Do you consider yourself a limited government type of voter? Are you looking for a path to find the political solution to runaway government spending? I am here to provide a word of caution. Consider, please, these facts:

  • Ronald Reagan: Federal spending in 1981 (the oldest year I have comparable data for) = $697.8 billion. Federal spending in 1988 = $1,066.9 billion. Average annual increase: 6.3%.
  • George HW Bush: Federal spending in 1988 = $1,066.9 billion. Federal spending in 1992 = $1,427.8 billion. Average annual increase: 7.6%.
  • Bill Clinton (pre-Gingrich with Democrats in control of the House): Federal spending in 1992 = $1,427.8 billion. Federal spending in 1994 = $1,463.0 billion. Average annual increase: 1.2%.
  • Bill Clinton (with Gingrich & Republicans in control of the House): Federal spending in 1994 = $1,463.0 billion. Federal spending in 2000 = $1,788.6 billion. Average annual increase: 3.4%.
  • George W Bush (with Republican control of Congress): Federal spending in 2000 = $1,788.6 billion. Federal spending in 2006 = $2,659.2 billion. Average annual increase: 6.8%.
  • George W Bush (with Democratic control of Congress): Federal spending in 2006 = $2,659.2 billion. Federal spending in 2008 = $3,145.3 billion. Average annual increase: 8.8%.
  • Barack Obama First Year: Federal spending in 2008 = $3,145.3 billion. Federal spending in 2009 = $3,516.1 billion. Average annual increase: 11.8%.
  • Barack Obama Second Year (annualized): Federal spending in 2009 = $3,516.1 billion. Federal spending in 2010 = $3,445.6 billion (annualized using data through September). Average annual decrease: 2.0%.

All information sourced from http://www.fms.treas.gov/mts/mts.xls.

CPAC and other conservative action groups are up in arms about Obama’s stimulus package and budget proposal. A primary basis of the attack is the plan to raise taxes, specifically to let lapse the Bush tax cut. For the conservatives, apparently, Bush’s maximum tax bracket of 35.0% meets with unquestioned approval, and Obama’s 39.6% maximum tax rate is utterly contemptible.

Such an incredibly fine-tuned sense of indignation the conservatives have! Apparently, somewhere in that span of 4.6%, we cross an invisible line from endless prosperity to eternal doom.

Not only is that precise identification of the disaster line presumptuous and laughable, it utterly fails any historical perspective test. Obama’s highest tax rate will be lower than the entire period from 1940 to the present, except for two brief periods. One was 1988 through 1992, and the other is 2001 to the present. It is interesting to note that each of those exception periods ended in recession. Obama’s tax plan will keep the marginal tax rate lower than it was even during the conservative-hallowed Reagan years. Only in Reagan’s final year in office did the highest federal income tax rate drop below 50%.

The stark reality about tax cuts ignored by conservatives is that lowering taxes is not fiscally conservative. The conservatives may wish or dream that lower taxes is a pragmatic approach to limiting the scope of government, but that is simply fiction.

Spending has increased unabated through Democratic and Republican administrations alike, through Democratic and Republican Congresses alike. Ronald Reagan? Federal spending, even excluding defense, increased an average of 7.1% per year during his two terms. In fact, federal spending has risen faster under Republican presidents than Democratic ones, and just as fast under Republican Congressional leadership as Democratic.[1,2].

Historically, there is only one fiscal difference between Republicans and Democrats. Democrats pay for their spending through taxation; Republicans do not. As a result, 80% of the current $11 trillion of federal debt arose under Republican presidents. This includes vast increases under Reagan, GHW Bush, and, taking vast federal debt to a whole new level, GW Bush.

So, when we embrace the conservative tax-cutting ideology, we get recessions and massive federal debt. When we pay for our spending as we go, we get prosperity and at least our debt doesn’t grow. And the notion that holding the line on taxes somehow magically restrains the scale of the federal government is utter nonsense.