Jul 13, 2011 at 12:34 am
While crunching some numbers tonight, I stumbled on this graph. These trends are well known but in the hurly-burly of the head-spinning/maddening budget talks, I was struck by them.
You know the Republican mantra against revenues in the budget talks: “The problem isn’t that Americans are undertaxed; it’s that their government overspends?”
Well, since Reagan, who did actually spend above the historical level, and putting aside the Great Recession for a moment, the problem hasn’t been particularly high levels of spending, at least in historical terms. The problem has been low levels of tax receipts.
Both Reagan and Bush lowered taxes initially (Reagan later raised them—numerous times, in fact). But Reagan and Bush I spent an average of around 22% of GDP while Clinton and Bush II clocked in with averages of around 20%.
But of course revenues tank with the Bush tax cuts, and fall off of the cliff with the Great Recession, when spending rises sharply, both due to automatic stabilizers like unemployment insurance and policies like the Recovery Act.
There’s obviously much more to this analysis then a couple of lines on a graph, but the history of structural (versus cyclical) deficits in recent decades is that they are largely the result of cutting revenues rather than raising spending (and visa-versa–remember Clinton’s budget surpluses).
That doesn’t imply that spending shouldn’t be on the table in the budget talks—though the real pressures come in the future, through health care—whacking food stamps, education, and so on is just plain mean. But it’s awfully hard to look at this graph and see support for that Republican mantra.
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