Opinion

Bloated Deficits Result From Wasteful Spending, Not Insufficient Taxation

government education billions spendingAs Congress progresses toward much-needed tax reform, critics dishonestly cite growing federal budget deficits as one rationalization.

The deficit, however, stems from excessive spending, not insufficient taxation.

Just last month, the first month of the new 2018 fiscal year, the Treasury Department reported that the federal government received a new record $235.3 billion in tax revenues.

That amount shatters the previous October record, set just last year when the federal government received $226.4 billion.

Those escalating October records parallel the continuing trend of record annual tax revenues.

For the recently completed 2017 fiscal year, the government received a record $3.46 trillion in taxes, which easily broke the previous record of $3.27 trillion set one year earlier during the 2016 fiscal year.  That broke the previous record of $3.25 trillion set one year before that, which broke the $3.02 trillion set one year before that, which broke the $2.75 trillion record set one year earlier during fiscal 2013.

Despite these continual record-breaking tax receipts, the federal budget deficit continues to grow.

For example, October’s monthly deficit hit $63 billion, an alarming 37.9% increase from last October’s deficit of $45.8 billion.  Even ABC News felt compelled to note the trend:

The federal government began its new budget year with an October deficit of $63.2 billion, up sharply from a year ago.  The Treasury Department reported Monday that the October deficit was 37.9% higher than the $45.8 billion deficit recorded in October 2016. 

Both government receipts and spending were up for the month, with receipts climbing 14.3 percent to $235.3 billion, a record for the month of October.  The larger spending figure was up a sizable 11.6 percent to $298.6 billion.  The deficit for the 2017 budget year, which ended on September 30, totaled $666 billion, up 13.7 percent from a 2016 deficit of $586 billion. 

Critics of current tax reform efforts also tend to be the same people who claim to seek a return to the halcyon days of the Clinton Administration, when the U.S. enjoyed a budget surplus as his term concluded.

But such people would be in for a rude awakening if the federal government returned to that fiscal behavior, because it would mean a drastic reduction in both spending and tax revenues.

In fiscal 1998, the federal government received $1.72 trillion but spent only $1.65 trillion, for a surplus of approximately $70 billion.  For fiscal 1999, we received $1.83 trillion in taxes but spent just $1.70 trillion, and in fiscal 2000 we received $2.03 trillion in taxes but spent just $1.79 trillion.

Again, for purposes of comparison, in 2017 the government received $3.46 trillion in taxes but spent approximately $4 trillion.  Accordingly, those who claim to favor a return to Clintonian policies should be careful what they advocate.

Opponents of current tax reform efforts also falsely blame higher budget deficits over the past fifteen years on tax cuts enacted during the Bush Administration, along with spending on the Iraq and Afghan wars.

But rudimentary federal budget facts contradict that assertion.

In fiscal 2007, the last year prior to 2017 in which Republicans controlled both houses of Congress and the White House, the federal budget deficit was just $161 billion, a trivial amount compared to what followed under the Pelosi-Reid Congress and Obama Administration.  Notably, that year marked the highest level of spending for both the Iraq and Afghan wars, and it followed the 2003 Bush tax cuts by several years.  Yet incoming federal revenues reached an all-time high of $2.57 trillion that year, with spending at $2.73 trillion.

Accordingly, it’s factually incompetent or flatly dishonest to blame deficits on the Bush tax cuts or the wars in Iraq and Afghanistan.

The true scapegoat has been out-of-control wasteful spending.  Since 1970, federal spending per U.S. household has more than doubled, and has increased at a rate over ten times higher than median household income during that same period.

The straightforward reality is that higher spending explains the unsustainable deficits and debt that we’ve experienced in recent years, not insufficient tax revenues.  Accordingly, we cannot allow historical revisionists to claim the opposite in their effort to stop long-overdue tax reform legislation moving forward in Congress.


From - CFIF.Org - by Timothy H. Lee

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Hank
4 years ago

I have friends in the Federal government. They are getting furloughed, again. That’s time off, without pay. Of course, they’ll get emergency reimbursement, retro-actively. Basically, we taxpayers are paying them to stay away from doing anything. Ironic.

Earl
5 years ago

I’m a deficit hawk, but Ithe two biggest changes congress can make to redice the deficit are:
1) Eliminate Obamacare, or at lease get parts of it under contral. I like the Senates removal of the insuance mandate although I don’t think it will reduce expenses as much as has been estimated. It need to be done for fairness!
2) Reduce or eliminate repatriation tax. There’s $2.6 T in overseas corporate profits that could come back into the US economy.

Wayne Peterkin
5 years ago

Every tax rate cut in my lifetime, I’m 74 and have seen several, resulted in an improved economy and higher tax revenues. If the economy grows at 4% for example, tax revenues increase by roughly the same percentage. Sadly, the author of this article is absolutely right that we still have deficits and increasing debt, and its only because spending increases faster than those revenues. If that does not stop, then nothing that we do will ever control the debt until it crushes the nation. We must get revenues to increase faster than spending and we must have a very robust economy to have any chance at getting there. Tax reform is the best hope of getting that robust economy. BTW, Citizens Against Government Waste (CAGW) publishes a book each year listing all of the government waste and abuse including many duplicative government programs. If their recommendations were followed eliminating it all, the budget could be balanced in less than two years with no cuts in any crucial services.

Hen3ry
5 years ago
Reply to  Wayne Peterkin

But the leftist Dems don’t care about the logic and history of the economic benefits of tax cuts and chose to ignore the resulting increase tax revenues.
None of that lines up with their agenda and power.
I would include Susan Collins in with that bunch.

Now they’re concerned (?) about the deficit ??
Where was that concern during the previous couple of decades.
I guess Schumer and Pelosi et al. truly believe that they know how to use my money better than me.
Thank you DC Swamp for your concern and tuff luv.

Cookiepress
5 years ago

do away with all super pacs, lobbyists, and subsidies. Impose term limits. Put it all to a popular vote

Victor Lawson
5 years ago

Here’s the problem with what American’s are lead to believe by the lying politicians about taxes in America, especially the lies from democrats. Companies/businesses do NOT pay taxes. I know, I know difficult to wrap your head around that but it’s the truth and it’s factual because the other part of the mathematical equation is consumers pay all the taxes that are charged against companies/businesses. Every tax levied against a company/business gets incorporated into the price of the product/service that companies/businesses offer. It’s mathematically impossible NOT to do that. How many companies could stay in business if every time government levied a tax on them the CEO or president shrugged his shoulders and said, “oh well, guess we’ll just eat that tax and NOT pass it on to the consumer”. I’ve asked numerous politicians and people in politics to name me one single tax, NO list, just a single tax that companies pay that doesn’t get rolled into the price of their product or service?? Crickets, none of them can give me an answer because no such tax exists. Here in Pennsylvania our idiot governor wants a “severance tax” levied against the natural gas drilling companies extracting natural gas in the state. Here’s the problem with that tax, how do most people and businesses heat their dwellings??? With “NATURAL GAS”. What fuel do most companies use to manufacture their products??? “NATURAL GAS”. What idiot in their right mind would want to levy a HUGE tax on the companies that supply the natural gas to heat their homes, the businesses they buy products from or the fuel used to make those products and see the price/cost go dramatically upward because of that tax??? Democrats tell us how evil companies are that move out of the state or even the country when the corporate taxes get so high they can no longer incorporate the corporate taxes into the price of their products or services. Gee, companies are struggling with keeping prices competitive at the current corporate tax rate so instead of 15% corporate tax, why don’t we hike it to 36%?? Yep, uh huh and on what planet does that make mathematical sense? I want politicians to come out and speak the truth to people, tell them honestly that companies and businesses do NOT pay taxes and why taxes on companies and businesses drive them out of business or out of the state or America. You and I pay the taxes levied on companies and businesses it’s a simple fact of life. If politicians were truthful, there would be one single tax, most likely a sales tax and believe it or not, businesses would still use their EIN exemption to NOT pay sales taxes because that would get incorporated into the price of their products and services. I know how this news is going to cause democrats to gnash their teeth and bang their heads on the floor in a tantrum but do the math for yourself and when a politician says they’re going to punish some industry by levying a heavy tax burden on that industry, in reality its us the consumers that will bear that tax burden. I for one am fed up with the BS politicians throw around regarding the tax system and how companies do NOT pay their “fair share”. That’s a crock of BS. Somebody please explain to me how any company is going to ultimately pay “their fair share” if they just pass the tax on to consumers in the price of their product/service??? Companies leave Pennsylvania when the taxes can no longer be incorporated into the price of their products/services and remain competitive. Same thing with leaving the country, when companies go out of business or leave the state or America you can blame your state and federal elected representatives, NOT the companies.

Rick
5 years ago
Reply to  Victor Lawson

Exactly the same with soaking the rich! Ask a democrat what happens when they run out of “the rich” to tax as they leave the country – they just move on down the ladder to the next “rich” taxpayer! Suddenly, the middle class are “the rich” – and they can’t pay 90% of their income in taxes. Pretty soon, it’s all over – and spending WILL be cut when no one will loan us any more money! I’ve got a feeling dimocrats will still be out there telling anyone who will listen that it’s the Republican’s fault!

Cookiepress
5 years ago
Reply to  Victor Lawson

FairTax :) would eliminate those problems

Hank
5 years ago
Reply to  Cookiepress

The biggest problem with the Fair Tax is transitioning to it.

Lee McQuillen
5 years ago
Reply to  Victor Lawson

Victor, I agree with most of what you say. But, and EIN number is a corporation or business social security number and not an exemption. I live in PA, too. The gas companies already pay a lot of taxes and fix up what they destroy. We should not be chasing them out of the state. As far as taxes incorporated into what we pay, that’s considered a cost of doing business but I don’t think many politicians really get it – they live in a different world. BTW, we have a chance next year to get rid of a senator and then the current governor and their leftist leanings. We need to work on that….
You’ve got common sense – does it disappear for many once they get within the beltway or into Harrisburg? Seems to.

Kim
4 years ago
Reply to  Victor Lawson

Exactly, Victor.
When Carly Fiorina was running with Ted Cruz for the nomination, the issue of HP laying off workers or looking toward other shores came up. Same thing—a CEO or the owner of any small business will do what it takes to keep the doors open. If you want less of something, tax it or penalize it in some way. No wonder so many of our largest manufacturers have moved operations overseas.
I remember listening to former Pres. Obama, who was asked in an interview during the depths of the recession, something like “If you owned a business, what would you do to help the economy?” Without thinking, he blurted out, “Just hire people!” As if that’s all this country needed to get back on track toward greater prosperity—just add a bunch of employees to the payroll without regard to whether or not it made good business sense. The Democrats and other liberals just don’t understand how the economy works, and I fear they never will.

Faith Carlson
5 years ago

We’ve known for years that there is wasteful spending in all sectors of the federal government. The question is – who is going to do something about it? We were hoping that having a businessman at the helm and his chosen cabinet – we would see a change. Haven’t seen any indication tighten the belt yet! No profitable business would stand for such waste!

Brian
5 years ago
Reply to  Faith Carlson

Actually the first step has been to eliminate regulations (being done at a furious rate for the past year). That leads to a “simpler mission statement” for many of the agencies. Which in turn will enable further constriction of expenditures. For some federal departments, we hopefully will get to the point of being able to eliminate entire bureaucracies. Any functions that are NOT constitutional for either state or federal will be dispensed with. The remainder will be handed back to the states where it rightfully belongs.

Hen3ry
5 years ago
Reply to  Faith Carlson

Of course the DC Swamp is going to overspend and spend wastefully
So that can justify keeping our taxes high
Except for carve outs for special interest groups
So they can retain power and assert control
Didn’t the Founding Fathers warn against this eventuality

Victor Lawson
5 years ago
Reply to  Faith Carlson

Let’s see, one guy and his employees trying to drain the swamp as opposed to tens of thousands of swamp critters doing everything possible to prevent the swamp from being drained and hoping they can outlast an 8 year term befor the swamp even begins to get drained. Gee, wonder how that will work out if voters don’t stand with the guy trying to drain the swamp????

Laura Cornwell
5 years ago

Finally, an article that gets to the heart of the matter. I get so sick of the ‘needs’ of the government. What they need to do is quit with the out of control spending from putting shrimp on treadmills to ‘arts’ programs to making us foot the bill for paying off interns they’ve assaulted to the tune of 15.2 million dollars. Why are we paying for them to become millionaires by supposedly serving us? We pay for our legislator’s haircuts, meals, and indiscressions, their 100% retirement packages, travels and family employees. Meanwhile, we get their misbegotten ideas for ending poverty which has increased our poverty levels every year since they began. Why do we keep putting them in office. We could start by not reelection any of these slobs.

Cookiepress
5 years ago
Reply to  Laura Cornwell

ah yes, the war on crime, the war on drugs, the war on poverty. All have been lost

Ivan Berry
5 years ago

War on poverty, drugs, terrorism, us, our children and war on almost everything else under the sun, the welfare state, dependancy initiatives like SS and disability, limits imposed by rediculous regulations, open borders, the non-profit foundations and trusts that shield the uber-wealthy from taxes while allowing them to control subversive dollars, international agreements that fail to benefit the nation and its people, regional trade agreements that increase our already out of balance trade deficit, ownership of millions of acres of land and the inability to use them or protect them, millions of bureaucrates in thousands of agencies and departments that meddle in everyones’ business other than their own, and any other area of unconstitutional operations that benefit what used to be the few (now, the many) and not the commoner (that’s us).

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