"The tax cuts passed by Presidents George W. Bush and Donald Trump totaled three percent of GDP—much more than the projected increases in entitlement spending over the next 30 years. Those cuts meant that in 2018, the federal government took in revenue equivalent to just 16 percent of GDP, the lowest level in half a century, except for a few brief periods in the aftermath of recessions. Without the Bush and Trump tax cuts (and the interest payments on the debt that went with them), last year’s federal budget would have come close to balancing. As things stand, however, the Congressional Budget Office projects that revenue over the next five years will continue to average less than 17 percent of GDP, a percentage point lower than under President Ronald Reagan."
"More serious than leading to inadequate revenue is the way that tax cuts in the last 25 years have misallocated resources. They have worsened income inequality and, at best, have done very little for economic growth. The most recent tax cut, in 2017, will cost $1.9 trillion over ten years, but it boosted growth only slightly, if at all, while shifting the distribution of income toward the wealthy and reducing the number of people with health insurance.
Look abroad, and it becomes obvious that the United States has more of a revenue problem than an entitlement problem. U.S. spending on social programs ranks among the lowest in 35 advanced economies, yet the country has the highest deficit relative to its GDP in the group. That is because the United States brings in the fifth-lowest total revenue as a share of GDP among those 35 countries." |
