Skip to comments.Reduce Spending to 21% of GDP--1 Point Higher Than Highest Taxes Since WWII(Erskine Bowles)
Posted on 07/25/2012 3:13:57 AM PDT by Son House
Erskine Bowles, the co-chair of President Obamas fiscal responsibility commission, says that the federal government should aim at cutting spending back to 21 percent of GDP--which is 1 point more than the highest level federal tax revenues have reached in any year since World War II.
At the National Press Club on Tuesday, CNSNews.com asked Bowles at what level of Gross Domestic Product he would balance the federal budget, given that federal spending has exceeded 24 percent of GDP over the last four years and that since World War II federal tax revenues have reached 20 percent of GDP only once--and have never been as high as 24 percent of GDP.
I can tell you the way we thought through it, its not exactly 100 percent of the way everybody up here would do it. But you have roughly the right numbers--in 2020, I believe the forecasts were for spending to be around 24, 25 percent (of GDP) and revenue to be around 19 percent, Bowles said.
If we wanted to get the deficit down to at least 1 percent of GDP, that meant we had to get spending down to around 21 percent and we had to get revenue up to around 20 percent. Thats in fact what we were able to do in our plan, he said.
(The Simpson-Bowles plan, which the Obama administration did not move forward with, called for reducing the deficit to 2.3% of GDP by 2015 by capping revenue at 21 percent and getting spending below 22% and eventually to 21%.)
On Tuesday, Bowles said, I believe we can get spending down to 21 percent (of GDP), even with the changes in the demographics and even with health care growing out at a rate of, lets say, GDP plus one, if we can slow it down to that kind of level. Somebody asked earlier, How do you do that? You make really tough choices.
As for the revenue (tax) side of the equation, Bowles said, as the economy improves and we go through the measures of broadening the base, simplifying the code, and getting rid of some of the spending in the tax code, that we can also create additional revenue, he said. (Spending in the tax code translates as tax cuts.)
As CNSNews.com previously reported, balancing the budget at current levels of spending would require record levels of taxation.
In fiscal 2009, 2010 and 2011, according to the White House Office of Management and Budget, federal spending was 25.2 percent, 24.1 percent, and 24.1 percent of GDP, respectively. In fiscal 2012, which will end on Sept. 30, the OMB estimates federal spending will be 24.3 percent of GDP.
Since 1945, taxation has gone as high as 20 percent of GDP only once, reaching 20.6 percent in 2000. The federal government collected 15.8 percent of GDP in revenue in 2011, and it is projected to take in 17.8 for fiscal year 2012.
Bowles and his National Commission on Fiscal Responsibility and Reform partner Sen. Alan Simpson (R-Wyo.) launched a new Campaign to Fix the Debt on Tuesday. The coalition is co-chaired by former Sen. Judd Gregg (R-N.H.) and former Democratic Governor of Pennsylvania, Ed Rendell.
At the Press Club, Bowles, who served as chief of staff to President Bill Clinton, talked about cutting government waste.
We do $1.5 billion of annual federal scientific research at the University [of North Carolina], he said. Is all of that high value-added research? Its not.
Nor is it at the 3,000 other colleges and universities that do scientific research, Bowles added. I want to invest in education, I want to invest in research, I want to invest in infrastructure, but weve also got to look at how were spending our money today and make sure we spend it more wisely.
Thats why we can bring spending way down and thats why I
The Simpson-Bowles National Commission on Fiscal Responsibility and Reform, appointed by President Obama, proposed a six-part plan to put our nation back on a path to fiscal health, promote economic growth, and protect the most vulnerable among us.
Taken as a whole, the plan, which was released in December 2010, would:
Achieve nearly $4 trillion in deficit reduction through 2020, more than any effort in the nations history.
Reduce the deficit to 2.3% of GDP by 2015 (2.4% excluding Social Security reform), exceeding Presidents goal of primary balance (about 3% of GDP).2
Sharply reduce tax rates, abolish the AMT, and cut backdoor spending in the tax code.
Cap revenue at 21% of GDP and get spending below 22% and eventually to 21%.
Ensure lasting Social Security solvency, prevent the projected 22% cuts to come in 2037, reduce elderly poverty, and distribute the burden fairly.
Stabilize debt by 2014 and reduce debt to 60% of GDP by 2023 and 40% by 2035
Here is the situation: Food Stamp use (and abuse) exploding, more people in American on Social Security Disability than ever before, Welfare reforms unconstitutionally squashed by the dictator's "Executive Order", illegals by the millions raking in hundreds of Billions in "benefits", Medicare/Medicaid spending choking the nation, ObamaCare already causing people's health insurance premiums to explode exponentially and it hasn't even been implemented yet, interest on our 16 Trillion (most people cannot even coneive of that number) is taking up a huge portion of our Federal pie chart.
To the Democrats, the only solution is cut the 3.5% of our GDP that is acutally in the Constitution and that creates jobs - Defense. It has already by slashed by over $500 Billion by Obama and is about to be decimated this January.
Our nation is on the precipice of complete collapse: economically, militarily, politically, morally, and spiritually.
Releasing the "thoughts" of the Simpson Bowles Commission does NOTHING. Your party (the Democrats) walked into the "Super Committee" hearings with a snicker, knowing full well they wanted to do nothing except slash Defense and increase entitlements.
So spare me the lecture Mr. Bowles.
I have to go now.....my "free" ObamaPhone is ringing.
You can look at federal government spending as a percentage of GDP by year here.
Mitt has stated his goal of reducing the Fed payouts to 17% of GDP. That’s the primary reason I support him now.