Americans Are Not Under-taxed, Washington Over-spends
           
The President gave a budget speech this week in response to efforts by Republicans to get control of government spending in Washington, for job creation today, and for the quality of life of the next generation of Americans.  It’s good that the President is finally getting engaged in the fiscal crisis that faces our country.  As the budget debate moves forward, there are important lessons from history that need to be understood.  Unfortunately, those lessons were not reflected in the President’s speech.

From World War II through 2009, every dollar of new federal tax revenue resulted in $1.17 in new spending.  Tax reductions in 2001 and 2003 resulted in more revenue to the federal Treasury.  The expanding economy spurred by this tax relief helped to reduce the annual budget deficit from $412.7 billion in 2004 to $160.7 billion in 2007.

So, even the most sincere argument that raising taxes will reduce the deficit and debt doesn’t have the history to back it up.  Outside of Washington, it’s obvious that the problem isn’t that people are under-taxed, but that Washington over spends.  They said so loudly and clearly in the last election.  Government spending increased by 22 percent during the last two years.

If we follow the budget proposed this year by President Obama, we’ll add another $13 trillion to our national debt over the next decade.  This debt gets in the way of the economic activity that creates jobs, and it’s a terrible burden to leave future generations.

Washington needs to get behind policies that clamp down on spending and grow the economy.  Increased economic activity increases revenue to the federal Treasury, enabling deficit and debt reduction.  The answer is not defending ways to grow the government.

Click here for my comments on the Senate floor after the President’s speech on Wednesday.