This is odd. A rare note ot sorta-optimism from Nouriel Roubini regarding the US debt situation.
In a note this morning that he put with fellow analyst Arnab Das, he writes:
The United States has the most manageable fiscal issues of any major advanced economy because federal, state and local revenues as a share of GDP are very low, for cyclical and other reasons. Therefore, fiscal balance can be restored by fiscal adjustment without major economic difficulty in the near term.
In other words, US revenue and spending can be brought closer into line via raising more revenue (as a share of GDP) and so in reality this means raising taxes.
Obviously though the GOP is totally anathema to the idea of tax increases as a debt solution.
But back to Roubini’s point, this chart — via a recent Jeff Gundlach presentation — demonstrates nicely that tax revenue as a percentage of GDP is what’s really fallen off a cliff lately.
The chart gives something of a lie to the GOP claim that Washington just has a spending problem, but not a revenue problem. At least based on any historical perspective, revenue is a big part of it.