1. Ignored Crisis: A Looming Wave of Debt
160
2030: 146%
140
120
Debt as a % of GDP
100
80
Today: 62%
60
40
20
0
1960 1970 1980 1990 2000 2010 2020 2030
Sources: Office of Management and Budget Historical Tables, Congressional Budget Office Alternative Fiscal Scenario
18

2. Widening Gap Between Spending and Revenue
28.0
26.0
24.0
2020
Gap:
22.0
$1.25
% of GDP
20.0 Trillion
18.0
16.0
14.0
Revenue
12.0 Spending
1960 1970 1980 1990 2000 2010 2020
Sources: OMB Historical Tables (1940‐2009), Congressional Budget Office's Long‐Term Budget Outlook Alternative Fiscal Scenario
17

3. Washington “Budgeting”
• In 2008, average TN household earned $43,000
• Using Washington logic, they would spend $74,000
• That’s $31,000 more than they earn
• Must borrow 40 cents for every dollar they spend
16

4. 1970 Spending
Interest Mandatory Spending
Payments: (Medicare, Medicaid,
$63 billion Social Security):
7% $279 billion
31%
62%
Discretionary Spending
(Defense, Highways,
Education): $558 billion
In Current Dollars
Source: Congressional Budget Office
15

5. 2010 Spending
Interest Mandatory Spending
Payments: (Medicare, Medicaid,
$209 Billion Social Security):
6% $2.03 Trillion
42%
52%
Discretionary Spending
(Defense, Highways,
Education): $1.38 Trillion
Source: Congressional Budget Office
14

6. 2035 Spending
Interest Mandatory Spending
Payments: (Medicare, Medicaid,
$2.27 Trillion Social Security):
$4.46 Trillion
25%
49%
26%
Discretionary Spending
(Defense, Highways,
Education): $2.43 Trillion In Current Dollars
Source: Congressional Budget Office, Alternative Fiscal Scenario
13

7. Debt Isn’t Free:
Putting 2009 Costs Into Perspective
200
187
180
160
Billions of $
140
120
100
80 69
60 49 45 44
40 30
20 12
0
Net Interest Dept of Dept of Dept of Dept of TN State Dept of Labor
Transportation Homeland Education Housing Budget
Security
Sources: President’s FY’11 Budget, CBO, TN 2010‐11 Budget 12

8. Debt Isn’t Free:
Putting 2020 Costs Into Perspective
1000
916
900
800
Billions of $
700
600
500
400
300
200
83 59 54 52
100 35 14
0
Net Interest Dept of Dept of Dept of Dept of Housing TN State Budget Dept of Labor
Transportation Homeland Education
Sources: President’s FY’11 Budget, CBO, TN 2010‐11 Budget
Security
Sources: President’s FY’11 Budget, CBO, TN 2010‐11 Budget 11

9. Who Owned America’s Debt in 1960?
Total Publicly Held Debt: $236.8 Billion
Foreign
Holders:
$13 Billion
(5%)
Domestic
Holders:
$223.8 billion
(95%)
Source: OMB and Department of the Treasury
10

10. Who Owns America’s Debt in 2010?
Total Publicly Held Debt: $8.8 Trillion
Foreign
Domestic Holders: Holders:
$4.7 Trillion $3.9Trillion
(54%) China Owns:
(46%)
$876 Billion
(10%)
Source: Department of the Treasury, Federal Reserve Board
9

11. Plenty of blame
to go around.
8

12. Historical Context
Spending: 20.3% of GDP over the
last 50 years
Revenue: 18.0% of GDP over the
last 50 years
7

13. What is Right Amount of
Spending?
21% of GDP: Erskine Bowles
20.3% of GDP: 50-year Average
18% of GDP: Balanced Budget
6

14. Getting Spending Back to a Balanced Budget:
$6.7 Trillion Reduction in Spending Over Ten Years
28.0
26.0
24.0
Tough
% of GDP
22.0
Medicine:
20.0 $6.7
18.0 Trillion
16.0
Revenues as % of GDP
14.0
Outlays as % of GDP
12.0
1960 1970 1980 1990 2000 2010 2020
Getting to 21% of GDP would be $3.4 Trillion
Getting to 20.3% of GDP would be $4.5 Trillion
5

15. $670 billion a year
is about what we spend
on ...
4

16. Fundamentally change
the way Washington does
business
3

17. A construct that forces
us to cap spending and
incentivize growth
2

18. We should not leave our
children and
grandchildren with this
crippling debt
1