IT'S THE SPENDING, STUPID

originally published: 8/27/09

Bill Clinton's 1992 Presidential campaign won over public opinion with one simple line; "It's the economy, stupid." The Berlin wall had come down in 1989, and the Soviet Union was no more. The Cold War was over - there were no more apparent threats to the US homeland. Meanwhile, the US was experiencing a short & mild recession. Clinton labeled it the worst economy since the Great Depression and blamed 12-years of supply-side economics combined with excessive military and foreign intelligence spending. Who could argue this theory, as the Ronald Reagan and George H.W. Bush administrations did greatly increase military spending . . . while facilitating the end of the cold war through victory. For this achievement Bush 41 was booted from office. I would compare that with coaching the Super Bowl champions, and then getting fired for ruining your teams draft position.

Needless to say, "It's the economy, stupid." resonated with voters, and vaulted President Clinton into office. Today we face a serious recession, not the short blip of 1991. Arguments revolve around income tax rates. Did the George W. Bush tax cuts cause the recession? Did tax cuts increase federal revenues? Will allowing the Bush tax cuts to expire increase or decrease federal revenues? Are the rich paying enough? Are the rich paying too much? As the arguments persist, both political parties are ignoring the elephant in the room. It's the spending, stupid!

As a conservative, I have always been convinced that lowering income taxes will raise federal revenues. I have seen the numbers - revenue nearly doubling during Reagan's administration. Still, Democrats insist to claim tax cuts 'cost' the federal government money. (A statement that can only come from the perspective that all money belongs to Washington) Both cannot be true. So which is it? Do tax cuts raise or lower government revenue? You certainly cannot count on the modern "He said, She said" irresponsible journalism today to actually include factual research related to the argument at hand. Most are capable of little more than amplifying the argument. So I took it upon myself to do the research. During my truth-seeking mission I learned things that even surprised myself.

Analyzing the numbers from 1956 to 2008, there is no clear relationship between federal revenue and income tax rates. (table above) Over this 52-year period, the federal revenue increased at an average of 7% per year - but fluctuates greatly. Yes, tax cuts do increase federal revenue - but raising taxes does as well. The numbers point to a seldom-mentioned truth, government revenues continue to grow over time despite changing federal income tax policy, not because of it. Economic recession seems to be the only element that causes a reduction of revenue.

Lowering income tax rates did not cause our $11 Trillion debt. So how did we wind up 14-digits in the brackets during the same timeline government revenue is growing by an average of 7% every year - double the rate of inflation? One statistic makes it all easy to understand. The $71 billion 1956 US federal budget exploded to $2.5 Trillion ($2,500 Billion) by 2008. This equals an average spending increase of 7.5% per fiscal year. Looking at the years 1967 to 2007, no matter what rate the average income grows in the US - the government expands even faster. Lets see here . . . 7% average yearly growth in revenue . . . and 7.5% average yearly growth in spending - what could possibly be the problem? It's the spending, stupid!

Even after a half century of government growing at twice the rate of inflation, when bridges fall and public education fails politicians point their finger at us - the taxpayer. The United States government has become the black hole of fiscal irresponsibility. Every politician and dollar we send to Washington gets sucked in, and the more it eats the larger and more powerful it becomes.

And what is it all for? Is government making our lives better? 40 years ago the poverty rate was 10.4%. In 2007 the poverty rate was 10.4%. Social Security and Medicare are going bankrupt. Public education has fallen from top in the world to barely hanging in the top 20. Where has the government performed so well that it is deserving of more responsibility? Since there is no evidence changing income tax rates have any real effect on government revenue, what point is there to raising taxes? 

Dear President Obama, independent Mathematicians and Economists have studied the historical data and concluded there is no direct correlation between income tax rates and federal revenue. Given this information, what is the reason for raising taxes on incomes above $250K? Why do you plan to let the Bush tax cuts expire? Punishment? Revenge? Or is it just a way to keep the voting public eye off of the spending monster? Is it not the draconian increases in government spending through the last several administrations that have created our massive debt?

Until we elect politicians with enough guts to face the truth, that black hole will continue to grow. For anyone with eyes on Congress in 2010, I suggest stealing a page from the Clinton campaign with a little twist. Adamantly and repeatedly say, "It's the spending, stupid!"

by: Darrin Barker