February 21, 2005

Current Budget is Future Tax Increase

Press Release of the Franklin Party – For Immediate Release

In 2004, the federal government spent 22% more than it took in. If the government was an average household, it would be spending nearly ten thousand dollars more than it makes. Obviously this is poor money management.

It would be nice if something like strong economic growth would fix the budget for us. Unfortunately, with tax cuts and with spending growing faster than the economy, that fix is impossible.

The current attempt to restraint spending is a good start to reducing the deficit. Strong spending restraint would allow revenue (from economic growth) to grow faster than spending and reduce the deficit. We aren’t holding our breath waiting for this restraint. In the past forty years under the joint leadership of the other two parties, federal government spending has grown four times faster than inflation.

So if those parties can’t restrain spending, how do they plan to balance the budget? They won’t tell you this, but in a few years they will raise taxes. It happened under the watch of Bush Sr. and Clinton after the tax cuts of Reagan and it will happen again.

Some of you are probably thinking that a few years of low taxes and higher taxes someday is a good thing. It would be if there wasn’t a huge string attached. This huge string is years of deficits until that future tax increase balances the budget. These deficits will significantly increase the debt and require additional government spending to service that debt. The interest payment on that debt will increase government spending and require tax increases larger than the original tax cut to balance the budget.

Sources: CBO, Census, InflationData.com

Press Office: email

Entry Type: Franklin Party


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