Tuesday, April 26, 2011

America's Problem is Low Taxes, Not Spending

It has quickly become a Republican talkling point that the US does not have a taxation problem; it has a spending problem. No need to raise taxes, they say. Just cut all that wasteful spending, and we will be all right. After all, teabaggers tell us we are Taxed Enough Already.

The reality is dramatically different. The chart below shows "general government expenditures as a percent of GDP". It is taken from the OECD "iLibrary" and can be found here. The bars represent each country's annual average for 2006-8. The blue bar is the average for all OECD countries combined.

The US is the seventh bar from the left, below the average and far below most of  Europe's most developed states. Note also that the gray diamonds hovering above each bar represent that govenment's average expenditure for 1995-97. They show that the spending percentage for the US was virtually unchanged for the subsequent decade.

The reality is that US government expenditures are a relatively modest percentage of GDP. Needless to say, US expenditures would be even lower were it not for our monstrously expensive industrial-military complex.

In other words, the US is not spending nearly as much on non-military items as some politicians would have you believe. Our overall spending levels are relatively low, and entitlement spending that directly benefits families is even lower. The US does not have a tax and spend issue. Our national debt is burgeoning because we keep reducing taxes on the wealthy and on corporations.

The chart below shows spending for families as a percent of GDP for the US and four other OECD members. This represents the socialistic spending and entitlements Republicans say is out of control and must be cut. Background and additional charts can be seen here.

Finally, have a look at the next chart. It comes from the same place as the first one. It also encompasses the same time frame. The one below measures taxes as a percent of GDP. The US is the fourth bar from the left, putting us even further down the OECD list.

To summarize, the US is not a tax and spend socialist nightmare. Government spending is comparatively low; spending on entitlements, welfare and the like is proportionately even lower. Teabaggers and others who buy into Congressman Paul Ryan's asinine spending bill, the one that guts Medicare and lowers taxes on the rich even more, are full of some serious shit.

Read Robert Reich, who details why we must raise taxes on the rich.

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