With their new majority in the House of Representatives, Republicans should quickly move to reduce federal spending and block any more tax increases by President Joe Biden.
The need for action is clear.
Annual federal spending has increased from $4.1 trillion in fiscal 2018 to $6.3 trillion in fiscal 2022, a staggering 53% increase. Although spending is down from the extraordinary pandemic spending levels over the last two years, fiscal 2022 spending is at a historic high. As a share of the economy, federal spending is at 25.1% of GDP, a record high level far above the 50-year average of 20.8%. If spending had returned to the average level, taxpayers would have saved $1 trillion this year.
Going back 75 years to the end of World War II, federal spending has never reached 25% of GDP, excluding the pandemic spending splurge of 2020-2021. Even when spending exploded after the Great Recession of 2008, spending never reached a level this high. In fact, spending has exceeded 23% of GDP only three times since 1946. What is worse, the Congressional Budget Office’s long-term budget outlook projects that on its current path federal spending will continue to soar above historic levels, reaching 30% of GDP by 2052.
This increased federal spending is the real cause of high budget deficits. High spending, not low taxes, is the problem.
Moreover, federal spending is also a tax on the private sector, taking money the private economy could be using to invest, expand production, and grow the economy. Lower spending will leave more money in the private sector to stimulate economic growth.
That’s why cutting federal spending and holding the line on tax increases should be at the top of the Republican agenda next year.
CLICK HERE TO READ MORE FROM RESTORING AMERICA
Bruce Thompson was a U.S. Senate aide, assistant secretary of Treasury for legislative affairs, and the director of government relations for Merrill Lynch for 22 years.
