Runaway government spending, not declining tax revenues, is the reason the U.S. faces dramatic budget shortfalls for years to come.
President Obama and congressional Democrats are blaming their trillion-dollar budget deficits on the Bush tax cuts of 2001 and 2003. Letting these tax cuts expire is their answer. Yet the data flatly contradict this "tax cuts caused the deficits" narrative. Consider the three most persistent myths:
• The Bush tax cuts wiped out last decade's budget surpluses. Sen. John Kerry (D., Mass.), for example, has long blamed the tax cuts for having "taken a $5.6 trillion surplus and turned it into deficits as far as the eye can see." That $5.6 trillion surplus never existed. It was a projection by the Congressional Budget Office (CBO) in January 2001 to cover the next decade. It assumed that late-1990s economic growth and the stock-market bubble (which had already peaked) would continue forever and generate record-high tax revenues. It assumed no recessions, no terrorist attacks, no wars, no natural disasters, and that all discretionary spending would fall to 1930s levels. [...]
The whole thing is very detailed, exposing each flawed premise being used to blame tax cuts for deficits, and then goes on to clearly demonstrate how it's government spending that's driving up the deficits.
Tax cuts allow people to spend and invest their own money, which stimulates the private sector economy and creates jobs, which creates more taxpayers, thereby increasing revenues also. But if the government continues to spend beyond the revenues they are bringing in, well nothing can "fix" that, other than cutting spending. Raising taxes won't do it because that means less jobs and overall less tax revenue being generated.
It's math, numbers. You can't spend what you don't have, and you can't over-tax or you will reduce tax revenues. The solution: live within our means. Duh.
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