It’s Not A Spending Problem. It’s A Revenue Problem.
A long time Republican talking point on the budget is that we allegedly have a spending problem and don’t have a revenue problem. They have it exactly backwards. It’s time to fact check Republican gaslighting on spending and taxes.
The GOP is gaslighting us on spending when they claim that spending is allegedly out of control. Let’s look at the facts. Federal spending was 31.2 percent of GDP in 2020. Federal spending was 25.6 percent of GDP in 2022. Federal spending will be 24 percent of GDP under Biden’s budget. Spending is down significantly since Biden took office.
What is never mentioned by the mainstream press and the GOP is that in the absence of the failed Bush 43 and Trump tax cuts, we would have a balanced budget.
According to the Center For American Progress on March 27, 2023:
“Tax cuts initially enacted during Republican trifectas in the past 25 years slashed taxes disproportionately for the wealthy and profitable corporations, severely reducing federal revenues. In fact, relative to earlier projections, spending is down, not up. But revenues are down significantly more. If not for the Bush tax cuts and their extensions — as well as the Trump tax cuts — revenues would be on track to keep pace with spending indefinitely….
In other words, the current fiscal gap — the growing debt as a percentage of the economy — stems from legislation that cut taxes, disproportionately for the very rich…If Congress wants to decrease deficits, it should look first toward reversing tax cuts that largely benefited the wealthy, which were responsible for the United States’ current fiscal outlook.”
Another long time false GOP talking point is that tax cuts pay for themselves. According to the GOP aligned Committee For A Responsible Budget in 2017, tax cuts reduce revenues: “While well-designed tax cuts may grow the economy (often not as much as tax reform), there is no case in which they could grow the economy enough to be self-financing. At best, tax cuts can finance a fraction of their costs through faster growth — and maybe not even that…..Past tax cuts in 1981 and the early 2000s have led to widening budget deficits and lower revenue, not the reverse as some claim.”
The Committee For a Responsible Federal Budget has been heavily funded by Republican billionaire Pete Peterson. This organization has long supported cuts to Social Security, Medicare, and other safety net programs. They aren’t leftists.
As I will discuss, by any objective measure, the Bush 43 and Trump tax cuts have failed. The expensive tax breaks for the wealthy never trickled down.
By the time Bush left office, the economy had collapsed and was hemorrhaging 800,000 jobs per month. According to Ron Brownstein of The Atlantic: “While Bush was in office, the median household income declined, poverty increased, childhood poverty increased even more, and the number of Americans without health insurance spiked.”
Bush was the only two term president in American history to preside over a decline in middle class incomes during his two terms as president. Moreover, at the time, Bush had the worst job creation record since Herbert Hoover.
The Trump jobs record was worse. In 2020, the U.S. economy lost a net 10 million jobs. Weekly unemployment claims between March and December 2020 exceeded the worst week of the 2008–09 recession. Trump left office after nearly 50 straight weeks of the worst job losses in American history. Trump was the first president since the Great Depression to leave office with fewer jobs in the country than when he was inaugurated.
Republicans will argue that we should measure Trump’s record as of February 2020. They like to pretend that the last eleven disastrous months of Trump’s presidency never happened. While Trump didn’t cause the pandemic, his performance made everything worse. In 2020, the U.S had the worst economic outcome of any first world country due to Trump’s incompetence.
In any event, let’s now give Trump every benefit of the doubt and imagine that his presidency ended eleven months early. Trump promised that the 2017 tax cuts would: 1. Deliver a $4,000 pay raise to the middle class; 2. Pay for themselves; 3. Kick off an investment boom; 4. Generate 6% GDP growth. 5. Generate more job growth.
None of this happened. Even before the pandemic, middle class incomes rose a paltry 1% adjusted for inflation; the deficit increased from $585 billion to $1 trillion; 85% of the tax cuts were spent on dividends and stock buybacks; there was no investment boom; GDP growth was no different than it was under Obama; and job growth declined by 20%. By Trump’s own criteria, the 2017 tax cuts were a failure.
Despite this record of failure, the GOP wants to extend the Trump tax cuts. That would add $3.5 trillion to the national debt. The reality is that we could substantially reduce the deficit by repealing the failed Bush and Trump tax cuts for the rich.
“The modern American right doesn’t care about deficits, and never did. All that talk about debt was just an excuse for attacking Medicare, Medicaid, Social Security and food stamps.” Paul Krugman
The D.C. Republicans believe that rich people don’t have enough money and that the poor and middle class have it too easy.
Please like and share this post because the mainstream media and the GOP never mentions these facts.