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How Not To Reduce the Deficit
Tuesday, January 30, 2007
Andrew Sullivan to liberals:Some things the left won't tell you:
Current tax revenues of 18.4% of GDP are now above the historical average.
The 2006 tax revenues of $2,407 billion were $47 billion above the level projected by CBO before the 2003 tax cuts, and just $58 billion below the level projected by CBO in 2000, before the 2001 tax cuts.
Capitals gains tax revenues have more than doubled to $103 billion since the 2003 capital gains tax cuts.
We don't need tax hikes; we need spending cuts, especially on middle class entitlements, corporate welfare, and agricultural subsidies.
This liberal to Andrew Sullivan:
I was curious about your information regarding the tax burden as a share of GDP and took a look at the data myself. The CBO indicates that in 2000 taxes as a share of GDP were 20.9%, while spending was 18.4%, while in 2006 taxes were 18.4% and spending 20.3%. This indicates that tax receipts have fallen since 2000 to the tune of two and a half percent. The Heritage Foundation's argument rests on the estimates of future tax revenue and spending rather than the reality, but every reasonable person knows how wildly optimistic these estimates usually are. The reality is that federal tax revenue as a share of GDP is down considerably. If it had remained constant (if there had been no tax cuts) we would still be in surplus. If there had been no tax cuts and no Iraq War, we would have a very substantial surplus, particularly when one considers net lower interest payments.
You claim that we must cut spending. I would certainly agree that reducing corporate welfare would be handy, but why to I suspect that this reduction would be used to justify another corporate tax cut? I don't know much about agricultural subsidies, but I know they run to the tune of 35 billion - a lot of money, but if you eliminated it entirely you would still have a 200 billion dollar deficit. But what I find most troubling is your suggestion that we "cut middle class entitlements." Given the generation-long stagnation of middle class incomes, does this strike you as wise? Even a cursory examination of the data reveals that the major "middle class entitlement" driving budget spending are medicare and medicaid, which together increased from 17% to 25% of the budget. But this is not a free-wheeling Congressional pork barrel orgy or an "entitlement" craze, but a health care policy problem.
It's not "entitlement spending" per se that's causing our budget problems. It's a broken health care system and irresponsible tax cuts targetted to those who have already enjoyed dramatic income gains. Furthermore, I see it as irresponsible budget policy to demand that the only acceptable method of reducing the debt is cutting programs or benefits with massive political support. If you are waiting for dramatic reductions in farm subsidies, corporate welfare, and medicare to balance the budget - you're going to be waiting a very, very long time.
