The Federal Deficit: A Spending or Revenue Problem?
History of the Federal Deficit One of the most polarizing issues in today's political playing field is the case of the massive deficits and mounting federal debt, along with the solution.
To the Republican Party (and for that matter, libertarians and the Tea Party) the problem is one of spending.
The government has grown too large and the cost of maintaining it is too expensive and burdens America with high tax rates.
The right thing to do is to scale back government and cut taxes.
To the Democrats, the issue is one of lowered taxes on corporations.
As a result, there is much name-calling and accusations from both sides of the political aisle.
Democrats accuse Republicans of coddling the rich and large corporations at the expense of the middle and lower classes.
Republicans accuse Democrats of inciting class warfare, wealth distribution and wanting to maintain a welfare/nanny state.
In the melee of ad hominem attacks and rhetorical soundbytes, getting a straight answer can be difficult.
Fortunately, data is indifferent to labels and can give us a straight answer.
History of Government As American society has grown larger and more complex, so too has the government.
With scientific knowledge has come the existence of agencies like the EPA and FDA which help ensure water is safe to drink and food and drug products are safe to consume.
As the stock market and banking sector have grown larger and more complex, agencies like the SEC and FDIC have been created to regulate activity and give investors and depositors added confidence, creating a more stable economy.
The expansion of the US military and creation of programs like Social Security, Medicare and Medicaid have also increased the role of government.
History of Taxes As the size of government has grown to meet the realities of a society that grows in both size and complexity, taxes in many ways.
The top marginal tax rates has been lowered from 91% to 28%.
Capital gains taxes today stand at 15%, which are lower than income taxes (meaning wealthy Americans making the majority of their earnings through capital gains pay a lower percentage in taxes than many middle income workers).
Corporate taxes have also been lowered over the last 30 years.
History of the Federal Deficit This combination of government growth and a suppressed tax rate has led to a growing deficit.
This has been exacerbated in recent years.
Under the Bush administration, taxes on the wealthiest Americans were reduced to the lowest rates since the Great depression and spending has increased.
The recent economic recession lowered tax revenues even lower, and automatic stabilizers that kick in when an economy is in recession have increased spending.
Reality meets Ideology The Republican's refusal to allow taxes on corporations or the wealthiest Americans is simply unrealistic and reflects an ideology of small government and free markets as opposed to a serious attempt to balance the budget.
Taxes on both are at their lowest in decades (including under many Republican presidents).
To the Republican Party (and for that matter, libertarians and the Tea Party) the problem is one of spending.
The government has grown too large and the cost of maintaining it is too expensive and burdens America with high tax rates.
The right thing to do is to scale back government and cut taxes.
To the Democrats, the issue is one of lowered taxes on corporations.
As a result, there is much name-calling and accusations from both sides of the political aisle.
Democrats accuse Republicans of coddling the rich and large corporations at the expense of the middle and lower classes.
Republicans accuse Democrats of inciting class warfare, wealth distribution and wanting to maintain a welfare/nanny state.
In the melee of ad hominem attacks and rhetorical soundbytes, getting a straight answer can be difficult.
Fortunately, data is indifferent to labels and can give us a straight answer.
History of Government As American society has grown larger and more complex, so too has the government.
With scientific knowledge has come the existence of agencies like the EPA and FDA which help ensure water is safe to drink and food and drug products are safe to consume.
As the stock market and banking sector have grown larger and more complex, agencies like the SEC and FDIC have been created to regulate activity and give investors and depositors added confidence, creating a more stable economy.
The expansion of the US military and creation of programs like Social Security, Medicare and Medicaid have also increased the role of government.
History of Taxes As the size of government has grown to meet the realities of a society that grows in both size and complexity, taxes in many ways.
The top marginal tax rates has been lowered from 91% to 28%.
Capital gains taxes today stand at 15%, which are lower than income taxes (meaning wealthy Americans making the majority of their earnings through capital gains pay a lower percentage in taxes than many middle income workers).
Corporate taxes have also been lowered over the last 30 years.
History of the Federal Deficit This combination of government growth and a suppressed tax rate has led to a growing deficit.
This has been exacerbated in recent years.
Under the Bush administration, taxes on the wealthiest Americans were reduced to the lowest rates since the Great depression and spending has increased.
The recent economic recession lowered tax revenues even lower, and automatic stabilizers that kick in when an economy is in recession have increased spending.
Reality meets Ideology The Republican's refusal to allow taxes on corporations or the wealthiest Americans is simply unrealistic and reflects an ideology of small government and free markets as opposed to a serious attempt to balance the budget.
Taxes on both are at their lowest in decades (including under many Republican presidents).
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