% Higher than GDP Growth 1965 — 2005 USA Real Federal Expenses Growth by Category vs. Real GDP Growth Expenses Growth ‘05 vs. 40-yr 4965YY 2005Y/Y |40-yrCAGR| Variance Comments Entitlement Expenses 12% 3% -3% Entitlement expenses grew 2 percentage points faster than GDP and overall expenses Defense 12 6 4