While the press was distracted by the misnamed “fiscal cliff,” we began the New Year with a 13-figure deficit and a 14-figure national debt—the result of today’s Americans borrowing vast sums of money and putting it on future Americans’ tab. The two parties offer rather different explanations for the cause of this unsustainable transfer of wealth from the young (and the unborn) to the old, which the “fiscal cliff” deal—at least on paper—only made worse.
President Obama and the Democrats suggest that federal tax revenues have fallen, while federal spending has generally proceeded at reasonable levels. Republicans suggest that tax revenues have more or less flatlined, while spending has skyrocketed. Neither explanation is fully accurate. In truth, taxes have risen—substantially. Yet these substantial increases in federal taxation have been dwarfed by an explosion in federal spending.
According to White House, Congressional Budget Office (CBO), and U.S. Census tallies, when John F. Kennedy was in the White House in 1962, federal tax revenues were $534 per capita, or $4,178 in today’s dollars. Last year (according to those same sources), federal tax revenues were $7,793 per capita. So, from 1962 to 2012, taxes rose 87 percent even after accounting for inflation and population growth. In other words, across the past 50 years, real (inflation-adjusted) per-capita taxes have nearly doubled.
Of course, this 87 percent increase in per-capita taxation hasn’t remotely kept the federal government from racking up higher deficit spending. With JFK in the White House in 1962, the federal government spent 7 percent more than it had available to spend—$1.07 going out for every $1 coming in. With Obama in the White House, it has spent $1.56 for every $1 available.
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