U.S. Representative Todd Rokita

Your Freedom, Your Family, Your Future

Imagine A Company

• ... With NEGATIVE cash flow for the past 9 years – and the majority of the last 50 before that

•  • ...NEGATIVE Net Worth for

as long as anyone can remember

•  • ... Needs 20 years of

income to pay off its existing debts

•  • Would You Invest?

Budget Deficits as a Percentage of GDP, by Administration

“Debt Day”

Source: Office of Management and Budget, President’s Budget FY 2012

All spending after July 27 of this year is borrowed spending.

THE FEDERAL GOVERNMENT IS BORROWING MORE THAN 42 CENTS OF EVERY DOLLAR IT SPENDS

Source: Office of Management and Budget, President’s Budget FY 2012

We’ve borrowed and have held debt in the past…..why is it a problem now???

Source: Congressional Budget Office, Office of Management and Budget

America’s Foreign Debt Reality

With the interest we pay to China on our debt, China can afford to buy 3 new Joint Strike Fighters every week – with $50 million/week left over.

Source: U.S. Department of Treasury, Government Accountability Office

TAKE A CLOSER LOOK

1941 1947 1953 1959 1965 1971 1977 1983 1989 1995 2001 2007 2013 2019 2025 2031 2037 2043 20490%

50%

100%

150%

200%

250%

300%

Tidal Wave of DebtDebt Held by Public as

Share of EconomyCURRENT POLICY

2011WWII

Source: Congressional Budget Office, Office of Management and Budget

THE COST OF WAITING – THE FISCAL GAPUNFUNDED PROMISES IN TRILLIONS OF DOLLARS

2009 2010 20110

10

20

30

40

50

60

70

80

90

$62.9 Trillion

$76.4Trillion

$88.6Trillion

IN T

RILL

ION

S O

F D

OLL

ARS

SOURCE: GAO

FALSE SOLUTIONS

1.) Taxing the Rich2.) Cutting the Stuff we don’t like3.) Cut Defense

FALSE SOLUTION #1

• THE PROBLEM OF JUST TAXING THE RICH• 1.)The top 1% of taxpayers, those with salaries, dividends, and capital gains roughly

at $380,000-----paid 38% of taxes.

• 2.)Suppose you tax all the billionaires and millionaires at 100%...you confiscate all their taxable income….even this only yields about 900 Billion, which is a drop in a bucket amid a 4 trillion dollar budget, and a 1.65 trillion deficit.

• 3.)The top 10%, or everyone with income over $114,000, including joint filers,

already pay 69% of all total income taxes. • The reality is that in the absence of entitlement reform, WASHINGTON will need to

tax the MIDDLE CLASS even more…because that’s where the big money is.

• And even if the middle tax is taxed more, it still won't pay the debts due to be incurred in the future under current spending plans.

Source: Office of Management and Budget Historic Tables, Congressional Budget Office; projections based on the CBO’s Alternative Fiscal Scenario.

1947 1952 1957 1962 1967 1972 1977 1982 1987 1992 1997 2002 2007 2012 2017 2022 2027 2032 2037 2042 2047 2052 2057 2062 2067 2072 2077 208210

20

30

40

50

60

70

80

We Are In A Spending-Driven Debt CrisisHistoric/Projected Spending & Revenue

As A Percentage Of The Economy

Spending Tax Revenue

FALSE SOLUTION #1

FALSE SOLUTION # 2

FALSE SOLUTION # 3

Solutions that Work• Medicare:• Transfer from a defined benefit, fee-for-service structure to

a defined contribution structure, and require an aggressive means test. It offers:

• CHOICE• COMPETITION• PATIENT CONTROL• FREE MARKET PRINCIPLES• LOWER COSTS• NO CHANGES FOR CURRENT BENEFICIARIES

• Social Security:• Index the normal age retirement (NRA) to longevity

standards, and require an aggressive means test. It offers:

• COMMON SENSE APPROACH• GRADUAL INCREASE• SOLVE LONG TERM SHORTFALL

•

More Solutions that WorkAnother Solution: Grow The EconomyHow do we do this?1.) Lower Taxes2.) Deregulate Business3.) More Domestic energy productionResults: HIGHER PERCENTAGE OF GDP GROWTHConclusion:--Growing our economy beyond the average rate, combined with other reforms, would reduce our debt faster.--The best way to do this is by:1.) Lowering taxes and simplifying the tax code2.) Removing job killing regulations and overzealous bureaucracies from the private, productive sector of our economy3.) Producing more domestic energy