Fiscal year 2012 concluded with a $1.1 trillion deficit, according to the Congressional Budget Office’s monthly budget review released today. It marks the fourth year of trillion-dollar-plus deficits.
Anyone can see that these massive, continued deficits are hardly sustainable. Despite claims that tax hikes are the solution to reduce the deficit, the fact remains that too much spending is the root cause of federal budget deficits.
The federal government is currently spending about 23 percent of gross domestic product (GDP), well above the historical average level of 20.2 percent of GDP. Current spending levels follow even greater spending excesses recorded during years saturated with stimulus spending. Conversely, revenues are temporarily low due to the recession, but they will rise and even surpass their historical level of 18.1 percent of GDP as the economy recovers and more Americans return to work. (continues below chart)
Prompted by presidential debate moderator Jim Lehrer about deficit-reduction proposals, President Obama chimed in with an all-too-familiar refrain: “There has to be revenue in addition to cuts.” When Washington’s spending addiction is the problem, why hike taxes on Americans? Doing so would hurt a fledgling economy trying to recover.
