The deficit charted

[jayhawk]

The Chart That Should Accompany Every Discussion of Deficits - James Fallows - Politics - The Atlantic

 

[ArmedProgrammer]

I call

Let's add to that chart the true growth rate of government spending. Including SS, Medicare, entitlements and all of it. Selectively only looking at the cost of war (admittedly high), selected tax cuts, etc. only shows a distorted picture. Show it ALL or shut the heck up. And let's show it for the past 10 years and going forward as far as the proposals do. (Probably 15 years???) THEN we can discuss this "fairly". This chart is simply trading a right leaning bias for a left leaning bias. All under the guise of "truth".

BS.

 

[LockStocksAndBarrel]

I call

Let's add to that chart the true growth rate of government spending. Including SS, Medicare, entitlements and all of it. Selectively only looking at the cost of war (admittedly high), selected tax cuts, etc. only shows a distorted picture. Show it ALL or shut the heck up. And let's show it for the past 10 years and going forward as far as the proposals do. (Probably 15 years???) THEN we can discuss this "fairly". This chart is simply trading a right leaning bias for a left leaning bias. All under the guise of "truth".

BS.

Agreed. Worthless chart.

 

[jayhawk]

The chart isn't meant to be all inclusive, it simply points out the relative affect of some hot button issues. This chart is covering the yearly deficit, not the total debt.

Here is a nice representation of total debt, though it is not broken down into individual factors:
National debt by U.S. presidential terms - Wikipedia, the free encyclopedia

or: United Stated National Debt

Or, for you Reaganites: U.S. National Debt Graph + Amazing YouTube Story of the Debt

I agree that "entitlement" programs are a factor, particularly Social Security. But be careful who you are picking on. The Bush tax cuts largely benefited the rich, while Social Security actually puts some money into the hands of the middle class (at the expense of the middle class of course). The Bush tax cuts enable the rich to get richer, expand our national debt, and don't help the majority of Americans enough to offset the downside. Obama, of course, has continued the trends and programs that were established under the previous administration.

 

[dross]

Complete biased crap. Based on static modeling. Worse than no value whatsover, it's a complete lie.

 

[jayhawk]

Complete biased crap. Based on static modeling. Worse than no value whatsover, it's a complete lie.

Well, not if you can interpret a graph. And no, it's not static modeling. Static modeling is time independent.

The "misleading" part of the graph is that the bottom half is missing (which would include all the other stuff that the federal government spends money on). For reference the 2010 budget was something like 3.5 trillion.

 

[jdhaines]

It helps to show the fact that we can't cut expenses and work our way into a better financial position. No one wants to pay more for the same services, but it's a fact of life. We have to drop the tax cuts, increase taxes AND cut spending. The tea party and people on the right (myself included) want to cut lots of programs and spending and yet go ballistic when any member of congress discusses increasing taxes. It's unrealistic to think we'll work out our problems without taking in more money. It sucks, but we have to be realistic.

 

[dross]

It helps to show the fact that we can't cut expenses and work our way into a better financial position. No one wants to pay more for the same services, but it's a fact of life. We have to drop the tax cuts, increase taxes AND cut spending. The tea party and people on the right (myself included) want to cut lots of programs and spending and yet go ballistic when any member of congress discusses increasing taxes. It's unrealistic to think we'll work out our problems without taking in more money. It sucks, but we have to be realistic.

You can't just raise taxes and assume more revenue. Historically, you can only collect about 18% of the GDP in taxes. That number holds true whether the GDP is larger or smaller. Trying to raise taxes above that amount can result in a reduced GDP, which means you get the same percentage of a smaller pie.

 

[jayhawk]

You can't just raise taxes and assume more revenue. Historically, you can only collect about 18% of the GDP in taxes. That number holds true whether the GDP is larger or smaller. Trying to raise taxes above that amount can result in a reduced GDP, which means you get the same percentage of a smaller pie.

That is true to a point, but you have to take into account the mix of tax revenue, which can have an affect on the GDP. It's also worth noting that we are just flirting with that line (in terms of total taxation). However, it has dropped off in recent years. Note in this analysis the difference in SS tax vs. corporate tax over the years:

Corporate Taxes as Percentage of GDP | The Big Picture

More data: Historical Source of Revenue as Share of GDP

 

[dross]

That is true to a point, but you have to take into account the mix of tax revenue, which can have an affect on the GDP. It's also worth noting that we are just flirting with that line (in terms of total taxation). However, it has dropped off in recent years. Note in this analysis the difference in SS tax vs. corporate tax over the years:

Corporate Taxes as Percentage of GDP | The Big Picture

More data: Historical Source of Revenue as Share of GDP

What do you interpret that percentage to mean? That graph doesn't show whether revenues or rates have increased or decreased, it just shows it's relation to other types of revenue. So increasing one type of tax will automatically reduce the other types of taxes as a percentage. What does this show?

 

[jayhawk]

What do you interpret that percentage to mean? That graph doesn't show whether revenues or rates have increased or decreased, it just shows it's relation to other types of revenue. So increasing one type of tax will automatically reduce the other types of taxes as a percentage. What does this show?

Exactly as the title of the chart states, it shows "US Tax Revenue as a Fraction of GDP by Component". These components add up to the tax revenue collected as a percentage of the GDP (the 18% number that you referenced in your post).

There is not necessarily a correlation between any of the components (I'm not really sure what "misc" refers to tbh). It's just interesting that SS taxes, which affect individuals (and particularly middle class individuals) has increased, while at the same time that corporate tax has fallen to a very low percentage vs. the GDP. It shows that regardless whether the overall tax rate has increased or decreased (and the trend-line shows that it has been relatively constant over time) the tax burden has shifted.

 

[ATOMonkey]

All very good reasons to switch to the fairtax system and throw out everything else.

 

[dross]

Exactly as the title of the chart states, it shows "US Tax Revenue as a Fraction of GDP by Component". These components add up to the tax revenue collected as a percentage of the GDP (the 18% number that you referenced in your post).

There is not necessarily a correlation between any of the components (I'm not really sure what "misc" refers to tbh). It's just interesting that SS taxes, which affect individuals (and particularly middle class individuals) has increased, while at the same time that corporate tax has fallen to a very low percentage vs. the GDP. It shows that regardless whether the overall tax rate has increased or decreased (and the trend-line shows that it has been relatively constant over time) the tax burden has shifted.

I understood quite well what the chart represented, my question was larger - what meaningful knowledge does it provide?

The difference between SS tax and corporate tax is that it shows the burden shifting from people who purchase goods and services to people who earn an income from employment. Probably not groups who are all that different.

Corporate income taxes affect the poor more than SS taxes, though SS taxes affect the poor and lower income quite a bit. Income taxes affect the upper middle class more than any group, as the very rich usually get their income from sources that have a lower tax rate than income.

 

[jdhaines]

I'm not as knowledgeable as some of you are on taxing systems and it's effects. My overall point was just that we can't expect to cut our way into "balanced-ness." Spending must be reduced and revenues must be increased. I don't want to pay more and most of you don't either. But we have to not shut down if the idea is proposed. If we shut down at the mention of tax increases it's no different than the libs shutting down at the mention of cutting their precious social programs. We have to have intelligent discussions about our options and be willing to evaluate ideas on their own merit rather than rhetoric.

 

[hooky]

The fact is that starting in 1940, tax revenues have increased over the previous year's revenues roughly 50 out of the last 70 years (inflation adjusted to 2005 dollar), but spending has gone up 62 out of the 70 years. In that same time period, we've only had 12 total years with a budget surplus. That tells me it's a spending issue, not a revenue (tax) issue.

Historical Federal Receipt and Outlay Summary

This entire argument about receipts and spending as a % of GDP is just another way to argue that the government should take more of our money from us under threat of violence.

 

[dross]

I'm not as knowledgeable as some of you are on taxing systems and it's effects. My overall point was just that we can't expect to cut our way into "balanced-ness." Spending must be reduced and revenues must be increased. I don't want to pay more and most of you don't either. But we have to not shut down if the idea is proposed. If we shut down at the mention of tax increases it's no different than the libs shutting down at the mention of cutting their precious social programs. We have to have intelligent discussions about our options and be willing to evaluate ideas on their own merit rather than rhetoric.

Nope. You've bought into the rhetoric of fairness.

We borrow 40 cents of every dollar we spend. We cannot tax our way out of this, and in fact, raising tax rates is likely to produce less tax revenues at the same time it hurts the economy.

Spending is the issue, the whole issue, and nothing but the issue. Tax rate increases are a red herring. To agree to a plan that won't work so we appear fair to the very people who are causing the problem is just going to produce more of what got us here.

Eliminate the corporate income tax and the capital gains tax, cut the income tax, cut spending to 2008 rates and freeze it there, and watch our deficit and debt become manageable as a percentage of GDP.

 

[jayhawk]

I understood quite well what the chart represented, my question was larger - what meaningful knowledge does it provide?

The difference between SS tax and corporate tax is that it shows the burden shifting from people who purchase goods and services to people who earn an income from employment. Probably not groups who are all that different.

Corporate income taxes affect the poor more than SS taxes, though SS taxes affect the poor and lower income quite a bit. Income taxes affect the upper middle class more than any group, as the very rich usually get their income from sources that have a lower tax rate than income.

It shows that in past periods of high federal spending (such as WWII and Nam) the tax burden for the "individual taxpayer" was less than it is today. Corporate taxes have been lowered (largely) in an attempt to make corporations competitive on a global scale. Whether those corporate tax cuts benefit the poor more than SS taxes is probably a subject that's up for debate.

At any rate...here is a fun article on the Bush tax cuts (and the idea of letting them expire), since that seems to be a contentious issue.
Five myths about the Bush tax cuts

It's kind of funny, the article states that the Bush tax cuts aren't a major influence on the deficit, they merely account for 25% of it...oh and we pay more interest on the deficit as a result...but no, not a major influence. Note the elephant in the room that isn't mentioned in the article (something about war time spending). In any event, we all know that since this article was written, congress elected to extend the tax cuts for 2 years and increase the AMT threshold (without curbing spending of course).

Anyways, I'm not trying to be contentious. I'm all for whacking a few chunks off the entitlement programs (wouldn't want anyone to get the impression otherwise)...as long as we don't forget the $700bil discretionary defense budget and our good friend the military-industrial complex.

 

[jayhawk]

Nope. You've bought into the rhetoric of fairness.

We borrow 40 cents of every dollar we spend. We cannot tax our way out of this, and in fact, raising tax rates is likely to produce less tax revenues at the same time it hurts the economy.

Spending is the issue, the whole issue, and nothing but the issue. Tax rate increases are a red herring. To agree to a plan that won't work so we appear fair to the very people who are causing the problem is just going to produce more of what got us here.

Eliminate the corporate income tax and the capital gains tax, cut the income tax, cut spending to 2008 rates and freeze it there, and watch our deficit and debt become manageable as a percentage of GDP.

There is no "whole" issue. That's nonsense. These are two sides of the same coin, and we're not at a tax level that is impending on bringing down the economy. Your plan sounds wonderful for corporate America, but it has all the makings of class separation...classic trickle-down theory. That's not a price I'd want to pay for a balanced budget.

 

[dross]

It shows that in past periods of high federal spending (such as WWII and Nam) the tax burden for the "individual taxpayer" was less than it is today. Corporate taxes have been lowered (largely) in an attempt to make corporations competitive on a global scale. Whether those corporate tax cuts benefit the poor more than SS taxes is probably a subject that's up for debate.

At any rate...here is a fun article on the Bush tax cuts (and the idea of letting them expire), since that seems to be a contentious issue.
Five myths about the Bush tax cuts

It's kind of funny, the article states that the Bush tax cuts aren't a major influence on the deficit, they merely account for 25% of it...oh and we pay more interest on the deficit as a result...but no, not a major influence. Note the elephant in the room that isn't mentioned in the article (something about war time spending). In any event, we all know that since this article was written, congress elected to extend the tax cuts for 2 years and increase the AMT threshold (without curbing spending of course).

Anyways, I'm not trying to be contentious. I'm all for whacking a few chunks off the entitlement programs (wouldn't want anyone to get the impression otherwise)...as long as we don't forget the $700bil discretionary defense budget and our good friend the military-industrial complex.

Another article full of fail. I can tell what I'm reading when the writer calls tax rate cuts "spending." As if all the money the government doesn't take is spending, which implies all money belongs to the government. No one who writes such a thing can be trusted - he has identified his bias from the outset.

Also, tax rate cuts do not necessarily mean lost revenue, something that opponents of these cuts always assume.

Defense spending isn't the issue, and I can prove it. Let's cut the entire defense budget. Snip. Now we're borrowing 20 cents for every dollar we spend instead of 40 cents. And we can't cut the entire defense budget.

There is no "whole" issue. That's nonsense. These are two sides of the same coin, and we're not at a tax level that is impending on bringing down the economy. Your plan sounds wonderful for corporate America, but it has all the makings of class separation...classic trickle-down theory. That's not a price I'd want to pay for a balanced budget.

Corporate America doesn't pay taxes - it can't. Taxes hurt American competitiveness, for sure, but the actual taxes are paid by the final consumer of those goods and services. That's why they hurt poor people.

Raising taxes won't "bring down the economy" I never made such a claim. What they WILL do is act as a brake on the economy - how much, I don't know, and neither do you - but they will absolutely slow the economy down. That's simple economics. It can't be another way.

 

[superjoe76]

I can not believe people actually think raising income taxes is a good idea. Its a strangle hold on the American worker. There is an estimated $11 trillion US in foreign banks, to avoid our income tax. Thats $11 trillion not working in the economy, all of which would be used to create jobs and stimulate growth. Even if we taxed 100% it wouldnt be enough to cut our overall debt. The only true way is to stop spending and let the free market work.

Even JFK new this. All the income tax is, is another way for the controlling class to keep class warfare alive.... tax the rich!! tax the rich!!... sorry but the rich create wealth and jobs and growth. Not the average blue collar worker. The income tax basically states that its the governments money and you are allowed to keep so much. Thats way they always say, "let you keep more of your paycheck" F-U!! Its ALL of my paycheck.

End all of these stupid entitlements, that were only created to ensure that Democrats had someone to vote for them.

“The American people will never knowingly adopt socialism. But under the name of Liberalism, they will adopt every fragment of the socialist program until one day America will be a socialist nation without knowing how it happened.” Norman Thomas Socialist Party