Spending, Not Tax Cuts, Is Driving Federal Deficits

From 2000 to 2023, taxes more than doubled, while spending more than tripled

Path of Least Resistance: Clive Crook writes in Bloomberg: “Republicans want lower taxes and lower spending. Democrats want higher spending and higher taxes (on companies and the rich). How to strike a deal? Easy. Cut taxes and raise spending – hence higher borrowing.” That sounds like it makes sense, but when you look at the numbers over the past few decades the pattern actually doesn’t empirically hold up.

The higher borrowing has been driven almost entirely by higher spending, not by lower taxes. Tax revenues have increased, even when tax rates have declined. Big picture, rounded numbers: In 2000, the government took in $2 trillion, spent $1.8 trillion, and had a $200 million surplus. In 2010, the government took in $2.2 trillion, spent $3.5 trillion, and had a $1.3 trillion deficit. In 2020, the government took in $3.4 trillion, spent $6.6 trillion, and had a $3.1 trillion deficit. The estimate for 2023 is that the government will have taken in $4.8 trillion, spent $6.4 trillion, and have a $1.6 trillion deficit. These are all “current dollar” numbers from the White House Office of Management and Budget.

From 2000 to 2023, revenue went to $4.8 trillion from $2 trillion, while spending went to $6.4 trillion from $1.8 trillion. Taxes more than doubled, while spending more than tripled. You can talk about inflation, you can talk about the war in Ukraine, you can talk about the pandemic, you can talk about interest rates raising borrowing costs, you can say you need to look at constant dollars or at percent of GDP…whatever. What’s happened to the U.S. federal budget over the years 2000 to 2023 is not a “cut taxes and raise spending” story. It’s a “raise taxes and raise spending even more” story.

Two Views on Aid to Gaza: Bret Stephens, in his New York Times column, takes Senator Cotton to task for voting against the Ukraine-Israel-aid bill. Cotton’s reason was that the bill also includes money for Gaza. Stephens writes: “From Arkansas’s Cotton, there’s the argument that support for Israel’s efforts to defeat Hamas is incompatible with any civilian assistance for Gazans…. What a mix of cruelty, defeatism, conspiracy-mongering and political servility. I’m surely among the most pro-Israel commentators around, but I can think of no moral or strategic argument in which hunger and disease among Gaza’s civilians serve anyone’s interests, least of all Israel’s.”

Meanwhile, Daniel Gordis has an interview with Einat Wilf. Gordis describes her as “a leading thinker on Israel, Zionism, foreign policy and education. She was a member of the Israeli Parliament from 2010 to 2013, where she served as Chair of the Education Committee and Member of the influential Foreign Affairs and Defense Committee. Dr. Wilf served as an Intelligence Officer in the Israel Defense Forces, Foreign Policy Advisor to Vice Prime Minister Shimon Peres and a strategic consultant with McKinsey & Company. She has a BA from Harvard, an MBA from INSEAD in France, and a PhD in Political Science from the University of Cambridge. She was the Goldman Visiting Professor at Georgetown University and is a lecturer at Reichman University in Israel.” The interview is headlined: “We should never have sent in humanitarian aid. They want aid? Then let the hostages go.” It goes like this:

Wilf: Look, I’m telling you, I think it was a massive mistake from day one to let anything go into Gaza.

Gordis: Any humanitarian aid you’re saying?..

Wilf: I’m sorry, it’s not humanitarian aid. We’re supplying Hamas…. I think that nothing should have gone in. The message should have been very simple. Nothing goes in until the hostages come out. We’re sorry. That’s it. Really simple.”

Tim Scott on Hannity: Senator Tim Scott was on Fox News last night defending his vote against the Ukraine-Israel aid bill.

“It’s called putting America first,” Scott said, arguing for border control before foreign aid. “Thousands of Chinese nationals have been crossing our border,” Scott said. Asked whether he’d accept the no. 2 spot on the Trump for President ticket, Scott said the “only objective I have is to make sure Donald Trump has four more years.” Nikki Haley’s communications director, Nachama Soloveichik, tweeted, “Tim Scott dumping all over Ukraine last night on Hannity and ignoring Trump telling Putin to invade NATO countries is a new look. Not a good one.”