Dealing with the deficit without hiking taxes

October 13, 2010 12:23 PM

Dan Mitchell, at the Center for Freedom and Prosperity in the States, has a new video about spending cuts. He makes a really powerful case that the ongoing deficit is the result of the failure of politicians to restrain spending, not insufficient tax revenue.











The numbers are a bit different in the UK.  But just as Dan points out you could easily solve America's problems by getting back to the level of spending under Bill Clinton - hardly a radical libertarian.  Years into the Government's spending cuts, in 2014-15, we will be spending the same share of GDP as we did in 2006-07 - 40.9 per cent - after a decade of Gordon Brown.


There will be some further cuts after that, to 39.8 per cent in 2015-16 but we're basically going back to the roughly 40 per cent of GDP that we were at before the financial crisis.  Spending isn't being cut substantially at all, just a few per cent in real terms.  If we got spending back to the 36.8 per cent of GDP it was at in 2000-01 then there would certainly be no need for tax hikes.  Were the public services really in such a dystopian state then?

Dan Mitchell, at the Center for Freedom and Prosperity in the States, has a new video about spending cuts. He makes a really powerful case that the ongoing deficit is the result of the failure of politicians to restrain spending, not insufficient tax revenue.











The numbers are a bit different in the UK.  But just as Dan points out you could easily solve America's problems by getting back to the level of spending under Bill Clinton - hardly a radical libertarian.  Years into the Government's spending cuts, in 2014-15, we will be spending the same share of GDP as we did in 2006-07 - 40.9 per cent - after a decade of Gordon Brown.


There will be some further cuts after that, to 39.8 per cent in 2015-16 but we're basically going back to the roughly 40 per cent of GDP that we were at before the financial crisis.  Spending isn't being cut substantially at all, just a few per cent in real terms.  If we got spending back to the 36.8 per cent of GDP it was at in 2000-01 then there would certainly be no need for tax hikes.  Were the public services really in such a dystopian state then?

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