FY revenues outlays balance 2000 2025.5 1789.2 236.2 2001 1945.9 1820.6 125.3 2002 1777.8 1929.2 (151.3) 2003 1665.5 2018.2 (352.8) 2004 1707.3 2082.1 (374.8) 2005 1888.2 2167.3 (279.1) 2006 2037.1 2247.1 (210.0) 2007 (est) 2103.3 2305.4 (202.2)
Sure deficits have shrunk in the past three years, because 2003 and 2004 ran the highest deficits in real dollars since World War II. A moderate disaster is an improvement on a big one.
The tax cuts were great and certainly beneficial to the economy, but the spending cuts that didn't go along with them have increased federal debt at the end of this year by $1,900,000,000,000.00 2007 dollars and a big tax hike - not just expiration of the cuts relative to 2000, but additional increases - is coming next administration to pay for it.
It’s kind of silly to look at things in real dollars, when GDP today is well over 10 times what it was during WWII.
Tax revenues, as a share of GDP, were at 18.5% last year, higher than they were in 2000, before the Bush tax cuts!
You can try to raise tax rates to 50%, but you’re just going to stunt GDP growth (taxing a bigger piece of a smaller pie) and encourage more noncompliance. We’ve had top tax rates of 35-90% since WWII, and rarely has the federal treasury collected over 20% of GDP. In fact, the 18.5% last year is above the historical average.
Someone has to cut spending. But Congress is as much at fault for that as the President is.
The $2 trillion in debt pales in comparison to future SS/Medicare liabilities that are going to hit when the boomers retire. The only way to manage to pay for all this is to enlarge the pie, and that means promoting pro-growth policy even with some short term cost.