10 Charts of the Year — Federal Spending and Revenues

Our Chart of the Year for today comes from the Senate Budget Committee, showing the gap between federal spending and federal revenues.

Source: Senate Budget Committee

What does this chart mean?

This chart demonstrates that revenue has to be part of the solution to the deficit. It shows that the last five times the budget was in surplus (in 1969, 1998, 1999, 2000, and 2001), revenue was near 20 percent of GDP. Revenue is now at 15.4 percent of GDP, near its lowest level in 60 years. – Sen. Kent Conrad (D-ND)

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2 Responses to “10 Charts of the Year — Federal Spending and Revenues”

  1. Unfortunately, this graph doesn’t even come close telling the whole story, and therefore little can be derived from it. As a percentage of GDP, revenues can be up or down in real dollars, as can spending, which makes this graph useless. During recessions, revenues fall disproportionately to GDP. The reasons for this are numerous, and have very little to do with tax rates. One reason is that stock values drop, and as losses are realized, on paper, not in GDP, revenues fall off as these losses are damaging to government income tax and capital gains receipts. Consumer spending falls off, and inventory levels are higher for discretionary spending goods. While companies still produce product, that product can lose value, again lowering profits, which directly affects government revenue. Without any tax changes, a recession will slash government revenue more than any tax cut, just as an economic rebound will increase tax revenues by leaps and bounds over anything that could be gained through tax increases.

  2. This chart also leaves out the fact that state and local spending has been falling since the recession began. Overall G is less than in 2007…

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