As 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