President Obama can now proudly claim the four largest deficits in modern history. As a share of GDP, the deficit fell to 7% last year, which was still above any single year of the Reagan Presidency, or any other year since Truman worked in the Oval Office.
McCain would have had the four largest deficits too. Unless you think he'd have responded to the recession by allowing the Bush tax cuts to expire and cutting spending.
Mr. Obama won't want you to know this, but this revenue increase is occurring under the Bush tax rates that he so desperately wants to raise in the name of getting what he says is merely "a little more in taxes."
Why wouldn’t he want you to know this? Gross revenues are increasing because GDP is growing. That would be happening this year even if the Bush tax cuts were twice as large. Do you think I don’t understand basic math, WSJ? Show me the revenues as percentage of GDP. That’s where to focus, and compare that to outlays as percent of GDP. The idea is to narrow that gap, and you need increased revenue to get there. And not just increased as in last year tax revenue was $100, this year it’s $101. Increased revenue as percentage of GDP.
Imagine the gusher of revenue the feds could get if government got out of the way and let the economy grow faster.
Ah, yes, just imagine the gusher. This means nothing. If you have a proposal, tell me what it is. But talking about imaginary revenue gushers if only the government would “get out of the way” (whatever that means) is a waste of my time. Hey, OU sucks.
Now let's look at outlays, which declined a bit in 2012. That small miracle was achieved thanks to a 4% fall in defense spending, a 24% fall in jobless benefits, and an 8.9% decline in Medicaid spending.
Whoa, whoa, whoa. Outlays declined? How can that be? Socialist Obama is a spend-a-holic, right? So you’re telling me that as the economy improves, the government pays out less in welfare payments like jobless benefits and Medicaid? (And as we end the Iraqi Adventure military costs drop?) Wait, so did spending on those welfare programs rise because of the recession, like automatically? But I thought welfare spending rose because Obama is a socialist and just wants to give handouts to the 47%. So why is Washington paying out less in food stamps? Is the Food Stamp President napping on the job and needs to be docked a day's pay?
One way to think about this is that most of the $830 billion stimulus of 2009 has now become part of the federal budget baseline. The "emergency" spending of the stimulus has now become permanent, as we predicted it would.
Yeah, that is one way to think of it, except that it’s not at all accurate. The stimulus hasn’t become part of the budget baseline. Luckily, most people don’t look at budgeting baselines or understand what that means. Go look at the line items from the stimulus and see if they’re being repeated in each successive year, and projected to increase for inflation & demographic trends. Oh, they’re not? That’s because the stimulus isn’t part of the federal baseline budget. You can think about it however you want, though. It's a free country.
When Beltway politicians claim they want a "balanced" approach to reducing the deficit, what they really mean is raising taxes to finance this new higher spending level.
I don’t know which Beltway politicians you’re talking about, but generally a "balanced" approach refers to a mixture of increased revenue (tax hikes) and spending cuts to stabilize the deficit. But it has zero to do with the stimulus in the way you’re suggesting.
The reality is that the fastest way to raise revenue is with faster economic growth. To the extent that raising tax rates will reduce the rate of growth, it will slow the flow of tax revenue and increase the deficit.
I see what you’re doing here. The “to the extent” clause is sneaky, but you’re disingenuously suggesting that a tax increase will actually result in less revenue, which is simply false. It's like the tax-cuts-pay-for-themselves fantasy, but in reverse.
Even if Mr. Obama were to bludgeon Republicans into giving him all of the tax-rate increases he wants, the Joint Tax Committee estimates this would yield only $82 billion a year in extra revenue. But if growth is slower as a result of the higher tax rates, then the revenue will be lower too.
Same as above.
So after Mr. Obama has humiliated House Republicans and punished the affluent for the sheer joy of it, he would still have a deficit of $1 trillion.
Because allowing the top bracket to revert back to 39.6% can only be motivated by a desire for public humiliation, malice and class hatred. Attributing evil motives to the other side is a great way to reinforce a sense of your side's moral superiority, but it is counter-productive to grown-up discourse of fiscal policy.
Most of our readers know all this, but we thought you'd like some new evidence to rebut the kids who voted for your taxes to go up when they return from college for Thanksgiving. Maybe they'll figure it out when they have a job, if they can find one.
Ha! Zing! Except this column isn’t evidence of anything.