...Entitlement Spending: Clarification On
‘Unfunded’ / ‘Net Responsibilities’
e Unless they are reduced, USA Inc.’s financial liabilities -- whether they are actual debt or the present value of future promises, whether called ‘unfunded’ liabilities or ‘net responsibilities’ and whether funded by dedicated taxes or general revenue — represent significant claims on USA Inc.’s future economic resources.
e To be sure, the projected unfunded liabilities are not the same as debt, because Congress can change the laws that are behind those future promises. With a few exceptions, however, over the past 60 years, lawmakers have acted to boost rather than reduce them.
KP i USA Inc. | Income Statement Drilldown 83
Entitlement Spending: Social Security Funding Has Worked, So Far While
Medicare/Medicaid Are Underfunded by $5.6 Trillion Since Inception in 1965
Annual Real Net Income of Social Security / Medicare / Medicaid, 1940 — 2009
Social Security Reform of 1983 Raised taxes by 2.3%
Reduced benefits by 5%
$100
——— Social Security ——Medicare (Part A/ B/D) $150 -— se a a ae sles ~~ Medicaid :
-$200 ----------------------------------------------------- (Pre Dru g-----------\!-.
1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005
Note: Real net income are inflation-adjusted using White House OMB’s GDP price index (based on BEA’s data); calculated as total revenue (tax receipts,
excluding trust fund interest revenue) minus total expenditures; Medicare Part B / D and Medicaid do not have dedicated funding source. Source: Social
KP Security Administration, White House Office of Management and Budget. (@E) www.kpcb.com USA Inc. | Income Statement Drilldown 84
Annual Net Income of Social Security / Medicare / Medicaid ($B) a ol oO
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