Though Entitlements Are Structural, Not a Cyclical Problem, Entitlement Outlays Go Up with High Unemployment Real Entitlement Spending Y/Y Growth & Unemployment Rates, 1962 - 2009 EI me a ee =e i es 2 tr tr i a i ne sa = 6 —— Real Entitlement Spending Y/Y wv © —— Unemployment Rate = 15% ON pes mgfg noses menos mame none anna oo gg et Mtoe ag = mo - = z wa mi > 7 ~ 2 ¢ N = 10% ------ --f-4---f-4-----f-f\--------4-----------------------------------f- NS g / \ =) ) I fa 1 08 t\ i] 2 /\ | N uo z ~ o S 0% y a sor ” : | E 86% Correlation Between 1986 & 2009 < Lu $ OE AQ YG wm — moe we eo eo re ne i re ne ee Oo SS co re ng ce Seo ecg eo oo 1962 1966 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 Note: Real spending adjusted for inflation. Fiscal year ends in September. Source: White House Office of Management & Budget, Bureau of Labor Statistics. (@)) www.kpcb.com USA Inc. | What Might a Turnaround Expert Consider? 385 Increase Employment — High-Level Policy Options to Consider Short-run options: 1) Payroll tax holiday and/or 2) Employment tax credit and/or 3) Job training and/or 4) Restore labor mobility by reducing housing imbalances Medium- to long-run options: 1) Reduce employer health care costs and/or 2) Improve vocational training/education and/or 3) Encourage inward foreign direct investment, “onshoring” which would increase domestic employment KP Source: Richard Berner, “Employment Prospects and Policies to Improve Them’ (2/26/10), Morgan Stanley Research. Ce USA Inc. | What Might a Turnaround Expert Consider? 386 HOUSE_OVERSIGHT_021034