A little over ten months ago, I appeared on C-SPAN Washington Journal with Romina Boccia from the Heritage Foundation who, as Congress was debating the tax cut that would reduce revenues by $1.5 trillion, had the gall to say repeatedly that the federal deficit was purely a spending problem.
(Assuming you didn’t get up early to see the show that Sunday morning or have already blocked all memory of it, you can grab your popcorn and watch it here.)
Unless you think of mathematics as fake news or garbage science, there are always two ways for the federal government to run a deficit: spend more than it collects each year in revenues or collect less in revenues that it spends. It’s a very basic calculation. No advanced degree is required.
Why raise this now?
First, because the myth coming from Heritage and others that the federal budget deficit is just a spending problem needs to be revealed as often as possible for what it really is: ultra conservative orthodoxy and GOP politics masquerading as unimpeachable basic economics.
Second, an oped by former Treasury Secretary Robert Rubin in today’s The Washington Post was a great reminder of just how ridiculous and easy it is to disprove the-deficit-is-all-because-of-spending lie.
Rubin, a Democrat who is at least as fiscally conservative as most Republicans claim to be, said:
“Tax revenue as a percentage of gross domestic product is expected to be 16.5 percent next year. The long-term average in a full-employment economy is 18.5 percent of GDP; if revenue were at that level for the coming decade, debt would be $3.2 trillion lower and the 10-year fiscal gap would be halved.”
In other words, the deficit is at least as much an issue of not enough revenue as it is of too much spending.
And Rubin acknowledged this in his next sentence:
“Returning to past revenue levels, however, will be inadequate over time, because an aging population will increase Medicare and Social Security costs.”
Honest and rational budgeting absolutely requires acknowledging that the federal budget deficit is the result of both revenues that are too low for the spending Americans want and spending that is higher than the taxes Americans are willing to pay.
It’s not just one or the other and conservatives insisting that it is only spending is both absurd and easily shown to be false.