Budgepocalypse 2012: Revenge of the Budgepocalypse

Feeling a little too upbeat? A little happy, or satisfied with the state of the world? The Congressional Budget Office has a cure for you. This year’s Budget and Economic Outlook—the budget office’s annual preview of projected federal spending, revenues, and deficits over the next decade (or, as I like to call it, the Budgepocalypse)—begins with the following line: “The federal budget deficit—although starting to shrink—remains very large by historical standards.” How large? According to the latest number, “the federal budget will show a deficit of nearly $1.1 trillion in fiscal year 2012.” That’s roughly seven percent of America’s total gross domestic product—a couple points below last year’s megadeficit, but, the CBO notes, “still higher than any deficit between 1947 and 2008.”

In 2012, the agency projects that the federal government will spend about 23.2 percent of our total economic output. But it will only bring in revenues equal to about 16.3 percent of the economy. That mismatch is  what creates our deficit. Keeping that mismatch, or something like it, going year after year is what creates our long-term debt. Now, liberals might say that the problem is that we don’t tax enough. But remember: Even when top tax rates were much higher, we’ve never managed to tax that much.  The federal government has never once collected revenues in excess of 20.9 percent of GDP (and that was a one-time deal). Overall, it has averaged about 18 percent since World War II, regardless of tax structure or top tax rates. Which means that we’re not just spending more than we’re taking in now; we’re spending more than we’ve ever managed to take in. And the projections show that we’re planning to spend even more. 

Now, it’s true that current law, and thus CBO’s “current law” baseline, calls for us to tax even more, and to cut some hundreds of billions in spending on physician payments out of Medicare: But that’s because current law assumes that we’ll cut payments to physicians by nearly 30 percent in a few months, despite years of both parties supporting overrides to such cuts. And it assumes that tax hikes, including allowing the Alternative Minimum Tax, which was originally designed to hit just 55 very wealthy earners, will eventually hit half the country (meaning much of the middle class)—something neither party is going to support.

As is now common, liberal wonks are pointing to the baseline scenario as evidence that we don’t really have a deficit problem. After all, Congress just has to follow current policy in order to keep revenues nearly in line with expenditures. But even forgetting about the country’s historical inability to raise tax levels substantially above 20 percent of GDP, there’s simply no plausible near-future political environment in which this happens. It’s a cute fantasy designed to comfort those who don’t want to cut federal spending.

And ultimately, it’s the increases in spending that kill us: “If that rising level of spending is coupled with revenues that are held close to the average share of GDP that they have represented for the past 40 years...”, the CBO says, “the resulting deficits will increase federal debt to unsupportable levels.”

As usual, the CBO says there are three basic ways out of the current deficit mess: "To prevent that outcome, policymakers will have to substantially restrain the growth of spending for those programs, raise revenues above their historical share of GDP, or pursue some combination of those two approaches.” Liberals might take comfort in the thought that we can fix the budget through tax hikes. But as I’ve written before, they shouldn’t. Tax hikes may not bring in enough revenue. And regardless, any tax hikes big enough would represent a unprecedented increase and fundamental change in the American tax burden—and wouldn’t be politically plausible. At some point, then, the federal government will have to substantially cut spending; the sooner the better. 

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  • ||

    Mixing different Mad Max movies, and then adding Waterworld to the mix?

    Suder-Man, who run Metaphortown?

  • Fist of Etiquette||

    Ain't you a pair.

  • Gojira||

    We don't have to, and won't, do any of those things. We'll keep spending like we always have, and just print, print, print. And as long as the rest of the world is content to along with the charade, the house of cards will get built up ever higher...

  • Brazil||

    Hey, worked for us.

  • Southerner||

    Celebrate bad times... Come on!
    Celebrate bad times... Come on!

  • Gojira||

    Or we could just shoot Episiarch in the head. Some say that he is the sole source of all our present troubles. I have it on good authority that they are correct.

  • ||

    Do you know who I was, Jimbo? Nobody. Except on the day after, I was still alive. This nobody had a chance to be somebody.

  • Gojira||

    The fact that you can quote that makes me hate you even more.

    The fact that I recognize the quote makes me want to take your straight-up murder and make it into a murder-suicide.

  • ||

    Ladies and gentlemen, boys and girls, and whatever Jimbo is...dyin' time's here.

  • Southerner||

    Remember: no matter where you go, there you are.

  • juris imprudent||

    Okay, so Epi is "Master", that must make Warty "Blaster".

  • Mr. FIFY||

    According to Tony, the source of all our troubles is having a 34% top tax rate instead of a *39.6%* top tax rate.

  • Y-not||

    Yeah, that and we don't spend enough. What an imbecile.

  • ||

    sweet taser video and commentary over at volokh.com (actually a followup to previosu posting with poll). pretty fair commentary on both sides of the issue, as per usual.

    i'm "whit" on volokh.com

    http://volokh.com/2012/01/31/m.....nt-1375001

  • Marshall||

    Just raise taxes back to sensible levels. Problem solved.

    The 1950's and 1960's had a booming economy and created the middle class despite higher tax rates so any objective analysis of history puts a lie to the notion that we can't raise taxes or that raising taxes will hurt the economy.

    I mean sure, we can keep taxes to historic lows and let the rich loot more and more of the treasury increasing inequality and poverty while slashing vital services, or simply raise those rates back up, close the budget gap and restore services to reasonable levels.

  • ||

    which of course is based on much mythology. you ignore the extensive loopholes present along with those higher rates, such that people didn't pay NEARLY what the rates were, whereas now, with AMT etc. the rates are much closer to what people actually pay

    this has been extensively debunked, although libs to this day, love to bring up the max rate under eisenhower, without acknowledging the loopholes

    the REVENUE from taxes per capita etc. was nowhere near as high as it would have been if those rates were REAL

    they weren't

    they were a fiction.

  • Marshall||

    Then just go and fix the loopholes. This isn't rocket surgery.

  • Your brain could use some||

  • ||

    nobody wanted to fix the loopholes because they know damn well, the tax code woul;dn't have owrked without them

    you don't get productivity when people are taxed at excessively high rates

  • ||

    A+ trolling FTW. Rocket surgery, how does it work.

  • Tman||

    any objective analysis of history puts a lie to the notion that we can't raise taxes or that raising taxes will hurt the economy.

    Income Tax Cut, JFK Hopes To Spur Economy 1962/8/13 - YouTube

    President Kennedy proposed across-the-board tax rate reductions that reduced the top tax rate from more than 90 percent down to 70 percent. What happened? Tax revenues climbed from $94 billion in 1961 to $153 billion in 1968, an increase of 62 percent (33 percent after adjusting for inflation).

    According to President John F. Kennedy:

    Our true choice is not between tax reduction, on the one hand, and the avoidance of large Federal deficits on the other. It is increasingly clear that no matter what party is in power, so long as our national security needs keep rising, an economy hampered by restrictive tax rates will never produce enough revenues to balance our budget just as it will never produce enough jobs or enough profits… In short, it is a paradoxical truth that tax rates are too high today and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now.

    You were saying?

  • Marshall||

    You can't compare it to back then because the same era had the Civil Rights Act and Great Society which brought people out of the shadows and into the real economy.

    In the 1990s we raised taxes just a little and would have had surpluses forever, at the same time as an economic boom. Then Bush cut taxes for the wealthy and we have record deficits and a near depression.

    I think the evidence is pretty damning.

  • Tman||

    I got the above mentioned JFK quote from this link.

    The Historical Lessons of Lower Tax Rates

    I'm sure you'll have an excuse for why each of these individual examples of lowering tax rates that raised revenues substantially is wrong though.

    Save it.

    And by the way, Bush cut taxes -for everyone, not just the wealthy- after the financial collapse due to the Dot-com/Enron/9/11 snowball effect, and the country was out of the recession in two years. The most revenue over collected in our history was $2,568 billion, and that happened in Fiscal Year 2007 - four years after Bush's final round of tax cuts.

  • Marshall||

    And a year later we had the largest deficit in U.S. history thanks to those same tax cuts. And tax revenues had plunged to historic lows as a percentage of GDP.

    You can't claim on the one hand that revenue is always 18% of GDP and on the other hand claim that tax cuts raise revenues, that's not only nonsensical it's not supported by any evidence.

  • Tman||

    And a year later we had the largest deficit in U.S. history thanks to those same tax cuts.

    You think it was tax cuts that caused the deficit?

    I think it was spending. You can tax at whatever rate you want but the reality is if spending isn't contained you will have a deficit regardless of the amount of tax revenue. Raising taxes doesn't increase government revenues necessarily, it only lets the government control more of how your money is spent.

    Now what else happened that year (and the consecutive years after) where the government bought a bunch of shit it couldn't afford?

    Any ideas Marshall?

  • Marshall||

    So like I said, you'd cut vital services like Health Care and Social Security hurting the worst off among us rather than let the rich actually pay for something.

    We don't even have universal health care and education in this country and you want to start tearing apart what little we have?

    If we ask everyone to pitch in we'll strengthen the social fabric of this nation rather than continue to tear it apart thrusting more Americans into poverty.

  • Tman||

    you'd cut vital services like Health Care and Social Security hurting the worst off among us rather than let the rich actually pay for something.

    Where did I say I'd do that? And uh, dummy, The top 5 percent pay well over half the income taxes. They are already paying for something. In fact, they are paying for half of it.

    We don't even have universal health care and education in this country and you want to start tearing apart what little we have?

    I don't even know what that means.

    If we ask everyone to pitch in we'll strengthen the social fabric of this nation rather than continue to tear it apart thrusting more Americans into poverty.

    According to the non-partisan Tax Foundation, taxing those making over $10 million at a 100% rate would only net the Federal government $186 billion in additional revenue

    Also, we wouldn't have anyone making over $10 million anymore. But then I bet our social fabric would be as strong as ever!

  • Marshall||

    Why do we need anyone to make over $10 million?

    Half this country is in or almost in poverty. I think that's far more important than some CEO getting another bonus for shutting down factories and moving them overseas.

  • Tman||

    Why do we need anyone to make over $10 million?

    Because fuck you, that's why. You think you have a right to tell people how successful they can be?

    Half this country is in or almost in poverty. I think that's far more important than some CEO getting another bonus for shutting down factories and moving them overseas.


    The poorest 5% of Americans are among the richest people in the world (richer than nearly 70% of other people in the world). That doesn't mean that living in inner city Detroit is fucking paradise by any means, but since we're living in your fantasy world here I thought I'd throw that out.

    When you start saying things like this "We currently do not have universal health care or education in this country." I kinda feel like I'm being punk'd or something so Imma just let you keep livin' the dream man...

  • Marshall||

    It's not about being successful, it's about taking the needs of society into account rather than just hoarding anything you can get your hands on.

    We don't have universal health care or education. You often have to pay out of pocket and go into massive debt to take care of your cancer or to get a Masters Degree which effectively cuts it off from large swaths of the population which just compounds their impoverished status by eliminating any chance at upward mobility.

    It would be nice to start having a global program to improve the standard of living for all people on the planet, but we can't even get it done in our country right now due to some strange resistance to supporting our communities so doing what needs to be done for the entire planet is going to be even harder. I say we do the sensible things here at home, get everyone on equal footing and then export that system to the rest of the globe.

  • Tman||

    I never thought I'd say this, but you make Herc sound sane and logical.

    Impressive.

    +1, would troll again.

  • ||

    Why do we need anyone to make over $10 million?


    We? Need? You're joking, right? What the fuck do your needs have to do with anybody else's income?

    Half this country is in or almost in poverty.


    And mighty high-class, comfortable poverty at that, what with the cable TV and smart phones and all. Jesus fuck, what a maroon.

  • Marshall||

    The proper way to measure poverty is not through simple black and white material measurements but instead to evaluate someones available capabilities and opportunity against the society they reside in.

  • The Bearded Hobbit||

    The proper way to measure poverty is not through simple black and white material measurements but instead to evaluate someones available capabilities and opportunity against the society they reside in.

    Wow, that is some pure-grade babble! I award you 25 Internet points because I haven't got the slightest clue what the hell you are talking about!

    ... Hobbit

  • Political Scientist||

  • juris imprudent||

    You'll have to take that up with the Lakers and Kobe Bryant, not me.

  • ||

    You don't "need" more than a few hundred calories a day and some water. Anything beyond the bare minimum of survival is a bourgeois luxury. If you want more than starvation rations, comrade, you're just going to have to wait your turn.

    My, don't the nomenklatura in charge of the redistribution committee look quite fat and happy, though?

  • Marshall||

    It's easy to know what it means. We currently do not have universal health care or education in this country. We need to take the steps to make sure everyone is taken care of, cutting spending will just make things worse than they already are as we gut the relatively minimal amount of health care and education we already are provided.

  • ||

    You know, every time some fucktard on Facebook says that the "rich" have to pay their "fair share" of taxes, I throw it out there: the top 10% pay 70% of all income tax, while the bottom 50% pay 0%. I haven't yet gotten a response, so I have yet to figure out how it's the "rich" who are underpaying.

    Wanna bet that Marshal can't explain it coherently, either?

  • Marshall||

    Income taxes aren't the only taxes. The poor in this country aren't getting away with paying nothing. They're effectively paying the most when you include the cost of services they depend on being cut.

    The rich have 85% of the income so of course they pay 70% of the income taxes. That's why we need a progressive tax instead of the regressive tax we have now. It's unfair to burden the poor when there is so much unnecessary wealth just sitting out there.

  • ||

    I said a coherent answer, which you do not provide. I said that the top 10% pay 70% of income taxes, to which you reply that "the rich" have 85% of the income. Clearly, there's no way that 90% of earners are scratching and clawing over 15% of the income, which you gloss over with vague and undefined terms.

  • BigT||

    A big difference is that States and Cities have much, much higher tax rates than in the 50's or 60's. Combined with federal taxes the diff levels of govt are NOW looting more from the economy than ever before.

  • Jeff||

    The evidence is pretty damning: your parents and educators failed miserably.

  • BC||

    Let me translate your post from the original Moron-ese:

    "I am a fatally stupid person who is blissfully ignorant of the sixty years of data demonstrating that no amount of dicking around with marginal tax rates is sufficient to generate government revenues above around 18% of GDP."

  • Marshall||

    Then how do other countries bring in revenues greater than 18% of their GDP?

    Every single European nation brings in twice that or more. Germany is at 39%, France at 43% and Sweden at 47%?

    How does your 18th century dogma square with those facts?

  • Southerner||

    You of all people should know, Marshall: they lied. They're kind of like this guy... and you.

  • Mr. FIFY||

    Oh, great... another genius who thinks higher taxes solves all our problems.

  • Y-not||

    The 1950's and 1960's had a booming economy and created the middle class despite higher tax rates

    And why was that? You had a generation of pent up demand being released following the Depression and the rationing of WW2, the early stages of the baby boom, and no from international competitors owing to the fact that the industrial bases in Europe and Asia were a pile of rubble.

    Any analysis that excludes these facts is ideologically driven.

  • New Year's Eve 1979||

    Johny Carson hosted his show Tina Turner was on stage wearing what looked like nothing Beautiful skin suit black woman on stage really skinny then I did something for the first time in my life that night.

  • ?||

    Is there nothing warmer or fuzzier than the sunny side of a bumble bee?

  • ryan||

    I am willing to pay a 25% tax rate under two conditions:

    1) Reduce spending in the near future, particularly on entitlements and military.

    2) Impeach and banish Obama to the Guantanamo Bay detention facility, assuming he hasn't closed it, while wearing a pointy hat labeled 'DUNCE'.

  • pagal||

    When I saw the alt-text on the first photo, I read it as "Alternative Vaseline Scenario". It seems just as appropriate.

  • ||

    Need to do both raise taxes and cut spending.

  • Mr. FIFY||

    No, no, no. Keep tax rates right where they are, THEN cut spending.

    This ain't rocket surgery.

  • Kwanzaa Cake||

    The unfunded liabilities if social security and medicare/medicaid alone are 37 TRILLION. There is absolutely no chance that any system of taxation can or will raise that amount. Cutting spending is the only answer. Well, that and/or bond-market induced shock therapy.

  • Mr. FIFY||

    Not if we tax the rich at 3000%.

    Just ask Tony, he'll school ya.

  • ||

    WE ARE MARSHALL

  • ||

    Again with the lulz-inducing one liner? Seriously, you've been on roll all day, across all threads. Just thought the good work should be acknowledged..

  • Lord Humungus||

    I must comment in here for no other reason other than one of minions is pictured.

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