The United States does not have a spending problem; it has a revenue problem. Republican tax cuts for the wealthy have reduced revenues and driven up the national debt. Despite this reality, Republicans want to further cut important social programs, harming millions of Americans while doing little to correct the country’s fiscal balance.
The United States should reduce the deficit, but not on the backs of working people. The deficit can and should be reduced by closing tax loopholes for the wealthiest of the wealthy and going after tax cheats among the wealthiest of individuals and big corporations—a move that requires maintaining funding for the Internal Revenue Service. Next year, there is also a crucial opportunity for Congress to put the country’s fiscal path back on track by letting key provisions of the 2017 Republican tax package expire.
Rising debt levels are due to Republican tax cuts for the wealthy, not increased spending to invest in American families
Debt levels are increasing over the long run because of tax cuts for the wealthy
For most of the 20th century, the United States did not run budget surpluses. Small deficits were paired with strong economic growth, which enabled the size of the debt to shrink from 106% of gross domestic product (GDP) at the end of World War II to approximately 30% by the end of the Clinton administration. The debt-to-GDP ratio began to grow in the 2000s following the passage of the Economic Growth and Tax Relief Reconciliation Act under the George W. Bush administration. Though the law contained tax cuts for people of all income levels, its benefits flowed largely to the wealthiest 20% of taxpayers.
Prior to the extension of the Bush tax cuts in 2012, when the cuts were due to expire, CBO estimated that revenues would exceed outlays every year for at least the following 75 years. Instead, Congress extended the Bush tax cuts, which dramatically increased the size of the debt. In 2017, President Trump pushed through a further round of partisan tax cuts, the Tax Cuts and Jobs Act, which also largely benefited the wealthiest taxpayers. By the time President Biden took office in 2021, debt held by the public was over 98% of GDP.
Currently, the Congressional Budget Office (CBO) projects that the national debt will continue to rise. Federal debt held by the public1 is expected to be 99% of GDP at the end of fiscal year 2024 and is projected to increase as a share of the country’s GDP over the next 30 years to 172% by 2054. This trajectory is the result of repeated Republican tax giveaways to the wealthy.
Low revenues, as opposed to high spending, have driven recent increases in the debt
The Bush and Trump tax cuts massively increased deficits by decreasing net revenue over the long term. One analysis even found that the Bush and the Trump tax cuts are responsible for the entirety of the fiscal gap (the total increase in debt beyond what is needed to maintain a stable debt-to-GDP ratio). According to the Office of Management and Budget, revenues were 20.0% of GDP in 2000, while by 2019, they had fallen to only 16.4% of GDP.
Rising deficits due to falling revenues have masked the fact that projected spending is also lower than previously estimated. Projected fed