WILLisms.com: Trivia Tidbit Of The Day: Part 349 -- Tax Revenue Growth Continues To Outpace Spending Growth.

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Trivia Tidbit Of The Day: Part 349 -- Tax Revenue Growth Continues To Outpace Spending Growth.

Tax Relief Can Produce Strong Tax Revenue Growth-

In 2005, tax revenue growth far outpaced spending growth in government, because of (or in spite of, for some) President Bush's tax relief. Just for reference, that's the same tax relief nearly all Democrats a) voted against and b) want to turn back the clock on.

In 2006 so far, tax revenue growth has once again outpaced spending growth, according to the very latest Monthly Treasury Report (.pdf):

Just for reference, although three major categories saw actual declines in spending, and a few other categories showed microscopic growth rates, the bulk of spending increases from last year to this year came mostly from (in millions of dollars):

1. Net Interest: 34,773
2. Medicare: 30,762
3. Community & Regional Development (Katrina): 29,479
4. Social Security: 25,433
5. National Defense: 23,883

There are also other Katrina-related expenses that show up on the ledger. But it's mostly the kind of spending that just automatically happens, without a lot of discussion, debate, or deliberation. Combine the two major entitlements on the top five list, and their growth dwarfs everything else. Next in line are interest payments, with miltary spending just behind.

We also spent more, in total, on Social Security (460,916 million dollars) than anything else, by a healthy margin (second place was National Defense, at 434,489 million dollars).

Despite the continued breathtaking growth of entitlement spending, tax revenue growth still won. Without tax increases.

We need to make the Bush tax cuts permanent, and we need to build on those tax cuts. If you have been a disgruntled Republican voter on overspending or immigration, there's still room to hop back aboard the bandwagon. Taxation is too important an issue to sit this election out. We need to send a message that tax cuts are more than good policy, they are good politics.

Folks, it's no secret that nearly all Democrats (and a small number of Republicans) want to raise tax rates. They want to let Bush's tax cuts expire. They want to invent new kinds of taxes, on new categories of Americans. Democrats, being the Marxists they are, love more and higher taxes. On rich people. On middle class people. On success. On entrepreneurialism. On anything and everything they can get their regulatory hands on.

We cannot afford to allow Charlie Rangel, who would become the Ways & Means Committee Chairman if Democrats take control of the House of Representatives, near our nation's tax policy.

It's time for Republicans to rally on the issue of taxes. Stand up and declare that President Bush's tax cuts have worked. Stand up and demand that they become permanent, and then some. We need more tax relief, not less. We need to build on our successes. We have the facts on our side. Tax cuts grow the economy. Tax cuts flood the Treasury with revenue. It's time that we defended low taxes, and fought against the high taxes Democrats would force on us, vigorously, in the political arena, together.

Because here's the deal: President Bush can and will veto tax hikes. But he can't veto inaction; Bush cannot veto the lack of an extension of tax cuts. Bush can't sign more-- or permanent-- tax cuts if they never come to his desk.

Disgruntled (and formerly disgruntled) Republican voters ought to be at least somewhat heartened by the victories of Tim Walberg and Doug Lamborn this week. It proves that the anti-incumbent sentiment out there, manifested by the Lieberman and McKinney losses, is not proof of a political shift to the left in this country.

What's happening out there is that Republicans want Republicans to act like Republicans. Democrats want Democrats to act like Democrats. And the former middle has been consumed and subsumed by Republicans and Democrats.

When Republicans act like Republicans and Democrats act like Democrats, Republicans win. Every single time. Our ideas are better than their ideas.

Fact:
There are more conservatives than liberals out there in America.

Fact:
There are more traditionalists than progressives out there in America.

Fact:
There are more libertarians than socialists out there in America.

We're all willing to vote for Republicans when they act like Republicans. Now that Democrats are finally talking about actual ideas (albeit bad ones), Republicans need to stop reacting, stop playing defense. We need to put our ideas back on the offense.

We need to defend the War On Terror (foreign AND domestic), rather than allow Democrats to unilaterally declare American retreat and defeat.

We need to defend against socialized Hillarycare, fight against frivolous lawsuits, and promote market-based solutions, including Health Savings Accounts, to health care.

We need to continue fighting for Social Security and other entitlement reform.

We need to remind people that judges matter, and it's possible that we'll see another retirement or death of someone on the Supreme Court in the next couple of years. Justices Roberts and Alito are proof that elections matter in judicial appointments.

These issues are all major winners for Republicans. These are all issues with which we can and should play offense. Ultimately, though, the Republican coalition is built around tax cuts. Want to excite the conservative Republican base?

Put tax cuts on the ballot this fall.

Tax cuts work. They are good policy. They are great politics. Everybody knows it. It's high time that Republicans started talking about them.

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Previous Trivia Tidbit: The Awful Sar-Box Is Just Awful.

Posted by Will Franklin · 10 August 2006 04:56 PM

Comments

Hey, I wanted to throw out a counterpoint to your Tax-Cuts-Work idea. It seems that a large complaint against the tax cuts is that they have thrown our budget way out of balance, causing large problems with our national debt that are essentially being handed off to our children.

In fact, the Center for Budget and Policy Priorities has done some research, finding that without the tax cuts, our budget for 2006 would have been balanced (or very close to balanced.)

I think what you say about increasing tax revenue deserves merit and a fair shake, but whatever benefits they offer stand in the massive shadow of the deficit they creat in the first place.

Posted by: glenstein at August 10, 2006 08:19 PM

I forgot to append a link to my previous comment. Here it is: CBPP Link.

Posted by: glenstein at August 10, 2006 08:21 PM

How true.

Posted by: Zsa Zsa at August 11, 2006 06:13 AM

It is nice to see you back, Will...

Posted by: Zsa Zsa at August 11, 2006 06:15 AM

Hello glenstein,

That link seems to be broken at the moment (I googled it and it's the same as the one you've given, so it must be hosed for now??).

Also with my Google search for that I found an article from the Heritage Foundation which I think I've read before (http://www.heritage.org/Research/Taxes/WM5.cfm) giving several reasons why the CBPP's findings are wrong. I'm not here to get in to a Google fight with anyone, but the most damning one to me is the economic response, which to be fair almost cannot be calculated by any other means than to pull a number off the top of your head. So let's say the numbers are somewhere in the middle, these tax cuts, in the face of (almost certainly foreseen**) higher oil prices, are a huge catalyst for growth.

I just don't understand why organizations like this consistently look backwards to begin with? I know that sometimes there can be benefits to this, but why? For example, if you're familiar with Digg.com, there was an article linked there that showed why both Kerry and Gore would beat W. in an election today based on poll numbers or whatever, and a smattering of folks that were hashing out the scenarios between one another in the discussion area. I mean - what's the friggin' point?

It's nice to hear the tone of...

"We need to.." or "We need to continue to.."

...rather than...
"..if we'd only done x, y or z three years ago..".

For some reason, that is the main difference between the (rational parts of the) two political parties these days, Lord knows it's difficult to differentiate between the two based on their spending.

**purely speculative on my part.

Posted by: snowballs at August 11, 2006 01:54 PM

Snowballs, I think when there is a large public debate over a policy, the backwards looking is so we can think about whether we make the right choice, and perhaps to additionaly yield some insight on how to better improve the policy in the future.

I checked my link again, still works for me.

Also, the link of yours was the Heritage Foundation disagreeing with a different CBPP article (cost of tax cuts when my article was the effect of tax cuts on the deficit), apparently the two groups don't like each other.

I will not dispute that tax cuts will have a positive effect on the economy (it seems almost self-evident). I think however, that enacting them now, what with Iraq, Katrina, etc. and the manner in which they have unbalanced the budget is a pretty high price to pay for having tax cuts.

It seems counter-productive to me, because when we look at the problems that the tax cuts are solving, many of them seem to be problems that the cuts created in the first place (defict, national debt.)

Posted by: glenstein at August 11, 2006 06:04 PM

you can cut the taxes all you want. it's meaningless without reducing spending. something the current republic leadership is unable to do. see: 2.8 trillion dollar budget

Posted by: lester at August 12, 2006 06:17 PM