Waaa US Deficit
Grown in Iraq
My oh my, those tax cuts must have a heck of a lot of callories.
That little baby might be in need of a bit of a diet, but who has the heart for it?
…and continually fed by reckless government spending. He can blame Bush for starting this mess but by continuing to feed it he cannot call himself different from Bush.
@HQ: they may grow the economy (usually - I have not seen a comprehensive enough study), but not always the government earning from it. The Laffer curve has a left side as well as the right, you know.
Edit - if you would prefer a more scientific review of how good tax cuts are for the federal budget, here is a CBO one from ‘05. Generally, they considered the 10-percent tax cut a rather poor idea as far as the government coffers were concerned.
Tax collections depend on several things. First, 2003 was a slump year (due to I suppose the post-9/11 economic downturn), so it is only to be expected that revenues would grow afterwards. Second, it might be also a matter of more efficient collection. Third - can you post a link to the actual official numbers? I am somewhat dubious regarding information - and interpretation - from the Heritage foundation.
@Churchill: Is it actually surprising that expenses will rise significantly during a war? If I remember correctly 2006 saw some escalation in Iraq, and someone has to pay for that.
@Church - well, some expenses were bound to increase between 2003 and 2006. Iraq was, and remains, a pretty big expense. Though I can agree that it is quite hard for governments to tighten their own belts - especially as it is often unpopular among people who had benefited from various expenses.
As for the graph itself, , the overall effect of tax cuts in general can not be inferred only from it. IIRC there were tax cuts in 2001 and 2002 as well, and they were similar to if not bigger than the 2003 ones. Just as it shows revenues increasing after 2003, it shows their decrease prior to that year. How much of all of this was due to Bush’s tax policies, and how much was due to the natural development of the economy, is as usual open to debate. Most economists that I have read, though, tend to hold that whatever the tax cuts may do for business, they decrease revenues overall. Yes, even conservative ones like Alan D. Viard (as he says at http://www.washingtonpost.com/wp-dyn/content/article/2006/10/16/AR2006101601121.html) . The CBO itself, in 2007 - after the developments of the 2003-2006 - stated that the expiring tax cuts decreased revenue.
In general, I am very disinclined to agree that tax cuts would be good for government revenue, and especially at them being peddled like some kind of economic panacea when the US faces even higher deficits. There is a time and place for everything.
churchill…I can tell you why. All of these economists can’t agree on anything and generally don’t look outside their own pre-concieved opinions. They will not let facts get in the way of their pre-concieved notions so don’t expect agreement.
I do know this much: the Federal government is subject to the laws of finance just like anyone else and are not immune to it. It may take a lot more time than it does others but there’s a whole lot of chickens out and on their way back to roost.
I beg to differ. I’ve dealt with my share of academics that cannot bear to hear any criticism of their work. The vitriol that exists in academia is well known. If you are different, more power to you. As I’ve posted before, I’ve seen responses to papers at conferences that looked like feeding frenzies. The attacks were most often from people who had published work that would suffer from the paper presented. There was nothing collaborative about it. Publish or die.