Thumbs Down: Spending Trumps Tax Cuts

The federal budget projectionsreleased at the end of January bythe Congressional Budget Office (CBO;202-226-2600; www.cbo.gov) showthat runaway spending, not insuffi-cient tax revenues, remains the causeof today's budget deficit, which is currentlyprojected to reach $368 billionthis year. Four years ago, there was abudget surplus of $128 billion—that's a$496-billion tumble. What happened?It's not the Bush administration's taxcuts; federal tax revenues total around$2.06 trillion for 2005—a 9.4% increaseover last year and 3.3% increase over2001. But this surge of new tax revenuescan only go so far to cover dramaticspending increases, which continueto grow at a rapid pace. The CBOprojects 2005 federal spending ofabout $2.43 trillion, a 5.8% increaseover last year and a 30% increase since2001. The 1-year spending growth rate,which excludes any forthcoming appropriationsfor the war in Iraq, is 2.5 timesthe rate of inflation.