In late February, both House Speaker John Boehner (R-OH) and House Majority Whip Kevin McCarthy (R-CA) argued record revenue for federal coffers proves there’s no need to raise taxes.
Here is what the Speaker said: “The president got his tax hikes in January. The federal government will have more revenue this year than any year in our history. It’s time to tackle spending. Period.”
Whip McCarthy added: “We have more revenue in in 2013, projected, than at any other time….You’ve got more money going into the coffers today than at any other time….In the last four decades, on average, we brought in 17.9 percent of GDP. Now we’re going to bring in 19.1.”
Unfortunately, while Whip McCarthy is correct that the 40-year average is 17.9%, according to the Congressional Budget Office (CBO), and 2013 is expected to bring in a record level of revenue in nominal dollars, the government will not in fact take in more revenue than any other time in American history. Consider:
- Nominal dollars do not account for population growth, inflation, or the growth of the American economy compared to past years. FactCheck.org took the Speaker to task:
But Bob Williams of the nonpartisan Tax Policy Center said it doesn’t make much sense to talk about revenues only in nominal dollars. That doesn’t account for growth in population, inflation or the growth of the economy. Say, for example, the population doubled, Williams said. You would expect the amount of revenues to double as well. So revenues would increase without the need to raise tax rates. But spending would have to go up to provide services to twice as many people. The same is true for growth in inflation and growth in income. That’s why most government numbers crunchers prefer to look at revenues as a percentage of the gross domestic product, which accounts for those factors.
2. PolitiFact, which took down Whip McCarthy’s claim, expands a bit upon the historical inaccuracy of the Whip’s claim:
The government will pull in 16.9 percent in 2013, lower than the average over the last 40 years, according to the Congressional Budget Office. That’s not more money than at “any other time,” as McCarthy said.
What about in 2015, when the government is projected to bring in 19.1 percent?
That’s still lower than revenue as a percentage of GDP in seven years of the last 40 — also not more money than at “any other time.”
McCarthy’s office told PolitiFact that CBO projects revenue in 2013 will be the highest ever in raw numbers, at $2.708 trillion, up from $2.568 trillion in 2007.
But that’s not the measure a listener would have assumed from McCarthy’s comments, which focused on revenue as a percentage of GDP — not raw numbers.
Speaker Boehner and Whip McCarthy are not the only individuals to miss important context with regards to the CBO’s revenue projections. On February 7, CNS News reporter Matt Cover wrote an entire article about the alleged “record for the most money the government has ever taken in” expected in 2013. Yet nowhere in the article did Cover mention the important clarifications PolitiFact and Fact Check brought to light. (The Heritage Foundation, a strong Tea Party ally, deserves criticism for including Covey’s article in its Hotsheet/Morning News update two days ago, but also credit for including an accurate article by the Christian Science Monitor’s in yesterday’s Hotsheet/Morning News update).
Tea Party Patriots reached out to Whip McCarthy’s office for comment on the inaccuracy in his statement. According to an e-mail from his office, “The Whip has stated the federal revenue as a share of GDP is going to increase to 19.1% from the previous average over the last 40 years of 17.9%. As to the statement that we are bringing in more money this year than any over year – this is also accurate in nominal terms. The Whip’s point was not intended to be interpreted in terms of percentage of GDP. The bottom line is that in the face of higher revenue, we will continue to have large deficits. More revenue, which is what is happening now, will not solve the problem.”
Whip McCarthy’s office is correct – spending is the problem, as shown by both CBO and the Treasury Department. Both agencies project unsustainable spending to be the major fiscal problem for the federal government in the foreseeable future. CBO also expects tax revenues to be above the 40-year average in 2015, which means plenty of tax revenue is coming in while too much spending is going out. However, this does not shield him or Speaker Boehner from criticism when they fail to provide important context, such as differentiating between “nominal” dollars and “compared to GDP” dollars.
As Republicans, neither Speaker Boehner nor Whip McCarthy has the mainstream media to ignore factual errors on their behalf, so they have a much larger cross to bear than their Democratic colleagues when it comes to conveying the truth to the public. In the end, of course, it doesn’t matter how the numbers are spun. As both men said, revenue is not the problem.
It’s the spending, stupid.