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  • Big Spending, Not Tax Cuts, Drive U.S. Budget Deficits

    The left wants you to believe that we must pass the Obama tax hike because low taxes on wealthy Americans are the cause of our nation’s budget deficits. For example, Speaker Nancy Pelosi (D-CA) told Christiane Amanpour on This Week last month: “I don’t see any reason why we should renew a tax cut that only gives a tax cut to the wealthiest people in America, increases the deficit and doesn’t create jobs.” Don’t believe her.

    According to the Congressional Budget Office (CBO), extending all the 2001 and 2003 tax cuts will place revenues at 18.2% of gross domestic product (GDP), which is actually above the 18% average over the past 50 years. Meanwhile, spending, which has averaged 20.3% of GDP over the past 50 years, is set to explode to 26.5% of GDP by 2020.

    The fact is that rapidly increasing spending will cause 100% of rising long-term deficits. The federal government now spends $30,543 per household compared to $21,875 per household in 2000. Under President Obama’s budget, Washington is projected to spend $3,618 billion, raise $2,118 billion, and run a $1.5 trillion deficit in 2010. If the federal government managed to return to the per-household spending level of the Reagan administration, the budget would be balanced by 2012 without any tax hikes. Or just returning to the per-household spending levels that existed before the current recession would balance the budget by 2019.

    Posted in Economics [slideshow_deploy]

    9 Responses to Big Spending, Not Tax Cuts, Drive U.S. Budget Deficits

    1. Kevin H, College Par says:

      Wow Conn, you are way off base. 100% of the long term deficits are from spending? Incredibly misinformed argument. The bulk of the spending increase on deficit over last 2 years are temporary provisions. In the long-term fiscal picture, the recovery package will barely be a speck of dust of the entire bundle of deficits and debts. You seem to this economic policy ends today and refuse to look down the road (as is habit with GOP).

      Just the wars and the bush tax cuts alone – two major initiatives of the Bush administration – will add $7 trillion to the debt from 2010-2019. This does not include trillions associated with Medicare Part D.

      The fact is, there was a projected suprlus of 6trillion when Bush and Republcians took over WH and Congress. Heritage cites this number over and over in their 2001 papers as reason we can have tax cuts – because deficits don't matter (can you believe Heritage was making this argument?)

      It seems simple enough. Look at the job creation rate under Clinton and the job creation rate under Bush. When Clinton was in office (where the rates were before the Bush tax cuts) job creation was over double that of Bush. Makes it tough to argue the tax cuts create jobs when we have bundles of evidence over last 2 decades that proves they do not. Let's stick the facts.

    2. George Colgrove, VA says:

      Looking at the graph, I think it is neccessary for the GOP to set the year 2000 as the benchmark for reducing and holding federal spending There is little difference between 2008 and today. I would like to even go further by saying we cut to 75% of 2000 spending with accross the board cuts in all departments remaining, with closures of redundant departments. The federal pay system should be contracted out with no more paper statements. They have multiple systems as it is (dept of ag plus the DoD are ones I know about). This is an obvious show of federal waste.

    3. Billie says:

      It's been proven over and over again tax cuts increase government revenue and big incompetent unaccountable, undisciplined, out-of-control, GOVERNMENT SPENDING, WASTES IT!

    4. Pingback: Each US Households Now on the Hook For $30,000 to Pay Off Debt | GovSpend.com

    5. Pingback: Can taxes on the wealthy fix the budget deficit? « Reason Riot

    6. Pingback: 2010 Election Wrap-up — Jeffrey A. Setaro

    7. John T, Olympia WA says:

      The Congressional Budget Office estimated that the Bush Tax Cuts will add $4 tillion to the deficit over the next 10 years. Their mission is to be accurate, not to report a position.

      Your slanted view is not helpful to finding the best solution to problems.

      • tom smith says:

        Its not because of the tax cuts, its because of the spending on entitlement programs. Just think about this real quick, it's common sense. If the government already grossly misuses the money they get now, what will it do when it gets more money? The problem causing the massive deficit comes from government’s money abuse, so giving even more money to them to throw away makes no sense. Liberals are really bad at thinking outside the short-term and planning out the consequences of their views.

    8. Pingback: Thoughts on the Debt Limit Debate — Jeffrey A. Setaro

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