It’s over: the “out of control spending” myth revealed
As promised, here’s the The One Graph that proves for a fact that America has a revenue problem, not a spending problem. The blue line represents federal spending, the blue line federal tax revenue, from 1990 to the end of 2012:
You can clearly see the Clinton-era budget surplus in the late ’90s, George W. Bush’s tax cuts choking off revenue creating (then) massive budget deficits, and then the Lesser Depression. Unlike the early 1990s and early 2000s recessions, revenue fell off a cliff and spending increased at the same time. But spending didn’t increase drastically. If you take spending from 2002 through about 2007, and then project it through 2013, you get this:
Because federal spending stopped growing for almost all of the Obama administration, we’re at spending levels now that we would have been if spending had been set at a fixed rate of growth in 2002. In other words, we’re likely spending no more money this year than we would have if President Bush had remained in office, Republicans had retained control of Congress, and there had been no recession.
What’s creating these massive budget deficits is the revenue side, where tax receipts haven’t come anything close to returning to “normal” like they did between 2005 and 2007.
Here’s the same graph, now with spending projected at 2007 levels and and revenue from 2006 levels (in other words removing the recession):
America has a revenue problem, and getting unemployment down to 4% as fast as humanly possible will solve most of it without having to cut a dime of spending. We’ve already effectively cut spending by reigning in spending growth at a faster pace than even during the Clinton years when the budget was balanced.
Now you have the facts, it’s time to reassess your views.