Which Side of Their Mouths?

Fiscal conservatives seem to have a habit of speaking, not out of both sides of their mouths, but out of multiple sides of their mouths. Their most recent plan to balance the budget by only cutting spending is a perfect example of their failure to grasp reality. A recent bill offered in both Houses of Congress proposed to cap federal spending at 20.6% of GDP. Unfortunately, this bill ( and nothing on the part of conservatives in Congress, has failed to even consider the revenue side of the equation. Here is the sad news on that issue. In 2000, revenue as a percentage of GDP was 10.2% from personal income tax and 2.1% from corporate income taxes for a total of 12.3% of GDP. By all mathematical measures, revenue at 12.3% of GDP is a far cry from spending at 20.6% of GDP. In fact, the gap between revenue and spending is a whopping 8.3% of GDP. So, Mr. Fiscal Conservative, from where does the additional revenue come? Perhaps for conservatives, there is a revenue tooth fairy since they do not want to do anything about raising taxes. Oh, wait! We were talking about the year 2000. Let’s look at what has happened since then. Fiscal conservatives still want to cap spending at 20.6% of GDP. No change there, but look at revenue in 2010. Income from personal income tax has fallen to 6.2% of GDP or a decline of 4% of GDP while corporate income tax has also fallen to 1.3% of GDP, declining by .8% of GDP. While calling for fiscal responsibility, the tax revenue has fallen a total of 4.8% of GDP widening the gap between a spending target of 20.6% of GDP to 15.8% of GDP. While the fiscal conservatives continue to talk about fiscal responsibility out of one side of their mouth, they have done nothing nor said nothing about the revenue side of the problem out of either the other side, the middle, the back side, or any side of their mouths. The fiscal conservatives have also continued to fail to acknowledge that the economic downturn is responsible for 48% of the revenue loss. They conveniently ignore the reality that the Bush tax cuts contributed 19% to the revenue decline while the unfunded wars contributed another 15% to the decline in federal revenue. The are loudly blaming the Obama stimulus plans for the problem, which, by the way, did account for 16% of revenue deficiencies but should be shared in part by the Bush administration’s role in the TARP bailouts. As the 2012 elections approach, it is certain that much will be made of the deficit and most conservative talking heads will attempt to mislead the voters on the cause of the problem. Keep in mind the adage George attempted, “Fool me once.....”