America Has an Overspending Problem, Not an Undertaxing Problem

Ryan Ellis

I'm a few days late on this, but here is my latest in National Review Online on the new Congressional Budget Office baseline, and what it has to say on taxes, spending, and the real cause of debt:

Here's a quick summary of where we are. The figures are expressed as a percentage of the economy (GDP), which is the conventional way to compare them over time.

	Spending	Taxes
50 Year Average	21% of GDP	17% of GDP
Today	22% of GDP	19% of GDP
End of Decade	30% of GDP	18% of GDP
End of Century	40% of GDP	19% of GDP

Notice the pattern? Spending keeps going up, Up, UP as time goes on (even faster than economic growth), but taxes basically keep steady with the growth in the economy over time--they're even a little frothy.

What about if we make the TCJA and other expiring tax provisions permanent? CBO has a static score for that, and it turns out that doing so shaves about a percentage point off of revenue by the end of this decade. Instead of federal revenues being 18 percent of GDP (the historical average + 1 pp), federal revenues would instead be 17 percent of GDP (the historical average).

So much for extreme tax policy.

The extreme position is the one that leaves spending completely unchecked, and calls for tax hikes even as tax revenues are coming in well above the historical norm.