Do we have a deficit problem in this country? Yes. Some have suggested we don't have a revenue problem, we have a spending problem. Let's look at it more closely Do we have a spending problem? Yes. Do we have a revenue problem? You betcha.
Some would say the solution to the deficit is to lower taxes. That would increase revenue? Really? Here are some historical stats form the Office of Management and Budget to gain some perspective.
During Jimmy Carter's administration, tax revenue grew at an average rate of 8.75 percent annually. During Ronald Reagan and first George Bush administrations, tax revenue grew at a 6.4 percent annual pace. During Bill Clinton's administration, tax revenue grew at 13.9 percent annually. During the second Bush administration, tax revenue grew at 2.5 percent annually. Hence no proof that lowering taxes equates to growing revenue enough.
Now let's look at the spending side. During Mr. Carter's administration, spending increased annually by 15 percent. During the Reagan and first Bush administrations, spending went up 9 percent annually. Under Mr. Clinton, up 3.6 percent annually. The second Bush administration, up 8.4 percent annually. President Obama's first two years, spending went up an average of 8 percent a year. So aside from Mr. Clinton's average annual increase in spending of only 3.6 percent and the Carter average increase of 15 percent, the other administrations were all in the 8 percent range.
Now let's look at deficits. The only way it makes sense is as a percentage of Gross Domestic Product. What we all earn. During the Carter years, the average deficit as a percentage of GDP was 2.55 percent. During Reagan and Bush I, the average deficit as a percent of GDP was 4.2 percent. During Clinton, it was 1.5 percent. During Bush II, it was 4 percent.
So in conclusion spending, is a problem causing the deficit. But a historical look at results points much more to the revenue performance particularly under those "low tax rates" of Reagan and Bush as a cause of bigger budget deficits. We shouldn't be deceived by those who falsely claim that lowering taxes helps the budget deficit problem. It clearly does not.
Mel Mintz, Pikesville