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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Laura Cornwell

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.

Ivan Berry

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).

Victor Lawson

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… Read more »

Faith Carlson

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!

Wayne Peterkin

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… Read more »

Earl

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.

Hank

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.

Cookiepress

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