Data: Spending and Tax Receipts, 1967-2011
I keep on hearing we have a spending problem, but no revenue problem, from you know whom. I decided to appeal to actual data. Below is a time series plot of Federal current expenditures and tax receipts plus contributions to Federal social programs, as a share of GDP, over the 1967Q1-2011Q1 period. The data are based upon the data definitions in the BEA’s national income and product accounts (NIPA), as of June 2011. Outlays are declining, and as of 2011Q1 are at 0.25, which exceeds the previous peak, during the Reagan era, at 0.241 (1982Q4). Federal tax receipts plus social program contributions are at 0.158.
Note the blue line does not equal total Federal receipts (income receipts on assets, transfer receipts, enterprise surpluses are not included), but it is only a small bit off. In order to close the gap between outlays and tax and contribution receipts, one needs growth which will reduce outlays and increase receipts through automatic stabilizers. But more fundamentally, it is hard to see how the bulk of the gap (i.e., the structural component) can be closed entirely by reducing spending.
[Update 8:41am Pacific] Reader MSM asks:
You essentially assert that the bulk of the gap is structural, rather than cyclical.
Really?
Which of these numbers say that, and how big is the structural-cyclical split of the gap?
Well, one can always refer to the CBO, as I have on a number of occasions in the past, to obtain the numbers requested. It’s as simple as downloading a spreadsheet to obtain the numbers. Here they are plotted (by FY):
Going forward to 2016, one would see the current law projection of cyclically adjusted revenues bounce back up to near average levels; that is because of the expiration of the 2001 and 2003 tax cuts (and the extension passed last year).
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