The editorial board of the Washington Post took a shot at Mitt Romney today, demanding to know how he’d lower American taxes without decreasing revenue. As rationale for their criticism, they cite the Bush tax cuts which according to them “plunged the nation into debt” after 2001 and 2003:
REPUBLICAN PRESIDENTIAL nominee Mitt Romney is specific about how much he will cut income tax rates for every American: by one-fifth. But he is vague about how he’ll pay for this, though he insists he can cut rates without losing revenue.
The danger is a repeat of 2001 and 2003, when President Bush and Congress enacted tax cuts that plunged the nation into debt.
The problem with this claim is that it isn’t true. Here’s a graph showing federal revenues and spending by year during the Bush years and the beginning of Obama’s term (numbers from the Tax Policy Center):
What we see are federal revenues beginning to decline from the end of the Clinton administration into the Bush administration, and then plunging during the post-9/11 recession. The Bush tax cuts begin to have an impact after 2003, and we see a steady rise in federal revenues until 2007 at which point they drop off again into the 2008 fiscal melt down.
Throughout these ups and downs, however, federal spending maintains steady growth, accelerating with the election of President Obama.
The Washington Post blames the Bush tax cuts for creating deficits by lowering revenues, but that’s demonstrably not true. Federal tax revenues grew after the Bush tax cuts. What created deficits the refusal of our political leaders – both Republican and Democrat – to match federal outlays to revenues.
In other words spending, not tax cuts, created the deficits.