Balanced: Tax Revenues Are Only Down 2% From 2008, But Spending Is Up 27%

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We need a “balanced” approach to deficit reduction. That is the cornerstone of the left’s arguments for dramatic tax hikes on American taxpayers including the expiration of the Bush tax cuts which, among other things, would mean a big hike in taxes on capital gains (investment income).

But is balance truly warranted? It’s not, if we take a look at what has actually caused our debt and deficit problems.

For one thing, federal spending has increased significantly. In fiscal year 2008, total US spending was $2.982 trillion. That jumped dramatically dramatically in President Obama’s first year in office (thanks mostly to the “stimulus” spending spree), increasing almost 18% to $3.517 trillion in 2009.

In fiscal year 2012, ending in October, federal spending was $3.796 trillion, another roughly 8% increase which happened even with Congress split between the two parties.

From the last fiscal year under President Bush to fiscal year 2012 the total increase in federal spending was 27.3%.

So, clearly, a big part of the problem is spending. But the “balanced” approach supporters are right about one thing. During this same time period total direct federal tax revenues (a figure that includes Social Security revenues which don’t directly apply to the deficit equation) have declined, though since FY2009 they’ve been rising after tanking thanks to the economic collapse.

Our “balanced approach” friends would tell us that this decline in revenues proves their case for tax hikes. But does it really? The decline in revenue didn’t have anything to do with tax cuts and everything to do with an economic collapse the nation has been slow to recover from. We’re going to fix that with dramatic increases in taxes, including taxes on investment income specifically?

Here’s the reality: tax revenues in FY2012 were only 2.17% lower than FY2008, but spending is more than 27% higher.

Now, again, our friends on the left insist that we must have a “balanced” deficit reduction package that incorporates both spending cuts and tax increases. But the budget problem isn’t balanced. The budget problem is almost entirely a spending problem.

Rob Port is the editor of SayAnythingBlog.com. In 2011 he was a finalist for the Watch Dog of the Year from the Sam Adams Alliance and winner of the Americans For Prosperity Award for Online Excellence. In 2013 the Washington Post named SAB one of the nation's top state-based political blogs, and named Rob one of the state's best political reporters. He writes a weekly column for several North Dakota newspapers, and also serves as a policy fellow for the North Dakota Policy Council.

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  • HG

    Even after all of Obama’s stimulus spending and bailouts revenues are down 2.7% from 2008? The tax rates haven’t changed so I guess that means the stimulus didn’t stimulate much of anything in the way of substantive economic activity.

    • http://sayanythingblog.com Rob

      Well, to be fair, revenues have slowly been recovering since 2009, but we’re not up to pre-economic crash levels.

      • HG

        So even after all Obama’s deficit stimulus spending and bailouts the economy has yet to generate the federal revenues it did 4 years ago.

        • http://sayanythingblog.com Rob

          Yes, that’s true, and remember that what growth there has been is also caused by things like population growth.

      • LibertyFargo

        Rob, I’ve read data on this but I can’t seem to find it. Do we have projections of what the economy “might” be like if instead of “stimulus” we had done nothing?

        • http://sayanythingblog.com Rob

          From 2009:

          CBO, the official scorekeepers for legislation, said the House and Senate bills will help in the short term but result in so much government debt that within a few years they would crowd out private investment, actually leading to a lower Gross Domestic Product over the next 10 years than if the government had done nothing.CBO estimates that by 2019 the Senate legislation would reduce GDP by 0.1 percent to 0.3 percent on net. [The House bill] would have similar long-run effects, CBO said in a letter to Sen. Judd Gregg, New Hampshire Republican, who was tapped by Mr. Obama on Tuesday to be Commerce Secretary.

          http://sayanythingblog.com/entry/congressional_budget_office_concludes_that_obamas_stimulus_would_actually_h/

          • LibertyFargo

            Thanks!

    • Anonymous

      Even after all HG’s rants, his posts haven’t had any effect but convincing himself and people that already agree with him. What a waste of life.

      • HG

        Telling the truth is never a waste of time, even if some like you will choose to remain ignorant.

  • Neiman

    It seems to me that this is what the American people voted for, higher taxes and deficit spending, not budget cuts and increased entitlements. Elections have consequences.

    The GOP will go along to get along, they may huff and puff a bit, but they are ready to bend over for Obama because of the butt kicking they just got. They will give in on taxes, spending and increasingly follow your advice to abandon the family/moral values issues.

    • http://sayanythingblog.com Rob

      Just because they voted for it (and I don’t know how many realize that even tax hikes on the top earners are going to have a dramatic impact on them).

      • Neiman

        The American people must face the consequences of their decisions, no matter what they thought, there was sufficient information that they should have known what would happen under this Marxist President.

        • http://sayanythingblog.com Rob

          There is a case to be made for pricing government appropriately. Far too many Americans are fooled into thinking the cost of government is going to be borne by someone else.

          That being said, I’m not in favor of cutting off my nose to spite my face.

  • SigFan

    But in Obamaspeak “balanced” means “I get what I want – and you don’t.” People really need to study up on the new meanings of words.

    So in spite of Porkulus, Son of Porkulus, Obamascare and all the wonderful things that Obama told us would heal the economy we’re still in an ever deepening hole. And tax revenues are only down 2.7%? Yep, someone definitely has a spending problem.

    • http://sayanythingblog.com Rob

      But in Obamaspeak “balanced” means “I get what I want – and you don’t.” People really need to study up on the new meanings of words.

      The problem is that people think “balance” is an inherently good thing. Much like “bipartisanship” and being “moderate” or “middle of the road.”

      The question that’s never asked is, what are we balancing? What road are you in the middle of? To what end are we working together?

      Those things sort of matter.

      • SigFan

        That is so true. One sure way to get your behind run over is to try walking down the middle of the road. Compromising on the non-essentials in the spirit of bipartisanship is fine to an extent. But when we compromise core principles that is not being bipartisan, it is simply being weak and lacking conviction.

  • LibertyFargo

    “Here’s the reality: tax revenues in FY2012 were only 2.17% lower than FY2008, but spending is more than 27% higher.”

    +1

  • matthew_bosch

    This is so apparent, yet not enough people care/notice.

    “I feel like I’m taking crazy pills!”…Jacobim Mugatu

  • matthew_bosch

    The American public worries about “who’s going to do the dishes” and “who’s going to take out the trash,” mean while, the house is about to be foreclosed on.
    Fiscal/Responsible money management must become the top special interest for the GOP.

  • Spartacus

    You’ve got Harry Reid running interference to insure a spending limiting budget never reaches Obama’s desk and now turbo Timmy is proposing an infinite spending limit. What could possibly go wrong?

  • chris

    I attached a neat pie chart of 2012 federal spending. If you were president, which part would you cut spending on first?

    • Spartacus

      I’d totally do away with the safety net to start with. It’s not the responsibility of the government or society to provide a means of living to those who have chosen to ignore the fact that as good times come so do the bad times. Move back in with Mom & Dad or man up and adapt. When the bad times come we all feel it and those of us that man up and adapt aren’t in the mood to carry your burden too.

      • chris

        You’d do away with Head Start, school lunches and after school programs for children, job training, student pell grants, etc??

        • two_amber_lamps

          Yep…. all programs you mention have NOTHING TO DO with the true purpose of the federal government. You want Head Start, school lunches and after school programs for children, job training, student grants? Move to a state that provides them…. and you pay the resultant taxes.

          Take your “expansion” and necessary and proper clause and shove it… the proof that such is a disaster is staring you in the face and you REFUSE to see it.

          http://www.usdl.info/uploads/img4fce43ccb2d7f.jpg

    • chris

      You guys seem to know how to reduce federal spending, so I ask again; which federal spending would you cut?

      Keep in mind that you can’t touch mandatory spending, which is about 65% of the total amount, without changing laws, and that wouldn’t happen for a few years. That leaves you with discretionary spending, and the largest chunk of that is defense, which is 20% of the total amount. Everything else is broken up into chunks of 1% and 2%. If you wanted to cut non-defense discretionary spending, then you would have to basically cut most if not all of it in order to make a dent, like education, housing, Veterans, science research, etc.

  • sbark

    Starve the Beast isnt working, in fact with all the extra fed Revenue via JFK, Reagan and Gw tax cuts, weve actually been gourging the “beast”. We just gave the Free Stuff bunch services at a discount. Big spending polticians then paid up to the true cost with what now adds up to 16 trillion in debt……..

    The price for “free stuff” has to go up in order to cut the demand……progressive tax rates with only a minority actually paying taxes wont do that, ………it’ll take a flat tax where everyone is paying, and then they will fight the “price” (taxs) hikes with reduced demand for “free stuff…….
    Problem is the party that exists only to hand out free stuff, nor the majority now addicted to free stuff wont let this country be “progressive” and survive…….the decline of this country is no longer an option.

    • chris

      What “free stuff” would you cut?

      • sbark

        Its gotta come from the free stuff list you crow that is untouchable…the mandates.. ……the stuff that eats up 100% of present fed treas inflow.
        Adults could cut 100% of the discretionary spending without starting to repay any of the 16 trillion in debt, and that is without Int rate hikes that are coming and the Free stuff bunch screaming for hikes in entitltements.
        yup, I know your party wont cut it because without it you dont exist as a political entity…….its not as if you have any other idea’s of merit other than the class envy originated by Marx.
        “the market” will take care of it in its own time, that process will be a hell of lot more painful than if adults could meet in a room. but the adolescants, by giving away the free stuff have gained control….therefore the death spiral.

        • chris

          The total amount of safety net programs account for only 10% of the total budget, and many of the programs are meant to help the disabled, children, students, and those needing job training. Would you cut all these programs, or just the ones that target the very poor? Here is a good link for more information:

          http://federalsafetynet.com/safety-net-programs.html

          Also, many programs were enacted by republican presidents, like Head Start, so don’t blame just the liberals.

        • chris

          The total amount of safety net programs account for only 10% of the total budget, and many of the programs are meant to help the disabled, children, students, and those needing job training. Would you cut all these programs, or just the ones that target the very poor? Also, many programs were enacted by republican presidents, like Head Start, so don’t blame just the liberals.

          • sbark

            Nobody minds helping the truely helpless…….the problem is the Free Stuff party has taken true American compassion and used it against the society as a whole by expanding it to the shiftless, lazy, frauds that wil gladly vote for more of it.
            The entitlements that eat up 100% of inflows include your self described safety net of fraud but add in SS, Medicare ponzie schemes, and then add in food stamp increases, perpetual unemployment
            Then the left encourges unemployment with “tools” such as minimum wage laws which alone pushes black youth unemployment toward 20% and then of course onto a lifetime of welfare dependency…….the cruelest thing that can be done to a person.
            The Left can trot out indiv. and small group after small group that are truely helped ……….but refuse to look at the damage to society and economy as a whole that once ruined, will hurt those they profess to so care about more than they can ever imagine.

          • chris

            I’m just trying to see exactly what programs you’d want to cut in order to reduce the national debt. Food stamps account for less than 1% of the total budget. Unemployment insurance accounts for a few percentage points, but not enough to make a dent on the debt if you cut it. Minimum wage regulation is not exactly part of federal spending. Trying to cut SS and Medicare is a nonstarter. What else….

  • Guest

    no worries – just print more $$! see how easy that was? and give rights and benefits to illegals, allows gays to marry and and free contraception for all! hey, while we are at it, lets pass something that is really a huge tax under the guise of health care, which is anything but! but if you act now, we can also continue to slaughter our very own people not one way but two: ignore pleas for help in foreign lands AND abort our future because really, who has a future any longer? Stand in line, salute your god and maybe a few table scraps come your way….but you gotta act now. Free Kool-Aid for all!

  • Guest

    no worries – just print more $$! see how easy that was? and give
    rights and benefits to illegals, allows gays to marry and free
    contraception for all! hey, while we are at it, lets pass something
    that is really a huge tax under the guise of health care, which is
    anything but! but if you act now, we can also continue to slaughter our
    very own people not one way but two: ignore pleas for help in foreign
    lands AND abort our future because really, who has a future any longer?
    Stand in line, salute your god and maybe a few table scraps come your
    way….but you gotta act now. Free Kool-Aid for all!

  • http://www.facebook.com/gino.washington Gino Washington

    I thought spending helped the economy?

  • chris

    You guys talk the good talk, but you don’t really know how to reduce the deficit simply by reducing spending. What exact spending would you reduce? Cutting back on safety net programs (not including SS, medicare, or Medicaid) would only save up a few percentage points of the total budget. You wouldn’t touch defense spending, even though that takes up a whopping 20%. We could reform SS and Medicare, but that wouldn’t be a short-term solution since it would take years of negotiation, and even then, how exactly would you reform it? The math simply doesn’t add up.

    Do you see why we need to also increase tax rates?

    • http://sayanythingblog.com Rob

      Well that’s the bugaboo isn’t it Chris? One you liberals don’t want to admit.

      We can’t make the nation fiscally healthy without slaughtering some sacred cows. Military spending is one (and there’s plenty of waste there to cut). Social Security, Medicare and Medicaid must also be targeted.

      We simply cannot afford them. And the problem is not taxation. Throughout the history of the country, regardless of tax rates, the government has never been about to collect more than about 19 – 20% of GDP in tax revenues. If they try to go higher, people start avoiding the taxes through both legal and illegal means.

      The solution is to start living within our means.

  • http://twitter.com/danhoffmann danhoffmann

    It’s time for a balanced approach. I don’t mean balancing the budget — that’s a 20-30 year proposition at least. We need our leaders to actually work together in a balanced way.

    • http://sayanythingblog.com Rob

      Saying ” balanced” a lot isn’t a strategy.

  • ScottEngageAmerica

    Revenue is lower and spending is higher. No wonder why we have $16 Trillion in debt (http://bit.ly/Irh5y).

    • http://sayanythingblog.com Rob

      Actually, Scott, revenue is up 19% since 2009. The problem is, spending has grown throughout the ups and downs of tax revenues.

      We have a spending problem.

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