In an article about the ongoing negotiations over a possible increase in the federal debt limit, the AP asserted in its “Spin Meter” column that “analysts say that in recent decades Republicans have largely succeeded in turning taxes into a dirty word.”
In an article which notes that President Obama “focuses on the very rich, and speaks euphemistically” when discussing his proposals to increase taxes, the AP cannot resist the urge to characterize Republican opposition to tax increases thus: “Republicans, for their part, are just as quick to declare elimination of the most rarefied corporate benefit a job-killing tax hike on the American people.”
The AP also states, “Listen to Republicans, and the whole [debt ceiling] problem was created by out-of-control spending that now demands to be addressed.” The implication is that taxes have to rise for (as AP says Democrats claim) “the U.S. [to] make good on its obligations.”
The truth is that although taxes have fallen as a percentage share of GDP by three points since the 2007-2008 recession (due principally to falling incomes and high unemployment), spending as a percentage share of GDP has risen by five points. Even under President Obama’s budget (which was rejected 97-0 by the Senate) the long-run trend of taxation and spending is such that taxation never exceeds about 20% of GDP but spending rises past 30% of GDP by 2060.
Even under these optimistic revenue projections (long-run average taxation is about 18.5% of GDP), there are massive deficits. This is because the Republicans that the AP highlight are correct in diagnosing the debt increases as spending-driven. Policymakers should keep that in mind as they consider proposals that the AP asserts “include raising taxes on small business owners and potentially low- and middle-income families.”
If reporters actually did look at the spending side of the equation, they might unearth some stories that their readers could find interesting. For instance, “House Energy and Commerce Committee leaders are demanding more answers from Obama EPA Administrator Lisa Jackson on the agency’s sending millions of taxpayer dollars overseas,” that the congressional committee announced on July 7, 2011. “Committee investigative staff recently released a report detailing 65 foreign grants (excluding Canada and Mexico) in excess of $27 million that the EPA has handed out since the stimulus was signed into law in February 2009. Further review of the EPA’s database has revealed significant discrepancies.”
“For example, the EPA’s database lists $15,000 for Indonesia’s ‘Breathe Easy, Jakarta’ publicity campaign while an EPA press release and blog posting from February 2010 boast an initial EPA investment of $450,000 for the project. In addition to the $450,000, the committee also discovered EPA’s soliciting of proposals for up to $1.5 million for the ‘Breathe Easy, Jakarta’ campaign.”