New at Reason: How to Balance the Budget Without Raising Taxes

December 5, 2010

Can America really reduce its debt and deficit without raising taxes to job-killing rates or cutting essential services to developing-world levels? The answer is not simply yes, it's that we have to.

Raising government revenue - taxes - substantially is not only bad policy, it has proven impossible. Since 1950, annual government revenue, as a percentage of Gross Domestic Product (GDP), has averaged just below 18 percent despite every attempt to jack it up or tamp it down. Our post-World War II experience shows that if the government is going to live within its means, it can't spend much more than 18 percent of GDP.

As Nick Gillespie and Veronique de Rugy explain, that would require trimming just $130 billion from budgets averaging over $4 trillion annually. If we can't manage that, it may just be time to move to Greece.

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