Bush Tax Cuts Did Not Cause Budget Deficits

As Congress begins their hand-wringing exercise about whether to extend the so-called Bush tax cuts, there has been a lot of chatter about how doing so would harm our economy.

Vice President Biden has been among the most opinionated.

"Doing so, he said, would cost $700 billion, worsen the nation's already dire financial situation and, in his words, is "just bad economic policy."

It must be true then that federal tax receipts dropped off a cliff in the years following the enactment of the Bush tax cuts because, you know, no one paid any tax, right?

Well, not exactly.

Federal tax receipts in 2001 were $1,991 billion. By 2009 (when federal tax receipts collapsed due to the recession), federal tax receipts were up to $2,105 billion.

What this demonstrates is that the budget deficit the country faces today is NOT due to a shortfall in revenue, but rather to overspending by the federal government.

Therefore, any "fix" to this problem that addresses the revenue side will prove to be a short-lived solution, unless and until government spending is addressed.