BUDGET DEFICIT FUELED BY OVERSPENDING, NOT TAX CUTS
February 21, 2005
The federal budget projections show that runaway spending, not insufficient tax revenues, is driving the administration's budget deficits, says Scott Hodge of the Tax Foundation:
- Federal tax revenues will total $2.057 trillion for FY 2005, $177 billion more than was collected last year -- an increase of 9.4 percent.
- Federal spending is expected to top $2.425 trillion, $133 billion more than was spent last year -- an increase of 5.8 percent.
- The growth rate of spending is two-and-a-half times the rate of inflation; if spending were held to the rate of inflation this year, the deficit would be trimmed $78 billion.
- Since President Clinton's last year in office, spending has increased 30.2 percent, while tax revenues have grown by 3.3 percent.
Since 2001, the budget has gone from a surplus of $128 billion to a deficit of $368 billion -- a swing of $496 billion. In the absence of new spending, the increase in tax revenues would have resulted in a significant budget surplus, says Scott.
Source: Scott A. Hodge, "CBO Forecast Shows Runaway Spending -- Not Tax Cuts --Causing Deficits," Tax Foundation, January 26, 2005.
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