Supply-Side Economics

[whell]

Originally Posted by Chicks

https://www.washingtonpost.com/opini...226_story.html

The primary reason the deficit in coming years will now be higher than had been expected is the reduction in tax revenue from last year’s tax cuts, not an increase in spending. This year, revenue is expected to fall below 17 percent of gross domestic product — the lowest it has been in the past 50 years with the exception of the aftermath of the past two recessions.

Sorry, Whell, you are the one who just doesn’t get it.

I think not. I think actually you can't understand what you read. First, you site an "opinion" column as your source for your conclusion. I'll leave aside the fact that this "opinion" comes from WaPo, and it specifically a response to a Hoover Institute study about entitlement funding and not written as a broader commentary specifically about government spending or revenue policy.

The specific quote that you site is not sourced: we don't know from where the author draws his/her data to support that statement. I suspect it comes from the CBO. The CBO info is an "estimate" based on projections from reductions in revenue versus as static model. The foresight can therefore not be based on actual receipts.

In other words, the story isn't written yet. For example:

Government receipts totaled $3,315 billion in FY 2017. This was $48 billion higher than in FY 2016, an increase of 1.5 percent, below expectations from both the Budget and the MSR. As a percentage of GDP, receipts equaled 17.3 percent, 0.4 percentage point lower than in FY 2016 and 0.1 percentage point below the average over the last 40 years. The dollar increase in receipts for FY 2017 can be attributed to higher social insurance and retirement receipts and net individual income taxes, partially offset by lower deposits of earnings by the Federal Reserve.

Outlays grew in FY 2017, but by less than expected in the Budget and the MSR, and decreased slightly as a percentage of GDP. Outlays were $3,981 billion, $128 billion above those in FY 2016, a 3.3 percent increase. As a percentage of GDP, outlays were 20.7 percent, 0.1 percentage point lower than in the prior year, but above the 40-year average of 20.5 percent.

That was the result of the fiscal 2017 budget, which was laid out in 2016. Revenues less than expected, but in actuality Uncle Sam spent less than what was budgeted. The CBO didn't accurately predict this result. We also know that the CBO's predictive ability isn't that great, particularly with multi-year projections.