Yesterday, the Congressional Budget Office (CBO) released their annual "Budget and Economic Outlook," which projects federal spending, federal taxes, federal debt and deficits, and economic growth. Chances are, you've already seen the topline numbers here. Below are some fun facts from the CBO report you might have missed:
Page 23: federal tax revenues in 2011 will be $123 billion than they were in 2009. This is despite not raising taxes, as Congressional Democrats wanted to do. Washington doesn't have an under-taxing problem. Washington has an over-spending problem.
Page 40: permanently avoiding all tax increases on American families and small businesses reduces CBO's revenue projections by $3.8 trillion (families and small businesses), and $760 billion (other businesses). This avoidance of tax hikes reduces tax revenue expectations over the decade from $39 trillion to $34.5 trillion (see page 14). Thus, the "current policy" revenue baseline is actually $34.5 trillion from 2012-2021.
Page 14: Historical tax revenues are about 18 percent of GDP. If all the tax hikes happen, tax revenues in 2021 (the last year of the report) are projected to be 20.8 percent a GDP, nearly a record. Avoiding these tax increases is vital to simply keeping federal tax revenues where they have always been. If all tax hikes are avoided in 2021, tax revenues will instead be 18.2 percent of GDP–the historical average. Again, Washington has an over-spending problem, not an under-taxing problem.
- Page 135: Growth matters. For every tenth of a percentage point in additional real economic growth, federal tax revenues over the decade rise by $266 billion. Getting a full percentage point of higher real GDP growth would yield a staggering extra $2.7 trillion in higher taxes. Considering CBO's average real economic growth rate for the latter half of the decade is a paltry 2.4 percent a year, this should be do-able with pro-growth strategies (starting with cutting the corporate income tax rate).