Government Spending

Why is everyone picking on the Bush "tax cuts" rather than the Bush "spending increases"?

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As the discussion heats up over whether to extend some or all of the so-called Bush tax cuts, a liberal and post-conservative consensus is forming that the reductions in various revenue streams engineered by George W. Bush not only proved ruionous during Chimpy McHitler's two terms in office but would like totally destructerate the federal balance sheet going forward into what is rapidly shaping up as Anything But The American Century.

Our story thus far: The tax cuts passed in the past decade are set to disappear at the end of this year. The Congressional Budget Office estimates that if rates and loopholes revert to where they were before the cuts darkened this sweet land of liberty, the feds would rake in about $3.9 trillion more over the next decade. If, as President Barack Obama has said, Congress simply kneecapped the rates affecting individuals making over $200,000 a year and households pulling in more than $250,000, the feds would be better off by about $700 billion over the next 10 years. Incidentally, the entire federal budget for FY2010 is about $3.55 trillion, but will likely end up being higher (they usually do).

The opposition to extending any or some of the Bush taxes is now pushing the idea that, damn the shitty economy, we need more revenue to pay for government operations, which have been underfed lo these many years by Bushitler starving the feds' coffers like some sort of principled, small-government conservative. As opposed to the Big Government Disaster he really was.

Hence comments such as:

Alan Greenspan, who wants all of the cuts to expire, even the ones targeted at defenseless kittens: "I'm coming out in favor, in the first time in my memory, of raising taxes."

Bruce Bartlett, who smartly points out that Bush pushed Keynesian logic to get the cuts passed in the first place: "[The cuts'] main effect was simply to reduce the government's revenue, thereby increasing the budget deficit.

Daniel Gross, who offers up five things to keep in mind: "President Obama's proposal to extend the tax cuts for those making less than $250,000 per year will add $3.2 trillion to the debt. But as the Congressional Budget Office noted, extending them all will add $3.9 trillion in debt.

Ezra Klein, who implies that the GOP remains in control of a White House that has proposed extending $3.2 trillion in the Bush tax cuts and pushed trillions of dollars in new spending over the past 18 months: "There is no policy that President Obama has passed or proposed that added as much to the deficit as the Republican Party's $3.9 trillion extension of the Bush tax cuts."

OK, we get it: By cutting federal revenues via tax cuts and incontrovertibly stupid rebates (they really were), Bush created the deficits that now have to be countered with…even higher deficits. Right?

Well, not exactly. Here's the actual federal revenues gathered under Bush (whose budgets cover fiscal years 2002 through 2009, which actually includes some spending signed by Obama due to the inability of the government to hit its own budget deadlines). Prior to 2008, when the current recession had gone big, you'll notice exactly one year-over-year decline in revenue. And if you look closely, you'll notice some pretty fricking big increases there, too. How many of you saw year over year gains like this in the "Worst. Decade. Ever."? If you come out of a revenue chart like this in the red, you deserve to be president of Greece.

YearGDP-US
$ billion
Total Revenue-fed
$ billion
200210642.31853.40a
200311142.11782.53a
200411867.81880.28a
200512638.42153.86a
200613398.92407.25a
200714077.62568.00a
200814441.42524.00a
200914258.22105.00a

So if the feds were generally pulling in more bucks each year—even with those tax cuts that so decimated federal revenue – where did the deficits come from?

Oh, that's right: From massively expanded spending that happened both under a lying GOP Congress and a feckless Democratic majority. The story of the Bush years isn't to be found on the revenue side of the ledger, but on the spending side:

YearGDP-US
$ billion
Total Spending -fed
$ billion
200210642.32011.15a
200311142.12160.12a
200411867.82293.01a
200512638.42472.20a
200613398.92655.44a
200714077.62728.94a
200814441.42931.22b
200914258.23107.36b

Note: The [a] in the right-hand column refers to actual figures; the [b] in the right-hand column refers to estimates in the FY2009 budget, which will eventually be higher once all the dust is settled. Go here for more fun.

Granted, I've been an English major all my life and I'm not much for book-larnin' and those fancy words and plus and minus signs, but when I look upon these two charts, something hits me in the mush with all the force of a friendly Dick Cheney shotgun blast: "It's the spending, stupid."

This talk about whether tax cuts are irresponsible given the fiscal pickle we're in is nothing more than a way of diverting attention from what Milton Friedman identified years ago as the true cost of government: how much the government shells out in a given year. We're on the hook for it, either through higher taxes now or higher taxes later.

We're in a lousy economy and most folks would agree that it's not a great idea to hike taxes or create huge new entitlements and regulations that will take years to figure out. That sort of action creates exactly the sort of uncertainty that freezes people. So do desperate attempts to keep house prices from falling, zombified banks and car companies from going belly up, etc.

The one thing the federal government could conceivably do is bring some commitment to freezing or rolling back spending and intervention to some baseline. The first rule when you find yourself in a deep hole? Bitch and moan that it's the other guy's fault. The second rule? Stop digging.

Yes, I know, it's unlikely but not impossible that the feds would actually stop spending (go check Clinton's first four years).

But this much is certain: To talk about how "tax cuts" inexorably add to deficits ignores the amount of tribute that poured into D.C. throughout most of the '00s. It's a fundamentally faulty and fruitless discussion.

NEXT: THIS is the Alternative to "Eco-Fascism"?

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  1. Oh wow, that is indeed a very good question!

    Lou
    http://www.privacy-web.cz.tc

    1. What, no “dude”?

      For some reason, I always imagine anonbot’s posts in the “You got it, dude” voice…

  2. Both teams own the spending, so neither can speak against it. When does the mostly Republican Tea Party want fiscal responsibility? Now! How are they going to achieve it? They don’t know!

    1. When does the mostly Republican Tea Party want fiscal responsibility? Now! How are they going to achieve it? They don’t know By spending less than they take in!

      But yeah, my opponent has no ideas!

      1. “By spending less than they take in!”

        They say it though but they don’t mean it. Note their resistance to cuts to entitlements and the military, IE 75% of the federal budget.

        1. Yup. Medicare and SS are sacrosanct. As is the bloated and unaccountable military spending. Glenn and Sarah sittin’ in a tree: “Milit’ry, milit’ry, we love thee!”

          1. So point to the candidates who are more likely to do what you want.

            1. Well, Paul Ryan has a plan. Not perfect but it does the job.

              1. His plan adds huge amounts to the deficit, while increasing taxes on 90% of the country (the poorest 90%). And removing the social safety net. Quite a plan.

        2. Note their resistance to cuts to entitlements and the military, IE 75% of the federal budget.

          All of them? What about all this hooey about them being individuals and stuff?

          1. “They” doesn’t have to mean 100%. But if you look at the overall theme it’s pretty consistant. Stop nit picking.

            1. Stop nit picking.

              But it’s what we do!

              1. (Saves us the bother of thinking)

            2. Sure it doesn’t have to mean 100%. But no one has any hard numbers on this, do they? How you do poll at “tea partier” when there’s no formal org? Everyone likes to point at the sign that said “keep your government hands off my medicare” but I find it hard to believe that the majority of them are that stupid.

              1. Not stupid. Just dishonest and politically naive.

                1. and uniformed about the true source of government spending problems.

                  1. Faith will do that to a person.

    2. By taking Democrats and beating the shit out of them.

      Then hope that Republicans get the message.

  3. Why do you think they are not talking about the spending increases?

    That’s like asking Obama to tell us exactly what Bush “deregulated.”

    1. Nothing was “deregulated”.

      Just as getting a 5% raise when you asked for a 15% raise is not a 10% pay cut (as government unions claim), slightly less new regulation is not the same as repealing existing regulation.

    2. Two deregulations that happened:
      Relaxing the amount of capital that banks needed to have, so they could leverage themselves out more. This was like a 10x change.
      And relaxing the loan documentation requirements for borrowers. So you could buy a home with no income verification and no money down.

      Do you think those two had anything to do with the housing bubble?

  4. It’s a fundamentally faulty and fruitless discussion.

    Not that that ever stopped us.

    1. At least it’s not faultless and fruity.

  5. The same people who say the tax cuts are irresponsible in the next breath claim that we need another trillion dollars or more in stimulus. None of these people care about fiscal responsibility. They just want to take as much as possible.

    And also this is not about “extending tax cuts”. That is just a bizarre way to put it. This is about avoiding Bush and the 03 Congress’ programed tax increases. The economy has adjusted to the tax rates as they are. What is going to happen is a programed tax increase. And it was the RINOs and Democrats in the 03 Congress who created this tax increase.

    1. Fucking bullshit John.

      The non-RINO Republicans wanted ONLY tax cuts for the rich. They stuck in middle class cuts (which they didn’t want) so they could get the votes, and they stuck in the sunset so that they could pass it with reconciliation.

      But don’t let that stop you carrying conservadick water. Jesus Christ. You guys never take responsibility for anything.

      1. Tony seems to be in less than top form today.

      2. Here Tony, Penn & Teller explain it to you, using small words and props.

        You should be able to get it.

      3. Oh good lord what a buffoon.

      4. Wealth envy is not a viable economic policy, Tony.

        1. Neither is anything the Republicans are offering.

  6. Fish gotts swim, birds gotta fly, et c.

    Government bloat is the natural order of things.

  7. “It’s the spending, stupid.”

    This should be on every sign at ever Tea Party rally from now, until the end of time.

    1. Strategic error. Somebody might come along and ask them how, or what newspapers they read and other such cunning tricks.

      1. You’re so clever!

        1. what newspapers they read

          All of them!

  8. Ezra Klein, who implies that the GOP remains in control of a White House that has proposed extending $3.2 trillion in the Bush tax cuts and pushed trillions of dollars in new spending over the past 18 months: “There is no policy that President Obama has passed or proposed that added as much to the deficit as the Republican Party’s $3.9 trillion extension of the Bush tax cuts.”

    There are days when I’d like to take an edition of the WaPo and shove it down Ezra’s throat, much like Ian Holm did to Sigourney Weaver in Alien. What a dishonest little fuckstain.

    Which is pretty much every day, but I digress.

    1. Is a fuckstain anything like a cockstain or it more like the stain of the gusset of dirty panties?

      1. It’s an all-purpose stain. In Ezra’s case, it comes from rough, sweaty sex with a fat and incontinent woman.

      2. A fuckstain is a result of the fluids and the more viscous solids produced during intercourse, including lubes, foodstuffs, etc. As such, a fuckstain can occur anywhere fucking can happen. Or anywhere that you can travel to without cleaning any variety of genitalia post-coitus.

        So, in your panties example:

        The stain in the gusset of panties can be any number of things… urine, vaginal secretions of the healthy and unhealthy variety, the by-products of any sort of sexual conduct, menstruation-staining, or smeared fecal matter, but if it is produced solely by the woman herself or without sexual contact, that is properly considered a cuntstain.

        For contrast, a cockstain is usually only created with what can be produced by the penis itself.

        1. I think Klein can be accurately called a “buttstain”.

          1. Oh no, he’s not merely anal discharge. As Sug has helpfully pointed out, it’s an amalgamation of a cornucopia of bodily fluids.

            Klein definitely tilts towards the fecal end of things, but he’s got a generous helping of vaginal smegma and yellow, lumpy semen too.

            1. OK, perhaps he could be described as “Santorum”.

              1. I can get behind this, but only if it has some yummy, sweet tears in the mix.

        2. Can cuntsmear effectively replace cuntstain in the context you set forth above?

          1. I believe so. But I’m not sure you can say they are perfectly synonymous. You can, after all make a stain on something without to contact smearing or smearing the staining material afterward.

            But in the panty example, smearing is probably involved in 99% of the cases, so they are effectively interchangeable.

      3. I’m sure you guys are really impressing the ladies with your foul speech. This is really disgusting (and I’m trying to eat lunch).

        Digression: this is what the Howard Stern revolution has wrought. At one time little boys would talk about this stuff (if they were particularly gross) out on the streets after school. Now we have to read it on blogs and hear it coming out of the radio, and everyone thinks it is so funny. Hah hah.

        Time and place guys.

        1. Well, I certainly feel chastised.

        2. I don’t like this Draco. What does he know about them except the virginal Ms. Purity in his mind? Girls like guys who talk dirty, and who aren’t starched collared Neo-Keynesians pussies like Draco.

          1. This isn’t the kind of dirty talk they like dude. Just a tip for you.

            1. Draco, you are beyond clueless. You have no idea what women think. I don’t need tips, especially from punks like you; I got women problems to make an Eagle tune sound like gospel revival tunes in comparison.

            2. Well then, by all means, whatever you do, keep reading it.

              He may be onto something, though. I mean, what else could explain our lack of action on an Internet forum, inhabited mostly by anonymous sausages?

              1. Why would you be here for the action? Especially here, a semi-intellectual (though those who get the idea they are here doing a Senior thesis can go fuck themselves) bin of libertarian discontent. Every minute spent whacking off on line is minute you are depriving a woman of dick. Have you know heart? And, yes, they do want your dick. So, get out of your seat, go forth, and give them dick.

        3. Oh, Draco! I DO love how you defended my honor and my innocence against those knaves. I don’t feel condescended to at ALL!

        4. I thought this was the time and place.

          1. I’ve never heard “cuntsmear” on the radio. Am I listening to the wrong stations?

          2. It is the time and the place, being a cenobite riffle morph, Draco has no actual sense of propriety. He took a piss in the punchbowl right in the middle of the ballroom while convinced he was actually in the restroom. Such is the dislocation of Dracos everywhere.

        5. You’re a Keynesian.

          1. Yep. Draco announced in a thread the other day he considers himself a Neo-Keynesian. A Keynesian and a prude? It’s as if he was born to be picked on.

        6. It was nasty but funny & clever – and for me funny & clever wins every time.

  9. I love the way the Obamatrons are trying to pitch their plan as the Obama Middle-Class Tax Cut. As if holding rates where they have been for 10 years is a tax cut.

    Still, this is a break from tradition for them in one way – they could actually blame this one on Bush, but they aren’t. I was kind of hoping they’d call the expiration of the cuts as the “Bush tax increase”, and call their plan “repealing the Bush tax increase.”

  10. Really great article.

  11. There is no policy that President Obama has passed or proposed that added as much to the deficit as the Republican Party’s $3.9 trillion extension of the Bush tax cuts.

    Hmm. Just what is the increase in spending under Obama’s watch over the next ten years? Let’s throw in TARP, too, just to be fair, since he voted for it.

    I’ll bet its more than $3.9 billion.

    1. His next sentence is “In fact, if you put aside Obama’s plan to extend most, but not all, of the Bush tax cuts, there is no policy he has passed or proposed that would do half as much damage to the deficit.”

      So yeah, disregard the policy he’s proposing to add 3.2 trillion to the deficit, and he doesn’t look so bad!

      What a hack.

  12. Lets for the sake of argument pretend that they are right and the tax cuts reduce federal tax collection by ‘$3.9T’ Does anyone in their right mind really think that Congress would put all(or even a significant amount) towards ‘deficit reduction’ Of course not. Spending would increase by about 350 to 400B a year. New money coming in…it has to be spent.

  13. This talk about whether tax cuts are irresponsible given the fiscal pickle we’re in is nothing more than a way of diverting attention from what Milton Friedman identified years ago as the true cost of government: how much the government shells out in a given year.

    Citation requested.

    I seem to recall an interview late in Milton Friedman’s life, showing him suggesting huge tax cuts as a Norquistian effort to prevent further spending. A nice idea, but it did not quite work out like he had hoped.

    1. How do you know it didnt not work? We never had huge tax cuts to test the theory.

  14. Its the opposite. Friedman reacted to Bush’s tax cuts without spending decreases as nothing but a “future tax” – which has proven him correct once again.

  15. We’re on the hook for it, either through higher taxes now or higher taxes later.

    There is another way, in addition to massively cutting spending and entitlements. Rather than higher taxes, MORE taxes through productivity until the deficit is under control and a natural evolution to no taxes dawns on the peasantry. How about a simplified, single consumption, or flat, tax!? We could save close to 140 billion right away. Then, rather than spending millions of hours a year trying to figure out the least amount of taxes one can pay by deciphering the purposely complex tax monster, people (the productive sector) could get back to fucking work. Eh?

  16. 05,06,07 Revenues increased more than spending increased by 4 to 5 percentage points. 08, 09 spending outpaced revenue by 7 to 8 percentage points and all we got from all this aggregate boosting is a lousy t-shirt. Wait a second, I didn’t even get a fucking t-shirt!

    The whole conflating taxes with actually writing a check or spending kills me, like the government is entitled to the revenue. It’s like the difference between borrowing your buddies car and returning it and carjacking some old lady, only to send her a letter later telling where her car is.

    1. Wait a second, I didn’t even get a fucking t-shirt!

      You got guidance and peace of mind. Now you have Hope and Change. It’s all good.

  17. ONLY rich people need to be taxed, because they’re evil Ron Pual cocksuckers!

  18. See i told you the Bush tax cuts were good!!!

    And yet you fucking reason commentors doubted me!!!

  19. “I’m coming out in favor, in the first time in my memory, of raising taxes.”

    I guess this shows us that Greenspan is suffering from Alzheimer’s, seeing as he was the head of a Social Security Commission in the early 80’s, that recommended the increase in SS taxes to perpetuate it’s solvency.

    Not to mention the indirect taxation that he perpetuated on the country through monetary inflation. But I guess he could claim that he never “advocated” this effect. He only understood that it was a foregone conclusion.

    1. Greenspan’s problem is that Andrea Mitchell won’t give him any.

  20. The only thing that matters, really, is how many real resources the government consumes. (It would be lazy and incorrect to say that what matters is what it spends).

    When I eat an apple, it’s an apple that you cannot eat. When the government uses up iron and concrete to build a new office building named after Robert Byrd, that’s iron and concrete you and I can’t use for our own purposes.

    Yes, it’s important to understand the financing end of it, to understand the deficit (and the numerous myths about it). But to have a grasp of the economic reality behind it all, I advise always keeping this fundamental truth in mind.

    When the government does something with a resource, that’s a resource we can’t do something with. The difference between the parties often comes down to what % of the total resources the government should use (for the common good, of course!) vs. the % that those who produced them should use.

    1. Money is a way of measuring resources in a common unit of measurement.

    2. The only thing that matters, really, is how many real resources the government consumes. (It would be lazy and incorrect to say that what matters is what it spends).

      Make up your mind, are you an Austrian barter kind of guy, or are you a liquidity untrapping fiat money Keynesian guy. No wonder I only hate you half of the time.

      1. Somehow I am lured back in by the sweet smell of… wait, that didn’t come out right.

        Dude, first off let’s not be haters, okay? Or at least let’s hate on the common enemy. I don’t hate you, I don’t hate SugarFree, I don’t even hate Episiarch, which is saying a lot.

        I said “neo-Keynesian.” There’s a difference. I’m a libertarian who understands MMT (modern monetary theory). I’m a libertarian who understands that, right now, whether we like it or not, we live in a fiat currency world, and there are certain laws that apply in that world.

        If you guys want to argue that we should return to the gold standard, it would be a retarded argument, but okay, I’m prepared to have it.

        Meanwhile, each additional dollar of government deficit is one dollar (to the penny) injected into private hands. And that’s a very good thing – an essential thing – during a recession.

  21. How did revenue increase? Certain posters here were saying the other day that the Laffer peak was 70% or more.

    Im confused.

    1. Revenue increased from a number of factors.

      Coming out of a recession
      inflation
      HUGE boom in housing/consumption by people taking fake equity out of their homes

      1. Coming out of a recession

        Did we come out becuase of the tax cuts? Also, after reentering an even worse recession, numbers are still up.

        inflation

        fair enough.

        HUGE boom in housing/consumption by people taking fake equity out of their homes

        And even after the bust, the numbers are still up.

        Are you saying that the tax cut didnt improve long term GDP growth, because as I proved in that other thread, that wins out in the long run due to power of compounding.

        1. Nominally, 2009 revenue under lower tax rates is higher than 2002 under higher tax rates. Can someone here inflation adjust?

          1. Just did it using this website:
            http://data.bls.gov/cgi-bin/cpicalc.pl

            The 1853.40B revenue in 2002 works out to $2,210.24B in 2009 dollars. Which is about 105B more than 2009 revenue of 2105.00B. That’s after the greatest recession ever in the history of man since the great depression.

            1. GDP growth = revenue growth.

              Note that GDP also grew when the taxes were raised by Clinton.

              There is a connection between growth and taxes, but it’s not as black and white as is often claimed, and I think also has a great deal to do with the level.

  22. Wouldn’t a plot of spending vs revenue as percentages of GDP be useful here?

  23. Tax cuts cost the government revenue?

    If this is your starting point, how do you even discuss economics. It’s like a mugger upset with his victim because he couldn’t find all of his funds in his pants pockets right before the police hauled the victim to jail for inciting a mugging. WTF!

    1. While I empathize with you MS, you kind of have to admit that this is pretty much the definition of revenue in a govt context. If you cut taxes (not tax rates!) you are by definition cutting govt revenue.

      Now, the govt isn’t operationally revenue constrained, that’s true. Which is where I first thought you were going.

      I hate it as much as you do when the statists say “your tax cut program is costing the government money!” Proper response: “yeah, that’s right. Fuck you and your fucking government.” Don’t bother telling them that it’s your money. They don’t believe that.

      1. I stand corrected. I should have said … cost government revenue that is responsible for federal deficits. It’s the indignation that’s important!

  24. This article reads like a 4th-year English major attempting to be edgy and hip to those taxes, yo.

  25. everytime one the the pro obama “tax cut” supporters recommend we just want to go back to the rates that were in effect during the clinton years, the obvious answer by the braindead republican needs to be “ok, we support that if we can also have the same federal expenditures as we had in the clinton years”. no prob

  26. The reason informed commentators are concerned about the Bush tax cuts and not so concerned about his increases in spending is because they understand the subject matter, and don’t rely on biased cranks for their numbers.
    http://www.census.gov/compendi…..0s0457.pdf
    When you look at revenue and spending as a percentage of GDP, which is the sensible way to do it, then you see revenue really did sink under Bush, while spending stayed fairly even, which is no small accomplishment considering we invaded a medium-sized country half-way across the world.
    Seriously, Gillespie, have a grown-up check your work if it has to do with numbers. You are hardly a qualified authority in American economics.

    1. Right, we should just be listening to protectonist, closed border advocating, conservative shills like you. Government spending as a percent of GDP is useful when comparing the relative growth of each, but not when you’re looking at deficits created by the relation between spending and revenues. It doesn’t matter how fast your spending is increasing relative to all other spending in the economy if these increases outpace your revenue increases, especially if your annual spending already dwarfs your revenue.

  27. They’re just jealous, I mean what a deal, a 1000 dollar donation gets you 10,000 or more back. But hey, lets be fair, Michael Moore and Bill Clinton benefited from the tax cuts just as much as W’s “base” did….

  28. They’re just jealous. After all, not everyone can get a 10,000 break for a 1000 donation. However Bill Clinton and Michael Moore got tax breaks too…

  29. Thanks for your analysis and viewpoint. It occurred to me that these 2010 “end of tax cuts” is the other side of a coin that was a “TAX INCREASE” mandated years ago, during the Bush administration, that were scheduled to occur AFTER the end of the Bush administration. Glad you picked that up and went into this depth.

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