Daniel Thornton, the St. Louis Fed's Vice President and economic adviser, finds what conservatives have been saying all along is true: it's steadily increasing government spending, not a lack of tax revenues, that's causing all of this.
[A]fter 1970, both revenues and expenditures increased on average relative to the previous two decades; however, revenue increased marginally while expenditures increased significantly... on average, the government spent 2.4 percent of GDP more than it received in revenue during the 38-year period.
The new study confirms that what's been driving the increases in spending hasn't been that old liberal boogeyman defense spending. It's entitlement programs - Medicare, Medicaid, Social Security, and other transfer and welfare programs.
Finally, Thornton concludes, the progressive response that all the U.S. has to do is raise taxes is bankrupt.
The long-run perspective offered here shows that there is a deeper and more fundamental issue that must be addressed if the problem is to be resolved solely or primarily by raising taxes. Specifically, the analysis shows that the deficit/debt problem began when the government decided to increase spending significantly without increasing taxes.
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