credit
Debt $16,000,000,000,000 $160,000
Card Debt
$34,150 Post-Sequester
4

5. 2012 Per Person
Population 314 Million A baby born
today
inherits
Income $7,637 $51K of
Debt per
Capita
Minus
$11,456
Expense
Equals
($3,819)
Deficit
Debt $50,915
5

6. 2012 Per Person
Population 314 Million
Income $7,637
Sequester: Reduces the Deficit
$270/capita – a drop in the bucket.
Minus
$11,456
Expense
Equals
($3,819)
Deficit
Debt $50,915
6

7. 2001: Debt $5.6T. 4th
consecutive Surplus - $127B
2002-08: Deficits $150B-$450B
2009: 1st Deficit >$500B, $1.4T
2012: 2/3rds of today’s Debt
racked up in last 10 years
Last 5 year
borrowings
exceed prior
231 years
7

8. What To Do?
“Don't find
fault, find
a remedy.”
-Henry Ford
8

9. Presidential Commission to identify…
“policies to improve the fiscal
situation…and achieve fiscal
sustainability over the long run.”

10. 1. Achieved non-interest Breakeven in 2015
2. Chained CPI for all indexed programs
3. Discretionary spending caps into law
4. Less interest cost, by borrowing less
5. $2 spending cuts / $1 new revenue
6. Medicare cost share, tort reform
7. SS Retirement age 68 in 2050 Nothing has been
done with the
8. Reduce farm subsidies recommendations

11. A Huge Hidden Variable…
61 65 79
Retiree Eligibility Ages
have not increased with longevity
11

12. Retiree Eligibility Ages
have not increased with longevity
• Life expectancy - 61 U.S Life Expectancy
1935 • Social Security - 65 90
1935-2012
80
79
70
• Medicare - 65 60 61
1965 50
40
• Life expectancy - 79 30
• Eligibility - still 65,
2013 w/ early option at 62
20
10
0
19…
19…
19…
19…
19…
19…
19…
19…
20…
20…
National Center for Health Statistics
Age 84 is today, what 65 was in 1935
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13. 13

14. Interest
Income Security
6%
Programs
10%
Federal
Pensions, 6%
Medicare/Medicaid,
Federal Gov’t. Retiree Programs 22%
16% 49%
Social Security, 21%
Military
19%
14

15. Income Security
Federal Gov’t. 16% Programs 10%
Interest 6%
Federal Pensions 6%
Off the Table Medicare/Medicaid
65% 22%
Social Security 21%
Military 19%
15

16. 2012 Tax Revenue -> $2,372,150,920,694
Medicare/Medicaid $791,009,579,504
Sources $3.5T
Social Security $743,102,667,904 Tax
Deficit
Revenue
34%
On the Table Military $668,109,289,531 66%
Sequester Federal Gov’t. $579,189,772,239
Income Security $365,605,593,228
Uses $3.5T
Interest $225,030,279,630
If rates increase 2 points as debt Federal Pensions $213,030,279,609 35% 65%
spirals > $20 T, Interest cost will On Off
soar. CBO projects “interest to Minus Expenses $3,585,077,461,645 Table Table
exceed military in 2017”.
2012 Deficit ($1,212,926,540,951)
16

17. 1) Except for Interest, put all expenses On the Table.
2) Graduate qualifying retiree ages and benefits. Use
Actuaries versus One Size Fits All.
3) Bring Simpson-Bowles up for Debate/Edit/Vote.
4) Hurry.
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18. 1. Individuals pay 91% of tax revenue, corporations 9%
2. 37% of income tax paid by the top 1% of income earners
3. A tax rate of 100% on the top 1% funds the negative for 2 months
4. 80% of tax is paid by the top 25%, households earning >$66k
5. 117 Million Households in the U.S. 47% paid no Income Tax in 2012
6. 100 million (1/3rd of population) are enrolled in Medicare/Medicaid
7. 62 million receive Social Security benefits
8. 25 million receive Income Support
9. U.S. borrows $300 per person/month
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