The document discusses national debt and deficits. It notes that the US national debt was $5.6 trillion in 1999 and $12.8 trillion in 2010. It explains that debt is the accumulation of yearly deficits and surpluses, with deficits added to the debt and surpluses reducing it. The document also discusses "pork barrel" spending projects by Congress and debates around taxation and proportional versus progressive tax systems.

1. Deficits , Surpluses and the Public Debt

2. Is Debt a four letter word?

3. What is the difference between debt and deficit?

4. National Debt $8.8 trillion is enough to: - Give every 18-year-old a 4-year college education for the next 57 years. - Buy up every Super Bowl ticket for the next 100,000 years. - A $1 bill is 6 inches long. If $7.8 trillion bills were laid end to end, they would form a chain 700 million miles long, enough to stretch from the surface of the earth to the surface of the sun and back –5 times.

6. For Example, my wife and I own a home. Well, we really don’t own our home, the bank owns the home until we pay off the loan (mortgage) We are happy in debt, our house gives us a nice place to live and we know our loan will be paid off sometime in the future.

8. Deficits , Surpluses , and the P ublic D ebt

13. DEFICITS AND SURPLUSES 1992 - 2012 Source: Congressional Budget Office $800 700 600 500 400 300 200 100 0 -100 -200 -300 Budget Deficits or Surpluses, Billions 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Actual Projected (as of May 2003)

16. The “ Debt ” and The “Deficit ” Deficit ($1.4 T .) Debt ($12.3 trillion) Reasons for Debt 1. Lack of political will 2. Tax cuts 3. Recessions (transfers) 4. Wartime financing Attention Deficit Hyperactivity Disorder [ADHD] Congressmen have trouble focusing attention on the deficit. $ 12.3

19. Porkmobile

23. O ne G ood T hing Has Come From the Public Debt This is the way we used to get the first cry out of a baby Now we tell them, “You owe $39,000.” (as their share of the public debt) We get the same result – their first cry ; no more of that “ Take that .” We no longer have to hit our newborn to get their first cry. The Debt prevents me from having to do this.

24. The “no” answer entails three points . 1. Refinancing –It refinances the debt by selling new bonds and uses the proceeds to pay off holders of the bonds. 2. Taxation – if bankruptcy were imminent the G could always raise taxes. 3. Creating Money – bankruptcy could be avoided by printing the money ( inflationary ). I’m not paying no $39,000 and I hope you will not either. Economic Implications of the Debt: False Issues [The “G” doesn’t have to pay the entire debt off because it never “dies.” ] [The “G” will live forever so it will keep “rolling it over in perpetuity” ] Going Bankrupt? Whew! $39,000 each. Where our debt comes from?

27. Chapter 18 Figure 18.2 The Crowding Out Effect

30. Term Limits “ If you had a well-paying position that comes with all kinds of perks and opportunities , would you vote to fire yourself ? Is there another position in which you vote to set your own salary ?

31. National Debt Clock 8 $24,000 National Debt Clock $7.9 $26,500 National Debt 8.8 $33,000 per second is added to the National Debt 3 4, and $4 mil per minute . or $1.3 Billion per day $124,000 $26,500

32. Deficits Since 1970

34. Sources of Government Revenue -Today Three major sources of federal taxes (90%) a. Individual income taxes b. Social Insurance c. Corporate income taxes

35. Proportional & Regressive Taxes

36. Think of your income as a L a y e r C a k e . The 1 st layer will not be taxed at all. ( $7,150 for singles) In the 2 nd layer , taxable income starts at 10% up to $14,350 . The 3 rd layer starts at 15% up to $29,050 . The 4rth layer starts at 25% up to $70,350 . The 5 th layer starts at 28% up to $146,750 . The 6 th layer starts at 33% up to $319,100 . The 7 th layer starts at 35% for those over $319,100 . With a tax cut, high earners not only get a tax cut on the top layer but all layers. Our Progressive Tax System Is Like A L a y e r e d C a k e 35% over $319,100 No tax on 1 st $7,150 10% up to $14,350 15% up to $29,050 25% up to $70,350 28% up to $146,750 33% up to 319,100

37. The Seven States With No Income Tax

38. State Sales Tax

42. Changes in Marginal Tax Rates 35% 2000 1990 1980 1970 1960 1950 1940 1930 1920 Top tax rate, in percent 100% 80 60 40 20 0

43. Marginal Tax Rate 1913-2005 Top Marginal Tax Rates Year Tax Rate 1900 No Tax 1914 1% [over $3,000] [Only 1 in 270 paid this tax at all] 1930 30% [1 in every 32 was now paying taxes] 1940 81% [1 in every 3 was paying taxes] 1943 * Paycheck withholding (by the boss) was launched to stop cheating. 1950 91% 1970 70% [E veryone was paying with taxable Y] 1980 70% 2002 38.6% 2005 35% Medicare tax – 1.45% for an individual [ 2.9% for self employed ] for every dollar earned . Harrison Ford – received $25 million for 20 days work on a movie . 1.45% of $ 25 million = $362,500 x 2 = $725,000 medicare tax. [Over his 35 years on the Big Screen, his films grossed over $10 bil . Jim Carrey – gets $20 million per movie, so his tax is $580,000 . [1.45% of $20 million = $290,000 x 2 = $580,000 .]

44. Nation’s Wealthiest 5 % Pay 55 % of Income Taxes Ave. Tax Rate Top 1 % ($293,000) paid over 1/3 of all taxes – average 28% Top 5 % (+ $121,000; 6.3 mil.) paid 55% - average 24% Top 10 % (+80,000) paid 62% of all taxes – average 21.4% Top 25 % (+$50,000) paid 81% of all taxes – average 18% Top 50 % (+$25,000) paid 96% of all taxes – average 16% Bottom 50 % (63 mil. earned -$23,000) paid o nly 4 % of all taxes. There are 7.5 million millionaires & 341 billionaires . [691 in world] 40 millionaires are in the U.S. Senate

45. Billionaires of the World in 2003 [The U.S. has 50%] 691 in 2004 Worth 2.2 T [341 in U.S.]

47. Federal Expenditures Pensions and Income Security National Defense Health Interest on Public Debt Pensions & Income Security 38% National Defense 17% Health 21% All Other 15% Interest 13% 2002 Data Total Expenditures $2,011 Billion

48. $412

49. 0 20 40 60 80 100 120 140 Japan Italy Belgium Canada France Spain Sweden Germany United States Netherlands United Kingdom Finland Denmark Australia GLOBAL PERSPECTIVE Public Sector Debt as a percent of GDP, 2002 Source: Organization for Economic Cooperation and Development