It’s The Tax Cuts, Stupid, Part 7: The Forgotten Campaign Theme
We’re going to need all the help we can get this election, so let’s not forget the tax cuts. Today, the federal deficit figures were announced, and they’re the lowest since 2002, thanks to…increased tax collections:
The federal budget deficit, helped by a gusher of tax revenues, fell to $247.7 billion in 2006, the smallest amount of red ink in four years.
The deficit for the budget year that ended Sept. 30 was 22 percent lower than the $318.7 billion imbalance for 2005, handing President Bush an economic bragging point as Republicans go into the final four weeks of a battle for control of Congress.
Both spending and tax revenues climbed to all-time highs. The sharp narrowing of the deficit reflected the fact that revenues climbed by 11.7 percent, outpacing the 7.3 percent increase in spending.
The 2006 deficit was far lower than the $423 billion figure the administration had projected last February and also represented an improvement from a July revised estimate of $295.8 billion.
It was the smallest deficit since a $159 billion imbalance in 2002, a shortfall that came after four straight years of budget surpluses, the longest stretch that the government had finished in seven decades.
I know tax cuts don’t completely pay for themselves, according to the most recent studies; however, given a choice of increasing government revenue by (a) growing the economy, or (b) increasing taxes, I’ll take (a) every time, and tax cuts can certainly help in that regard. This is an issue that Republicans are strong on (though we’ve got to do much, much better on spending), and more candidates need to be running on…
got a disagree with the ‘tax cuts don’t pay for themselves’.
The increase in tax revenue accounted for a 40% reduction in the deficit, in one year. Since expenditure is a fixed/known number the only number that could possibly change is revenue. clearly the cbo was way wrong in their projection, despite their ‘short-term’ prediction.
Reducing taxes continuously would lead to a point of diminshing return, and a skeptic could argue that revenue might have been larger had the reduction in taxes not been so large, but the only way to know for sure is to keep playing with the number.
Since Rangel favors completely doing away with the tax cuts, he should be at the front explaining that the tax cuts had no effect, and that is was the strength of our economy that accounts for the increase in revenue.
I’m disappointed at the 7.3% spending increase. Much of the increase in tax receipts comes from corporate taxes. Once those nasty oil companies, and other mercenary businesses, stop making obscene profits and the economy cools down a bit we will be left with increasing deficits because spending hardly ever recedes.
I much rather see the deficit reduced through reduction of the real culprit, spending, rather than through higher tax receipts.
You guys are right about the diminishing return point. But at the rate the dems bloviate about the evil tax cuts, we’re never gonna find it. Classic kill the goose laying golden eggs. Rich people have cash? Tax ‘em for the poor.