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Friday, January 26, 2007
Stop, Tax Foundation, Please Stop
The Tax Foundation's blog has an aggravating but typical post up. The basic claim is that spending has risen faster than tax revenues over the last 6 years. Therefore, it's spending that's out of balance, not revenues. So, implicitly, spending should be reduced to eliminate the deficit.
This argument downplays a basic point: that the recent tax cuts considerably reduced the rate at which revenues could have grown. In fact, had none of the 2001-2005 tax cuts had been imposed, the Center on Budget and Policy Priorities found that the federal budget would have been balanced in 2006. The budget would probably have been in surplus this year given that spending isn't increasing as fast as it once was. Taxes and spending would have risen at about the same pace.
More importantly, deficits pretty much alway mean that spending has risen faster than revenues. By the Tax Foundation's logic, whenever the rate of spending growth outpaces the rate of revenue growth, spending's the problem. But unless the starting point is a significant surplus, that means that whenever there's a deficit, we need to lower spending.
The Tax Foundation's logic is set up to lead to the conclusion that spending must be cut. Of course, to groups like the Tax Foundation, the problem with the budget is always that we're spending too much, no matter what the circumstances are.
We need a better way to think about facing fiscal challenges. Let's focus on the needs and priorities of the American people rather than wonky calculations that remove them from budget decisions.
Posted by Matt Lewis
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