The Treasury reports that for the Fiscal Year that ended on 30 September the U. S. Government had revenues of 2.77 trillion dollars. The deficit for the same period was around 680 billion bucks.
How much government could we have bought with that money without going into the red?
According to figures posted at the Tax Policy Center website, 2.77 trillion dollars would have covered all federal spending in FY 2007 (corrected for inflation) with a surplus of around 40 billion dollars.
I don’t know about you, but I felt like I had more government than I really needed in 2007.
Or lying by euphemism. Stacy McCain calls out the President and his flacks in the press for the use of the term “new revenues.”
A business can generate “new revenues” by expanding sales. A government doesn’t have that opportunity, and it won’t find “new revenues” some magical, super-secret hiding place. They’re taxed out of our wallets.
In his essay, Politics and the English Language, George Orwell wrote that
one ought to recognise that the present political chaos is connected with the decay of language, and that one can probably bring about some improvement by starting at the verbal end.
He wrote that in 1946, but it’s also true today. Indeed, the time has come when we need to stop allowing the use of nonsense terms in our government’s financial planning. Not collecting a tax is not an “expenditure.” Spending more this year than last is not a cut just because you were planning an even larger increase. Etc.
Actually, there is a way that government can get new revenues. Over the long haul since WWII, the federal government has been able to take in about 19% of GDP as taxes. That’s been true regardless of how high or low the tax rates have been. When government gets out of the way of the economy so that it can grow, that 19% share grows with increasing GDP.
The federal government expects to take in about $2,900,000,000,000 in revenue this coming year. The interest due on the debt during that time will be roughly $246,000,000,000. That leaves around $2,654,000,000,000 to spend without adding a dime to the national debt.
To give you an idea of how much federal government that money would buy, consider that is 96% of what the government spent in FY2003 (corrected for inflation).
Could you get by with 4% less federal government than you had 10 years ago?
And that’s why today I’m pledging to cut the deficit we inherited in half by the end of my first term in office. This will not be easy. It will require us to make difficult decisions and face challenges we’ve long neglected. But I refuse to leave our children with a debt that they cannot repay—and that means taking responsibility right now, in this administration, for getting our spending under control.
—Barack Obama, February, 2009
Are you better off now than you were four years five trillion dollars ago?
UPDATE–Politico reports that the Obama reelection campaign feels that an ad being aired by Crossroads GPS is dishonest because it says that President Obama has added to the deficit. Well, the FY2009 deficit was over 1.4 trillion bucks, and a substantial part of that was caused by the Obama “Stimulus.” As for the promise to cut the deficit in half, it will still be greater than a trillion dollars this FY. Here’s a link to the ad in question.
UPDATE 2–Perhaps this factoid will help you understand just how far out of whack the federal budget has gotten: NASA’s budget is less than the amount the government borrows each week.
The estimates for the deficit reduction that might be accomplished by the proposed “Buffet Rule” tax are beginning to come out. The liberal Citizens for Tax Justice numbers add up to about a 4% reduction.
Cutting net spending to the FY2008 (pre-Obama) level would reduce reduce the deficit roughly 64%.