1. The Budget and Entitlements: Time to Take Action David John The Heritage Foundation

2. Federal spending will more than double, driven by Medicare, Medicaid and Social Secuirty

3. The “Big Three” Entitlements Will Grow Dramatically As Nation Ages

4. Absent action under current law deficits not a problem soon – but then skyrocket to unprecedented levels

5. Entitlements will crowd out everything else and collide with historical long-term level of taxes

6. Even eliminating defense will not solve the problem

7. Bush 2008 Medicare proposal has significant savings—trimming 2014 long-term costs

8. 2008 House Budget: No Entitlement Savings, but huge tax increases

9. Projected Federal Tax Revenue for Three Tax Policy Scenarios as a Percentage of GDP But under current law taxes will rise sharply thanks to pre-Bush laws, despite Bush tax changes

10. Raising revenue to balance the budget would lead to European level taxes

11. But European-level taxes = European-level growth

12. Slow European-style growth = Lower incomes in US

13. Slow European-style growth = Unemployment

14. Conclusion: Take Action on Retirement Entitlements Amend the Medicare drug bill Raise the retirement age Target Medicare and Social Security to those with most need Transform entitlements into 30-year budgeted programs, balanced against other needs Measure impact of policy changes on long- term obligations