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Yes, of course big deficits are due to tax cuts

The Center for American Progress says that our recent big deficits are due to Republican tax cuts. Their explanation is a little complicated, but it's all pretty obvious if you just look at federal spending:

In 2019—the last year before the pandemic—the federal government spent almost exactly as much as it did in 1980. Spending was up a bit during the 1991 and 2000 recessions, and up a lot during the 2008 recession, but it always settled down afterward to around 20% or so.

So yes, if spending is the same as it was 40 years ago then consistent deficits are obviously due to tax cuts.¹ And here's a reminder of just who those tax cuts were for:

Everybody has gotten tax cuts, but the big winners were the super-rich. Not only have their incomes quadrupled since Reagan was president,² but their tax rates have gone down enough to save them some serious money on top of that. It's a sweet deal.

¹That is, average deficits over time. There are also temporary deficits during recessions, including the one we had during the pandemic recession. Those typically last a few years and then disappear.

²Yes, of course I adjusted that for inflation.

27 thoughts on “Yes, of course big deficits are due to tax cuts

  1. E-6

    Not everyone benefited. Some were targeted to be hurt. I got a tax increase, because I'm in one of those expensive "democrat" towns that have high real estate taxes and can't fully deduct that anymore.

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    2. dotkaye

      came here to say this, we got a tax increase about $4000 per year. I never tire of telling people about my Republican tax increase.. ha.

  2. golack

    Even with Obamacare, spending stable relative to GDP.
    Even with aging population, spending stable relative to GDP.
    Even with massive military spending, spending stable relative to GDP.

    Now, does the cost of the tax cuts also include revenue losses due to tax breaks, off shoring of income, etc.?

  3. KJK

    The MAGA GOP and that Orange fuck head purposely screwed over high tax (Blue) states. The lower tax rates did not offset the loss of SALT deductions and I ended up paying a few $000's more in Federal tax. At least with George W's and Ronny's tax cut, everyone got a benefit, but of course the rich got the lions share.

    Another interesting chart would be the the percentage of the US Federal tax burden paid by corporations over time. I would bet that the corporate tax burden has declined precipitously since 1980.

    1. rick_jones

      The MAGA GOP and that Orange fuck head purposely screwed over high tax (Blue) states.

      And yet, the Democrats didn’t undo that when they ostensibly had the chance…

      1. KJK

        In 2021 - 2022, the only legislation the Democrats could pass was whatever Joe Machin and Kyrsten Sinema would both agree to. Tax cuts are always politically difficult to undo.

          1. ScentOfViolets

            Why don't you answer my question first? Until then, why would anyone think that your question is in anything other than bad faith?

            Of course, we already know the answer to that one 😉

      2. ScentOfViolets

        What. Every single Democrat was against undoing the tax cuts!?!?!?! Wow. Of course, extraordinary claims require extraordinary proof. So lets see yours. Put up or shut up, I don't care which.

      3. KinersKorner

        Because dolts thought it was progressive to screw people who can “afford to pay”. I too am in one of the districts. My guess is we lost Congress right there. LI and Westchester candidates could have campaigned on that and won. Someday they will learn, I will just be dead by then though.

  4. NeilWilson

    You need to understand that your "savings" is not accurate.
    People change their actions based on tax law.
    So if something were taxable in 1979 and not taxable today then you would expect it to happen more often today. Obviously, it works the other way too.

    Middle class people have very few ways to play with their taxable income. The really rich can afford to hire a lawyer for $10,000 if it will save 1% in taxes. Most people would lose money if they did that.

    Of course, the gist of your numbers is correct. The tax cuts helped me A LOT but it helped people 10 times richer than me a lot MORE.

  5. rick_jones

    So, I could see a reticence to include 2020 and perhaps even 2021, but we are in 2023, so why doesn’t this chart include 2022 at least?

  6. Joseph Harbin

    One of the conceits of representative democracy is that one-person, one-vote leads to outcomes that may not be fair for everyone but at least are ones that the majority has agreed to. How nice. But democracy in practice does not work like democracy in theory.

    Imagine 40 years ago negotiating tax cuts with new rates that would apply for four decades to come. Four people in a room, a majority must agree or no deal.

    Scenario 1
    Elon & Jeff proposal:
    $99,348 for Elon & Jeff
    $4,960 for Average Jane & Joe
    NO DEAL! Elon & Jeff walk out.

    Scenario 2
    Average Jane & Joe proposal:
    $4,960 for Elon & Jeff
    $4,960 for Average Jane & Joe
    NO DEAL! Elon & Jeff walk out.

    Scenario 1 ends without a deal because it is inherently unfair to two of the players. Scenario 2 ends with no deal because it's not worth the candle for two of the players.

    You might imagine a Scenario 3 in which the players continue negotiating until they reach a more equitable agreement that they all agree on. That does not happen, however, because that only happens in game theory and not our game called Democracy in America.

    1. Joseph Harbin

      In Democracy in America, of course, the only option is Scenario 1, and either Jane or Joe caves because ____*.

      * Culture war issue of the day.

      1. KenSchulz

        Nah, Jane and Joe are talked into accepting Scenario 1 because Elon and Jeff are Job Creators, and a tax break doesn’t help Jane and Joe if they don’t have jobs.

    2. aldoushickman

      "Scenario 2 ends with no deal because it's not worth the candle for two of the players."

      I have no idea what you are trying to demonstrate here, but your Scenario 2 outcome is pretty irrational. Are the four game players (Jane, Joe, Jeff, and Elon) given only two options? Or is the idea that 1983-vintage Bezos (19 years old) and Musk (11 years old) are so certain that they'll be rich in 2023 that they'll take no tax cut at all?

  7. Creigh Gordon

    Assumption here being that deficits are on the face of it bad. The mere existence of a deficit or surplus--regardless of size--is neither good or bad. Deficits and surpluses should be judged on their effects, most conspicuously on inflation and unemployment. Other than the effect on relevant economic factors like inflation and unemployment deficits have no significance.

  8. kenalovell

    To do them justice, reactionaries would not accept the validity of an analysis based on government spending as a % of GDP. They would argue that government spending was already out of control in 1980, and that at the very least, it should have been frozen at that level forever in real dollar terms, not as a proportion of GDP.

    1. ScentOfViolets

      To do them justice, said reactionories would have had no problem with doubling the so-called 'defense' bugdet and then doubling it again. Don't give them one iota of credit more than they're due.

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