Earlier, I wondered why, if the Republicans are suddenly so concerned about the country’s debt and deficit problem, they also want to delay or eliminate the medical-device tax.
Eliminating this tax, after all, will balloon our deficit and debt by $US30 billion over 10 years — exactly the opposite of what the Republicans say they want.
After publishing this question, I got an immediate (and common) response on Twitter:
“Because we have a spending problem, not a revenue problem.”
Now, there may be some good reasons to eliminate the medical-device tax, but this is not one of them.
Because we actually DO have a revenue problem.
Let’s go to the chart…
The first chart, from the St. Louis Fed, shows federal revenue as a per cent of GDP. As you can see, it is currently only 16.5% of GDP, well below the 18% average since 1980, and even farther below the peak of about 20%.
It may be that some Republicans want taxes to be even lower than 16.5% of GDP. That’s fine. But that does not mean that we have a “spending problem, not a revenue problem.” As the chart above shows, we very clearly have a revenue problem.
Of course, we also do have a “spending problem,” at least relative to the same average. As the chart below shows, our federal spending is currently about 23% of GDP, versus an average of about 21% since 1980.
So, yes, if you regard this year’s deficit as bad, spending is a “problem.”
But so is revenue!
Business Insider Emails & Alerts
Site highlights each day to your inbox.