>While reading the testimony of Robert L. Bixby of the Concord Coalition, I came across the following quote:
Some people may believe that the federal government should both tax and spend at about 18 percent of the GDP, while others may find it acceptable to tax and spend at about 30 percent of GDP. No reasonable person, however, would argue that the government should tax at 18 percent and spend at 30 percent. The resulting annual deficits and accumulated debt would shatter the economy. Yet, this is the future we will get if we try to fund the spending required by current law with today’s level of taxation.
I think he’s gotten to the heart of my concern. Right now, we’re collecting taxes at about 18.5% of GDP and spending about 21.5% of GDP. The spending is on an upward trajectory, but taxes are not. If Democrats are serious about spending programs, they need to propose tax increases (specific taxes and rates) to suit the spending. If Republicans are serious about tax cuts, they need to propose exactly what programs they would cut or reduce (specific programs and amounts).
Both sides are able to point to the other for political cover. But running a deficit of around 3% of GDP year after year is going to be a drag on the economy.