On May 23, 2003, Rush Limbaugh posted an article on his site titled Maha, Where Do Deficits Come From?. In the first paragraph, Rush states:
...I want to illustrate that it is not tax cuts which cause deficits, but quite the contrary. It's spending that causes deficits - thus the term "deficit spending." I want to use Clinton Office of Management and Budget figures to debunk what liberal Republicans and Democrats say about the deficit skyrocketing and disaster striking because we send less money to Washington.
Following are the receipts, outlays, and surpluses (or deficits) from the 2004 U.S. Budget, put out by the Office of Management and Budget:
RECEIPTS, OUTLAYS, AND SURPLUSES OR DEFICITS(-): 1940-2008
(billions of dollars)
Total Total Unified
Year Receipts Outlays Deficit
---- -------- ------- -------
2000 2025.2 1788.8 236.4
2001 1991.2 1863.9 127.3
2002 1853.2 2011.0 -157.8
2003* 1836.2 2140.4 -304.2
2004* 1922.0 2229.4 -307.4
* estimated
Source: U.S. Budget, FY 2004, Historical Table 1.1
In the third paragraph, Rush gets into the numbers:
Now the government spent $1.789 trillion in fiscal year 2000, and $75 billion more - $1.864 trillion - in 2001, and we were said to be in fat city in 2000 to 2001. Every program had full funding, seniors were dancing in the streets, school kids were getting two school lunches if they wanted, dogs and cats were living together, etc. My point? If we spent the exact same amount in 2003 that we spent in 2000 or 2001, we would have budget surpluses of $58 billion and $27 billion respectively! Instead, we'll spend $2.3 trillion in 2003 - and we're wondering where this deficit came from?
As can be seen from the previous table, Rush's figures for fiscal years 2000 and 2001 are exactly right. After that, however, it's unclear where his numbers are coming from. The receipts in 2003 were about $1.836 trillion. If we had spent the exact same amount in 2003 as we did in 2000 or 2001 ($1.789 or $1.864 trillion), we would have a budget surplus of $47 billion (1836 - 1789) or a deficit of $28 billion (1836 - 1864), not surpluses of $58 billion and $27 billion as Rush states. Likewise, it's unclear from where the figure of $2.3 trillion for spending in 2003 comes from. The budget estimated spending of $2.14 trillion trillion for 2003. Rush may be including a supplemental spending bill of about $80 billion for the war and rebuilding effort in Iraq and Homeland Security. That would bring the total spending to $2.22 trillion. In any case, Rush concludes the article:
We've added almost $330 billion in new spending since Clinton's final budget! So when you hear Tom Daschle whining that tax cuts cause deficits in the audio link below, ask how a mere $50 billion in tax relief compares with hundreds and hundreds and hundreds of billions in new spending. Ask yourself why Daschle and the states keep right on spending when the American people, say, "You know what? We can't afford to spend that much on the government, because we need the money at home." (See: Why Are You So Miserable, Senator Daschle?) The kicker of all this is: from JFK to Reagan, cutting taxes has increased revenue to Washington. No spending program has ever done that.
The 2004 Budget estimates the increase from 2001 to 2003 to have been $277 billion which, if added to the supplemental spending bill of $80 billion, would be about $357 billion. However, the $50 billion in tax relief appears to be understated. The 2002 Budget estimated Bush's first tax cut to cost $29 billion in 2002 and $66 billion in 2003. Added to the estimated cost of $33 billion in 2003 for Bush's latest tax cut, the total cost through 2003 will be about $128 billion.
In any case, Rush suggests that, by simply freezing spending for two or three years, we can return the budget to surplus. To judge the feasibility of this, it helps to look at the components that make up the increase in spending, shown in the following table:
FEDERAL OUTLAYS: 2001-2003 (amounts in billions of dollars)
Change % of
---------------- Total
Function 2001 2003 Percent Amount Change
----------------------------------- ----- ------- ------- ------- -------
National Defense................... 305.5 376.3 23.2 70.8 25.6
Health............................. 172.3 223.1 29.5 50.8 18.4
Social Security.................... 433.0 478.5 10.5 45.5 16.5
Education, Training, Employment,
and Social Services............ 57.1 86.3 50.9 29.1 10.5
Other Income Security.............. 152.6 180.9 18.5 28.2 10.2
Medicare........................... 217.4 244.7 12.6 27.3 9.9
Unemployment Income Security....... 30.2 56.3 86.2 26.1 9.4
Veterans Benefits and Services..... 45.0 57.1 26.7 12.0 4.4
Transportation..................... 54.4 64.2 18.0 9.8 3.5
Community and Regional Development. 11.9 18.5 55.0 6.6 2.4
Administration of Justice.......... 29.7 36.1 21.9 6.5 2.3
Retirement Income Security......... 86.7 92.9 7.1 6.2 2.2
Natural Resources and Environment.. 25.6 30.6 19.3 5.0 1.8
General Government................. 14.6 19.0 30.2 4.4 1.6
International Affairs.............. 16.5 20.7 25.7 4.2 1.5
General Science, Space & Technology 19.8 21.7 9.7 1.9 0.7
Energy............................. 0.0 0.7 1715.4 0.7 0.2
Allowances......................... 0.0 -0.4 -0.4 -0.1
Undistributed Offsetting Receipts.. -47.0 -50.3 7.0 -3.3 -1.2
Commerce and Housing Credit........ 5.9 1.3 -78.5 -4.6 -1.7
Agriculture........................ 26.4 20.8 -21.0 -5.5 -2.0
Net Interest....................... 206.2 161.4 -21.7 -44.7 -16.2
----------------------------------- ----- ------- ------- ------- -------
Total, Federal Outlays............. 1863.9 2140.4 14.8 276.5 100.0
Total w/o Interest, Allowances &
Undistrib. Offsetting Receipts. 1704.7 2029.6 19.1 324.9 117.5
Source: U.S. Budget, FY 2004, Historical Table 3.2
As can be seen from the table, a full one-quarter of the increased
spending went to National Defense. Another 45 percent went to
spending in Social Security, Medicare, and Health (which consists
mainly of Medicaid payments). Most of this is so-called "mandatory
spending" and would require reform of those programs to change.
So, while Rush is correct that spending has increased sharply over
the past two years, even he would likely not have agreed to freeze
all areas in which the increased spending occurred.
Regarding Rush's contention that "from JFK to Reagan, cutting taxes has increased revenue to Washington", I have seen no evidence of that. The effect of the Reagan tax cuts on revenues is addressed by the article at http://home.netcom.com/~rdavis2/costmore.html. Hence, it would seem that the obvious is true - that both revenues and spending can and do play a role in deficits.