Federal Revenue and the Economy

June 28, 2010 03:53

We’re still working our way through the mess even as the next (and perhaps final) bubble inflates before us: the government bubble. This will prove the most intractable bubble of all. We have only to look at Europe, and particularly at Greece, to see what’s coming.

By Jon N. Hall at American Thinker

The Office of Management and Budget reports that total federal revenue more than doubled every decade from 1940 to 1980 (Table 1.3, tables). And from 1980 to 2000, total federal revenue almost doubled every decade, going from $517 billion in 1980 to $1.032 trillion in 1990 to $2.025 trillion in 2000. But in 2010, OMB estimates that total revenue will be only an anemic $2.165 trillion. If the current decade had kept pace with the last two decades, the feds would have receipts in 2010 of $4 trillion.

That’s more than enough to balance the budget. But the above numbers are in current dollars, not constant dollars (i.e., inflation-adjusted dollars). Table 1.3 also shows that in constant dollars, a decidedly different picture emerges: Although federal revenue from 1950 to 2000 always grew by the end of every decade, it never doubled. And OMB estimates that in constant dollars, federal revenue will drop from $2.310 trillion in 2000 to $1.929 trillion in 2010 — an inflation-adjusted drop of $381 billion.

So if OMB’s estimate for 2010 holds, the aughts will be the only decade in the last seventy years when the feds suffered a decrease in revenue in real money.


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