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Myths on Spending, Debt, and Taxes Fuel Ryan Vision

April 5, 2012 at 11:19 AM
BY
Chad Stone

In my latest post for US News & World Report, I identify three myths about spending, debt, and taxes that conservative politicians use to justify the plan of House Budget Committee Chairman Paul Ryan -- one that would set the nation on a path to end most of government other than Social Security, health care, and defense by 2050.  I ask:

Are those who advance these myths interested in fixing the deficit and debt problem, as most Americans would hope, or are they conducting a bait-and-switch in pursuit of anti-tax advocate Grover Norquist’s quest to “reduce [government] to the size where I can drag it into the bathroom and drown it in the bathtub?”

I draw on CBPP analyses to rebut the following three myths:

Myth #1: Spending Is Out of Control, and Only Draconian Cuts Will Rein It In

As CBPP analysis has shown, non-interest spending outside Social Security and Medicare spiked in the Great Recession but is scheduled to fall substantially as a share of Gross Domestic Product (GDP) over the next 10 years as the economy recovers.  Moreover, the aging of the population and rising health care costs economy-wide are responsible for the growth in government spending in subsequent decades, not uncontrolled growth in government spending generally.

Myth #2: The Country Faces a Looming Debt Crisis Due to the Debt Incurred In the Past Few Years

That myth fueled irresponsible brinksmanship over legislation to raise the nation’s debt limit last year, and it stands in the way of meaningful deficit reduction.  But the weak economy and the legacy of policies enacted under President Bush (especially his tax cuts) play a far larger role in explaining deficits and debt going forward than recent temporary measures that were designed to combat the financial crisis and recession.

Myth #3: Americans’ Tax Burden Is High and Rising

As this CBPP analysis shows, the most recent “Tax Freedom Day” report that the Tax Foundation released earlier this week gives a misleading impression of the tax burden that the average American faces.  And as this CBPP analysis shows, average federal income rates are at historic lows for typical taxpayers.  When total taxes, including federal and state and local taxes, are taken into account, the United States has one of the lowest average tax rates among all industrialized countries.


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