Government Revenue

In my recent post on the revenue problem that our government has, one of the commenter's indicated that I missed some important information in the discussion.

Constitutionally Speaking, from Perrinton, MI stated the following:

For the ignorant and the ideologues out there, the FACT of the matter is that we have the HIGHEST levels of government revenues in the history of this nation. In fact, the 5 HIGHEST revenue levels in history have come SINCE the Bush tax cuts.

We do NOT have a revenue problem, our problem is ENTIRELY a spending problem.

While I do NOT have the DATA that Constitutionally Speaking is referencing since there is no LINK, I can tell you that while researching for my post I looked at revenue data and how the numbers compare over the last 30 years.

If you simply look at unadjusted data Constitutionally Speaking is incorrect since we have actually had the 6 highest revenues in our countries history under the Bush era tax cuts. The problem with this line of thinking is that you are essentially looking at a 3-D issue in 2-D world.

If you use this line of thinking then the Gulf War cost the US more to wage than World War 1.

If you fail to adjust for inflation then of course it looks like we are spending more money now than ever and taking in more revenue than ever. The reality is that after adjusting for inflation and population growth the 2009 Federal revenue is $6,964.02 per person. That number happens to be just under the 1989 number of $6,964.61 per person.

The graph below shows that the inflation adjusted 2009 Federal revenue per person was actually the 17th highest in history. It also show that it is not a FACT that Bush era tax cuts yielded the 5 highest Federal revenues in history.



You could also look at Federal revenue as a percentage of GDP and see that the 2009 number is as low as it has been since 1959. This same link also shows that only one year since the Bush era tax cuts were enacted falls in the top 5 of Federal revenue as a percentage of GDP.

I would also argue that as our population grows the size of government needs to expand along with it. If you are to think of government as a business, and the business has an increasing demand for widgets the employees the business will need to produce the widgets will also increase. Obviously this means the business is spending more money. Is that good or bad for the company? It is hard to say since outlays are only part of the equation. In business you want to eliminate spending with a low ROI and increase spending with a high ROI. The same is true of government. You want to provide the services that the people want at a good value. The exact expenditures and income are secondary.

Just because something is a FACT doesn't mean it proves your point. If it did, I would probably get a lot less comments and the budget debate would be settled by now. The good news is that for every ignorant ideologue that posts here, there is a commenter to hold us accountable, and for that, I thank you.