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It’s The Glasses, Stupid

If you wonder why the Federal Government can’t seem to contain spending, it must be the rose-colored glasses being donned at the CBO.  The Federal Debt has increased every year since 1968.  Put another way, we haven’t paid off $1.00 of our National Debt since 1968.

But, last week, the CBO Released a document entitled “The Budget and Economic Outlook: Fiscal Years 2011 to 2021″ containing information on projected tax revenues and budgets… …and thus the budget deficit.  Here are the projected tax revenues:

Year Tax $ Increase
2010 2162 N/A
2011 2228 3.05%
2012 2555 14.68%
2013 3090 20.94%
2014 3442 11.39%
2015 3651 6.07%
2016 3832 4.96%
2017 4075 6.34%
2018 4275 4.91%
2019 4489 5.01%
2020 4712 4.97%
2021 4963 5.33%
Average 7.97%

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What struck me immediately was the wildly speculative increase in Tax Revenues in 2013 and over the entirety of the projection.  I would think a 6% increase in tax revenues to be unrealistic, but a 20% increase in 2013?

I’m not the smartest guy in the world, but if I go to my boss and tell him in two years that we are going to increase productivity, output, or any other measure by a sudden 20%, he’s going to laugh me out of the office.

Even so, the CBO is projecting the average increase per year over the next 10 years to be ~ 8%.  During Clinton’s supposed heyday years of (non-existent) balanced budgets, the Tax Revenue increase  (1990 – 2000  multi-year average) never exceeded 7%.  Only ONE year-over-year increase exceeded 10%

Year Revenues Pct Increase Avg Pct Increase
1990 1031.96
1991 1054.99 2.23%
1992 1091.21 3.43% 2.83%
1993 1154.34 5.79% 3.82%
1994 1258.57 9.03% 5.12%
1995 1351.79 7.41% 5.58%
1996 1453.05 7.49% 5.90%
1997 1579.23 8.68% 6.29%
1998 1721.73 9.02% 6.64%
1999 1827.45 6.14% 6.58%
2000 2025.19 10.82% 7.00%
2001 1991.08 -1.68% 6.21%
2002 1853.14 -6.93% 5.12%
2003 1782.31 -3.82% 4.43%
2004 1880.11 5.49% 4.51%
2005 2153.61 14.55% 5.18%
2006 2406.87 11.76% 5.59%
2007 2567.98 6.69% 5.65%
2008 2523.99 -1.71% 5.24%
2009 2104.99 -16.60% 4.09%
2010 2162.72 2.74% 4.03%
Average 4.03%

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Starting from the land of unicorns and rainbow farts in estimating tax revenues does not do any service to the country.  The CBO may be non-partisan, but they’re also wearing rose-colored glasses!

 
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Posted by on February 14, 2011 in Balanced Budget

 

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