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Budget
Chart
Book
The Federal Budget in Pictures
2010 Budget Chart Book
The Federal Budget in Pictures
The federal budget is on an unsustainable course the debt to skyrocket as Debt and Deficits Chart 3
with red ink as far as the eye can see, so it is especially (National Debt Set to Skyrocket, p. 26) illustrates.
important for Americans to understand spending, The main reason America finds itself on a
Federal taxes,Spending
and debt. perThe Household
HeritageIsFoundation’
Skyrocketing s Budget precipice of disastrous deficits is from spending
The federal government is spending more on a per-household basis than ever before.
Chart Book is a user-friendly way to learn about the on the three major entitlements—Social Security,
federal budget in pictures.
INFLATION-ADJUSTED DOLLARS (2009)
Medicare, and Medicaid. As Entitlements
$40,000
As Federal Spending Chart 1 (Federal $31,088 $36,139 Chart 2 (Entitlement Spending Will More
$35,000Spending per Household Is Skyrocketing, Than Double by 2050, p. 35) shows, these
$30,000
p. 2, at right) shows, spending has been programs will double in size in a few
on the rise—even before the recession decades. But Chart 10 (Spending Cuts
$25,000
and stimulus bill—and will continue to Alone Will Not Pay for Rising Entitlement
Actual Projected
$20,000climb steeply under President Obama. Spending, p. 43) explains spending cuts
$11,337
Washington is planning to pay alone can’t pay for entitlements, and the
$15,000
Federal Spending Chart 1
for this and more spending with level of taxes, shown in Chart 8
$10,000tax hikes, but as Federal Revenue Charts 1 and (Paying for Entitlements with Tax Increases Would Cause
$5,0009 (Taxes per Household Have Risen Dramatically, p. Tax Rates to Double, p.41), required to pay for the
14; and Total Tax Burden Is Rising to Highest LevelsActual programs would devastate the economy.
in Projected
0
History,
1965
p.
1970
22) reveal,
1975 1980
taxes1985
are already
1990 1995
a hefty
2000
burden
2005 2010
Tough
2015 2020
policy choices and strong entitlement
and will reach unprecedented levels in the future.
Source: U.S. Census Bureau, White House Office of Management and Budget, and Congressional Budget Office.
reforms are necessary to get the budget back on
Yet spending continues to grow
Inflation-Adjusted Dollars (2009)
federal-spending-per-household
far faster than track,
Federal Spending Chart 1 • 2010 Budget Chart Book
and
heritage.org
the Budget Chart Book will help you
revenues, creating record deficits. President Obama’s appreciate the size and scope of the decisions
annual deficits will add more to the federal debt than policymakers must enact to protect America’s
every other president before him combined, causing fiscal future.
Table of Contents v
Page
FEDERAL SPENDING
Federal Spending per Household Is Skyrocketing..................................................................................................2
Federal Spending Is Growing Faster Than Federal Revenue..................................................................................3
Recent Spending Hikes Are Not Limited to Temporary Emergencies.....................................................................4
Federal Spending Grew More Than Eight Times Faster Than Median Income......................................................5
Federal Spending Is Outpacing Inflation................................................................................................................6
Mandatory Spending Has Increased Nearly Five Times Faster Than Discretionary Spending................................7
Entitlement Spending and Interest Payments Are Squeezing Out Other Programs . .............................................8
Total Government Spending Has More Than Doubled Since 1965........................................................................9
Defense Spending Has Declined While Entitlement Spending Has Increased......................................................10
Obama’s Budget Would Reduce National Defense Spending . .............................................................................11
Earmark Spending Continues Despite Change in Congressional Leadership.......................................................12
FEDERAL REVENUE
Taxes per Household Have Risen Dramatically....................................................................................................14
The Top 10 Percent of Earners Paid 71 Percent of Federal Income Tax...............................................................15
Federal Government Revenues Have More Than Tripled Since 1965..................................................................16
Federal Revenues by Source.................................................................................................................................17
Recession Pushes Current Tax Receipts Below Historical Average........................................................................18
Income Tax Receipts Stay Constant Even as Tax Rates Decline............................................................................19
Corporate Income Tax Receipts Stay Constant Even as Tax Rates Decline...........................................................20
U.S. Top Corporate Tax Rate Exceeds the OECD Average....................................................................................21
Total Tax Burden Is Rising to Highest Level in History.........................................................................................22
vi Table of Contents
Page
DEBT AND DEFICITS
Obama’s Budget Would Send Federal Debt to Levels Not Seen Since World War II............................................24
Debt in Obama’s Budget Exceeds Congressional Budget Office Baseline..............................................................25
National Debt Set to Skyrocket.............................................................................................................................26
Obama’s Budget Would Create Unprecedented Deficits.......................................................................................27
Federal Budget Deficits Will Reach Levels Never Seen Before in the U.S.............................................................28
Entitlement Reform Would Eliminate Long-Term Deficits...................................................................................29
Net Interest Spending Will Quadruple over the Next Decade..............................................................................30
The Monthly Interest Payment on the National Debt Is More Than Most Program Spending.............................31
ENTITLEMENTS
Entitlements Will Consume All Tax Revenues by 2052........................................................................................34
Entitlement Spending Will More Than Double by 2050......................................................................................35
Social Security Spending Will Soon Rise Rapidly.................................................................................................36
Medicare and Medicaid Spending Will Rise with Increasing Health Care Costs...................................................37
Entitlement Debt Dwarfs Other Spending, Including Bailouts ............................................................................38
Without Entitlement Reform, Federal Spending Could Consume More than Two-Fifths of GDP by 2055.........39
Repealing Tax Cuts and Not Fixing AMT Will Not Balance the Budget...............................................................40
Paying for Entitlements with Tax Increases Would Cause Tax Rates to Double ..................................................41
Balancing the Budget Would Cause Taxes to Skyrocket ......................................................................................42
Spending Cuts Alone Will Not Pay for Rising Entitlement Spending...................................................................43
The Roadmap for America’s Future Could Solve the Long-Term Budget Problem...............................................44
Federal Spending
The government is spending at unprecedented levels, posing an
expensive threat to limited government.
Page
2
Federal Spending per Household Is Skyrocketing
The federal government is spending more on a per-household basis than ever before.
INFLATION-ADJUSTED DOLLARS (2009)
$40,000
$31,088 $36,139
$35,000
$30,000
$25,000
$20,000
$11,337
$15,000
$10,000
$5,000
Actual Projected
0
1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020
Source: U.S. Census Bureau, White House Office of Management and Budget, and Congressional Budget Office.
Inflation-Adjusted Dollars (2009)
$4 trillion
$3.69 trillion
Est. 2010
$3 trillion Spending deficit:
$1.54
trillion
$2 trillion
$2.15 trillion
Revenue
$1 trillion
0
1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
(est.)
Source: White House Office of Management and Budget.
Inflation-Adjusted Billions of Dollars (2009)
0
1990 1995 2000 2005 2010 2015 2019
Source: Heritage Foundation calculations based on White House Office of Management and Budget data.
Inflation-Adjusted Billions of Dollars (2009)
150%
Total Federal
Spending
100% 1970 $39,403
2008 $50,893
Median
50% Household +29%
Income
0
1970 1975 1980 1985 1990 1995 2000 2005 2008
Source: U.S. Census Bureau and White House Office of Management and Budget.
Inflation-Adjusted Dollars (2009)
15%
Federal Spending
Inflation
Average Change Average
10% in Federal Change in +9.3%
Spending: Inflation: +7.9% +7.8%
+5.6% +2.6% +7.4% +7.4%
+6.2%
5%
0 –0.4%
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Source: White House Office of Management and Budget and Bureau of Labor Statistics.
Year-to-Year Percentage Change
$3.0 trillion
$2.5 trillion
$2.0 trillion
$604 billion
$1.5 trillion
Mandatory
$1.0 trillion Spending
10% 10%
Net Interest
Net Interest
5% 5%
Discretionary Defense
Spending 6.6% 3.5%
Other Discretionary 1.0%
0 0
2012 2015 2020 2012 2015 2020
Source: Heritage Foundation calculations based on White House Office of Management and Budget data.
Percentage of GDP
$40,000
$30,000
$17,440
State and Local
Spending
$20,000
Federal
Spending
$10,000
0
1965 1970 1975 1980 1985 1990 1995 2000 2005 2009
Source: U.S. Census Bureau, White House Office of Management and Budget, and 2010 Economic Repor t of the President.
Inflation-Adjusted Dollars (2009)
National
Defense
4% 2.5%
22.
.55%
5%
4.9%
.9%
%
2%
1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
(est.)
Source: White House Office of Management and Budget.
Percentage of GDP
10% 9.5%
8%
6.2%
6% 4.9%
44.9
.9%
9% 33.5%
.5%
45-Year Average: 5.3%
4% 3.0%
Actual Projected
2%
0
1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
3,000
$5
0 0
1991 1995 2000 2005 2010 1991 1995 2000 2005 2010
Source: Citizens Against Government Waste and Taxpayers for Common Sense.
Billions of Dollars and Numbers of Projects
$25,000 $23,947
$23,947 $16,543
$20,000
$10,000
$5,000
0
1965 1970 1975 1980 1985 1990 1995 2000 2005 2009
26%–50%
This Level 11%–25%
of Income Top 1% 2%–5% 6%–10%
Earners ...
$2.5 trillion
$2.0 trillion
Total Revenue
$1.5 trillion $927.4 billion
Individual Social
($915.3 billion) Insurance
($890.9 billion)
43.5% 42.3%
18%
30-Year
16% Average:
18.2%
14%
14.4%
14.8%
12%
1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
(est.)
Source: White House Office of Management and Budget.
Percentage of GDP
60%
50%
39.6%
40% 35%
Individual
20% Tax Receipts
7.8% as % of GDP 9.4% 9.2% 7.7% 6.4%
0
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
(est.)
Source: White House Office of Management and Budget and the Tax Foundation.
Tax Rates and Receipts as a Percentage of GDP
20% Corporate
Income Tax
10% Receipts as
4.1% % of GDP
1.4% 1.8% 1.1%
0
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
(est.)
Source: White House Office of Management and Budget and the Tax Foundation.
Tax Rates and Receipts as a Percentage of GDP
18%
Extend Tax Cuts
30-Year Historical and Fix AMT
16% Tax Burden: 18.2%
14%
1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2055
Source: Heritage Foundation calculations based on Congressional Budget Office and White House Office of Management and Budget data.
Percentage of GDP
60% 400.
440.8%
00.888%
%
40%
20% Obama’s
Budget
0
1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020
Source: Congressional Budget Office and White House Office of Management and Budget.
Percentage of GDP
obama-budget-skyrocketing-debt Debt and Deficits Chart 1 • 2010 Budget Chart Book heritage.org
Debt in Obama’s Budget Exceeds Page
25
Congressional Budget Office Baseline
Debt as a share of the economy is rising. Whether current law continues or Obama’s budget is passed,
the debt will be more than two-thirds of annual GDP in just 10 years.
DEBT AS A PERCENTAGE OF GDP
90.0%
90%
Obama’s
80% Budget
70%
60% Current
Average, 1980–2009: 39.4% Law 67.5%
50%
26.1%
40%
30%
Actual Projected
20%
1980 1985 1990 1995 2000 2005 2010 2015 2020
Source: Congressional Budget Office and White House Office of Management and Budget.
Percentage of GDP
obama-debt-increase-above-CBO Debt and Deficits Chart 2 • 2010 Budget Chart Book heritage.org
Page
26
National Debt Set to Skyrocket
In the past, wars and the Great Depression contributed to rapid but temporary increases in the national debt.
Over the next few decades, runaway spending on Social Security, Medicare, and Medicaid will drive the debt
to unsustainable levels.
200% 180.6%
150%
World
War II
108.6%
110
00888.666%
08. %
100%
War on
W
World
r h Great
The Terrorism
Te m
Warr I Depression
e
50%
0
1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 2030
Source: Heritage Foundation compilations of data from U.S. Depar tment of the Treasury, Institute for the Measurement of Wor th
(Alternative Fiscal Scenario), Congressional Budget Office, and White House Office of Management and Budget.
Percentage of GDP
national-debt-skyrocket Debt and Deficits Chart 3 • 2010 Budget Chart Book heritage.org
Obama’s Budget Would Create Unprecedented Deficits Page
27
The President is responsible for submitting an annual budget to Congress and has the authority to veto legislation
including irresponsible spending. Most Administrations ran small but manageable deficits, but President Obama's
unprecedented budget deficits pose serious economic risks.
BUDGET DEFICITS AS A PERCENTAGE OF GDP, BY ADMINISTRATION
Kennedy Johnson Nixon Ford Carter Reagan Bush Clinton Bush Obama
0
– 0 .1%
–1%
–1.0% – 0 .9%
–2% –1.6%
–3% –2.4%
–4% –3.5% –3.2%
–5% – 4.3% – 4 .3%
–6%
–7%
–8%
–7.8%
(est.)
Source: White House Office of Management and Budget.
Percentage of GDP
budget-create-deficits Debt and Deficits Chart 4 • 2010 Budget Chart Book heritage.org
Page
28
Federal Budget Deficits Will Reach Levels
Never Seen Before in the U.S.
Recent budget deficits have reached unprecedented levels, but the future will be much worse. Unless entitlements
are reformed, spending on Social Security, Medicare, and Medicaid will drive deficits to unsustainable levels.
PERCENTAGE OF GDP
50%
45.3%
40%
%
30%
%
Average
Historical
20%
% 11.0%
111.0
1.00%
0% Deficit: 2.9%
10%
%
–2.2%
2 2%
–10%
1962 1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080
federal-budget-deficits Debt and Deficits Chart 5 • 2010 Budget Chart Book heritage.org
Entitlement Reform Would Eliminate Long-Term Deficits Page
29
In January 2010, Representative Paul Ryan (R–WI) re-introduced the Roadmap for America’s Future, legislation that
would improve America’s long-term budget situation by reforming entitlements. Compared to the current trajectory,
the bill would eliminate long-term deficits.
SURPLUS/DEFICIT AS A PERCENTAGE OF GDP
10%
+5%
+1.9%
2009 2010 2020 2030 2040 2050 2060 2070 2080 2009 2010 2020 2030 2040 2050 2060
0
–0.6% 2070 2080
–2.6%
–3.8% –4.8% –4.5%
–10% –7.6% –7.4% –7%
–11% –12.1% –11%
–20% –17.2%
–22.3% Rep. Ryan’s Roadmap
for America’s Future
–30% –28%
–34.9%
–40%
Current –42.8%
Projections
–50%
entitlement-reform-eliminates-deficits Debt and Deficits Chart 6 • 2010 Budget Chart Book heritage.org
Page
30
Net Interest Spending Will Quadruple over the Next Decade
As the national debt grows, interest payments will consume more and more of the federal budget. Under the
President’s budget, the national debt would nearly double and real net interest costs would quadruple over the
next decade.
INFLATION-ADJUSTED DOLLARS (2009)
$800 billion $768.2 billion
$600 billion
$200 billion
Actual Projected
0
1990 1995 2000 2005 2010 2015 2020
Source: White House Office of Management and Budget.
Inflation-Adjusted Billions of Dollars (2009)
budget-net-interest-spending Debt and Deficits Chart 7 • 2010 Budget Chart Book heritage.org
The Monthly Interest Payment on the National Debt Page
31
Is More Than Most Program Spending
In 2009, the U.S. spent more on interest payments on the debt in one month than it spent on some federal
departments for the entire year.
2009 SPENDING, IN BILLIONS OF DOLLARS
$50 $46.8
$43.6 $42.6
$40
$31.9
$30 $27.0
$20
$14.3
$10
$10.0
0
Department Department Department Average Department Department Environmental
of Education of Housing of Homeland Monthly of Agriculture of Labor Protection
and Urban Security Interest Agency
Development Payment
Source: U.S. Depar tment of the Treasury and White House Office of Management and Budget.
Billions of Dollars
interest-spending Debt and Deficits Chart 8 • 2010 Budget Chart Book heritage.org
Entitlements
Social Security, Medicare, and Medicaid spending is about to
explode, placing enormous pressure on the budget.
Page
34
Entitlements Will Consume All Tax Revenues by 2052
If future taxes are held at the historical average, spending on Medicare, Medicaid, and Social Security will consume
all revenues by 2052. Because entitlement spending is funded on autopilot, no revenue will be left to pay for other
government spending, including constitutional functions such as defense.
PERCENTAGE OF GDP
15% Social
Security
10%
2.7% Medicare
5%
Medicaid
0
1965 1975 1985 1995 2005 2015 2025 2035 2045 2055 2065 2075 2083
Source: Congressional Budget Office.
Percentage of GDP
7% 6.0% 6.2%
6%
4.4%
1.7 percentage point
increase from
5% 2009 to 2031
4%
4.3%
3%
2%
1%
Actual Projected
0%
1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2055 2060 2065 2070 2075 2080
15%
2.9%
3.5%
Medicaid
10% Medicare
4.7%
0
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
(est.)
Source: Congressional Budget Office.
Percentage of GDP
Medicare
$37.9 trillion
National
Total Stimulus Defense TARP
National Debt
Social Security $862 $714 $700
$12.4 trillion
$7.7 trillion billion billion billion
Source: U.S. Depar tment of the Treasury, U.S. Government Accountability Office, and Congressional Budget Office.
Billions of Dollars
Medicare
0
2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2055
20% Defense
15% Social
Security
10%
Medicaid
5% Medicare
0
2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2055
Source: Congressional Budget Office (Extended Baseline Scenario).
Percentage of GDP
100%
88% 88%
80%
Social
15% Security
Revenue
Medicaid
10%
5% Medicare
0
1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2055
Source: Heritage Foundation calculations based on Congressional Budget Office data (Alternative Fiscal Scenario).
Percentage of GDP
Entitlements
Global War (Social Security,
on Terrorism Medicaid, Medicare)
$130 $1.4 trillion
Pork billion
earmarks NASA
$15.9 $18.3
billion billion
25% Tax
Revenue
20%
Net
15% Interest
All Other
10% Spending
5% Entitlements
0
2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2055 2060 2065 2070 2075 2080
Source: Congressional Budget Office.
Percentage of GDP
Nicola Moore
Assistant Director
Thomas A. Roe Institute for Economic Policy Studies
Steve Keen
Research Assistant
Thomas A. Roe Institute for Economic Policy Studies
John Fleming
Senior Data Graphics Editor
Technical Notes
The charts in this book are based primarily on data available as of March 2010 from the Office of
Management and Budget (OMB) and the Congressional Budget Office (CBO). The charts using OMB data
display the historical growth of the federal government to 2009 while the charts using CBO data display
both historical and projected growth from as early as 1940 to 2083. Projections utilizing OMB data are
taken from the White House FY 2011 budget.
The charts provide data on an annual basis except where computations are made for Administration
averages. As a corollary, all spending and revenue data are based on a fiscal year. However, for the purpose
of simplicity, they are treated as calendar years in the charts. Prior to 1976, the fiscal year was from July
1 to June 30. Following that year, the current format of October 1 to September 30 was implemented. In
the charts, the transition is omitted for clarity. Also, in all charts in which spending or revenue is mea-
sured by taxpayer, taxpayers are counted as the number of individual income tax returns filed (according
to data from the Internal Revenue Service) per year. Thus, married couples that both work but file a joint
return are counted as a single combined-income unit. Most of the data are adjusted for inflation in 2009
dollars. Furthermore, specific information regarding data is indicated at the bottom of each chart.
Charts designating Presidential Administrations begin with the fiscal year in which the Administra-
tion presented its first budget. In the case of 2009, an atypical year in which much was spent before the
Administration’s first fiscal year budget (FY 2010), all revenue and spending up to the CBO January 2009
“Budget and Economic Outlook” was attributed to President Bush. All revenue and spending thereafter is
attributed to President Obama.
The Entitlements Initiative is one of 10 Transformational Initiatives making up The Heritage
Foundation’s Leadership for America campaign. For more products and information related to this initia-
tive or to learn more about the Leadership for American campaign, please visit heritage.org.
The Heritage Foundation is a research and educational institution—a think tank—whose mission is
to formulate and promote conservative public policies based on the principles of free enterprise, limited
government, individual freedom, traditional American values, and a strong national defense.
Our vision is to build an America where freedom, opportunity, prosperity, and civil society flourish. As
conservatives, we believe the values and ideas that motivated our Founding Fathers are worth conserving.
As policy entrepreneurs, we believe the most effective solutions are consistent with those ideas and values.
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