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Hello John,
The year was 2001. The first Harry Potter movie (“Harry Potter and the
Sorcerer’s Stone”) was released in theaters. Usher and Nickelback(!) topped the
charts. The Arizona Diamondbacks were World Series champs.
The year 2001 was also the last time the federal government had a budget
surplus — $128 billion. In fact, the Congressional Budget Office projected that
the federal government would pay off the national debt by 2009!
Fast forward to today, and we’re looking at $2 trillion annual budget deficits
as far as the eye can see. So, what happened? How did we go from such a rosy
scenario to such a bleak one?
To hear those on the left tell it, tax cuts caused our growing deficits —
including the Trump tax cuts of 2017. And they are making the same argument
against renewing those tax cuts, which are set to expire at the end of this
year.
If you want to know the mindset we are up against in trying to renew those tax
cuts, just read this revealing quote from Senate Minority Leader Chuck Schumer
(D-New York) on greedy American taxpayers:
“You know what their attitude is? ‘I made my money all by myself. How dare
your government take my money from me? I don’t want to pay taxes.’ Or, ‘I built
my company with my bare hands. How dare your government tell me how I should
treat my customers, the land and water that I own, or my employees.’ They hate
government. Government is a barrier to people, a barrier to stop people from
doing things. They want to destroy it.”
But who’s really greedy? The taxpayer … or the government? Let’s look at what
happened to government revenues and spending (outlays) since 2001 and find out.
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Source: Congressional Budget Office <[link removed]>
This chart from the CBO shows federal revenues and spending since 1974. Some
patterns are easy to detect. The dotted lines are the average revenue and
spending as a percent of gross domestic product, so it’s easy to see where the
bigger problem lies — and it’s not with revenue.
Since 2001, even with a couple of tax cuts, revenue has remained remarkably
consistent and at the historical average. There was a dip around the 2009
financial crisis, but otherwise steady. Outlays, however, have been rising and
are now several percentage points higher than the historical average.
Now, you would expect government spending to rise when there are crises to
deal with, like the Great Recession or the Covid pandemic. But once those
challenges have passed, spending never seems to come down. Instead, a new
spending floor is created.
The folks at the nonpartisan Citizens for a Responsible Federal Budget
analyzed the deficits since 2001. Here is what they found:
* “Rising spending relative to GDP explains about two-thirds of the growth in
annual budget deficits since 2001, while declining revenue explains one-third.”
* “Had revenue remained stable as a share of the economy, the debt would be
half its size;had primary spending been stable, it would be nearly paid off.”
So, the next time you hear some politicians claiming that all our fiscal
problems are caused by Americans not sending enough of what they earn to
Washington, don’t believe them. The fact is, Washington has a spending problem,
not a revenue problem.
Indeed, just look at the previous administration. According to an analysis by
the House Budget Committee
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, Joe Biden added nearly $12 trillion to the national debt.
* $4.8 trillion in enacted legislation
* $4.8 trillion in higher interest costs due to inflation
* $2 trillion by executive actions
Here at Americans for Prosperity, we believe that before politicians even
think about taking another dime in taxes from any American, they need to get
government spending under control. President Trump and the Department of
Government Efficiency are making a real effort to reduce the size and scope of
government, but they can only do so much. If we’re ever going to make lasting
progress, Congress must do the heavy lifting.
Before any of that, however, Congress needs to renew the Trump tax cuts and,
if possible, make them permanent. We need to send a message to Washington that
17% of GDP is the absolute limit to what the American people should have to pay
for their government.
Americans have had to tighten their belts for years; now it should be the
government’s turn! Let your elected officials know you support renewing the
Trump tax cuts!
Best,
Joe Eule
Americans for Prosperity
Americans for Prosperity believes freedom and opportunity are the keys to
unleashing prosperity for all. We are a community of millions of concerned
citizens advocating for solutions based on proven principles to tackle the
country's most critical challenges.
Americans for Prosperity
4201 Wilson Blvd, Suite 1000
Arlington, VA 22203
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