In its latest issue, Newsweek reports that, for about 30 years, federal tax revenues have amounted to approximately 18% pf GDP, while federal expenditures were about 20%. The 2% difference created a manageable deficit. However, in 2009, tax revenues were only 15% of GDP, and expenditures were 25%. This 10% difference leaves us with a federal deficit that is anything but manageable.
Now, admittedly, math is NOT my forte, but here's how it looks to me. If we keep the Bush tax cuts in place, we have to reduce federal spending from 25% of GDP to 15% just to stop the deficit from growing any larger. That would be a 40% reduction in federal spending! Does anyone seriously believe that the Government could actually cut spending by almost half? Federal discretionary spending is nowhere near 40% of the total budget. Entitlements, defense and interest payments on the deficit comprise approximately 75% of the budget. If we eliminated everything else, we would have cut spending by only 20-25%. And what kind of country would we have?
It's time to get real: we must increase tax revenues as well as cut spending. And the spending cuts will have to include the sacred cows of the federal budget: defense and entitlements. Our incoming Tea Party Congress will engage in legislative acrobatics to try to avoid these inevitabilities. Unfortunately, we'll be circling the drain while we watch the entertainment.
No comments:
Post a Comment