We have a revenue problem, not a spending problem

Joan McCarter    Tue Jul 05, 2011

The refrain that's won the day, apparently, for budget negotiators racing to see who can get the most praise from the Very Serious People for making the most Americans suffer under austerity, is "we having a spending problem." Not to put too fine a point on it: Bullshit.

That's a chart from the Senate Appropriations Committee, making a key point.

Our deficit and debts can be traced to the fact that spending on entitlement programs and defense has shot up, and tax revenues have plummeted to their lowest level in decades. But spending on domestic discretionary programs has grown much more slowly. And, if you correct for inflation, and for growing population, it turns out we're spending exactly the same amount on these programs as we were a full decade ago....

"Although non-defense discretionary spending in nominal dollars has increased, when taking inflation and population growth into account the amount contained in the [2011 budget] represents no increase over what we spent in 2001, a year in which we generated a surplus of $128 billion," said chairman Daniel Inouye (D-HI) in a prepared statement. "So the right question to ask is: Are we really spending too much on non-defense programs? The answer is clearly no."

...In the wake of the Bush tax cuts, and the Great Recession, tax revenue has fallen through the floor to near-historic lows. As a percentage of GDP, it's fallen 24 percent since 2001, and if you correct for inflation, the government is collecting nearly 20 percent less per person than it was a decade ago. At the same time, the population-adjusted costs of mandatory spending programs—driven by Medicare, including its new prescription drug benefit, and Medicaid—have increased by over 30 percent. And, of course, defense spending has skyrocketed. But if you isolate domestic discretionary programs, a decade later we're spending no more on a per-person basis than we were back then.

What has increased? Health care spending, but at a rate that would have nearly been covered by massive loss of revenue in the past decade. TPM took the numbers from the Committee and "put them in a slightly different context, so you can see by what percentage spending and revenues have risen and fallen on a population adjusted basis over the last decade."

As they say, it clearly shows "what is and is not the culprit of deficits and our supposedly out-of-control spending."

 

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