The Congressional Budget Office has released its annual Budget and Economic Outlook for 2026 to 2036, and once again, CBO and the media are blaming the nation’s deficit problem on Republican tax cuts. However, the 172-page report shows very clearly that higher spending, and not lower taxes, is the main reason for the rising deficits and debt.
A Washington Post story on the CBO report said the “GOP tax law fuels steeper deficits,” and cites the “massive cost” of the Republican tax cuts. Not one word in the entire article addressed the massive increases in spending projected by the CBO over the next 10 years.
The CBO report provides 10-year projections of revenue, outlays, deficits, and debt, and by any measure, these numbers show that rising budget deficits are caused by higher spending, not because taxes are too low. Instead, the numbers show that excess revenue coming in is fueling more spending.
Even with the Republican-led tax cuts, which essentially just extended current law and prevented a massive tax increase, federal tax revenue is soaring. Total federal taxes are projected to increase by an incredible $70 trillion over the next 10 years, rising well above the 50-year average as a percent of GDP.
Annual tax revenue will increase from $5 trillion in 2025 to more than $8 trillion in 2036, a 60% increase in the annual tax burden. Tax revenue will be even higher if growth exceeds the paltry 1.8% annual growth projected by CBO for the next 10 years.
The projected growth of federal spending is staggering. Total federal spending is projected to increase by $95 trillion over the next 10 years. This is more money than the federal government collected in taxes in the 65 years from 1960 to 2025.
RESTORING AMERICA: ON THE FEDERAL DEFICIT, PICKING THE LOW-HANGING FRUIT WON’T BE ENOUGH
What’s more, total annual spending will increase from $7 trillion in 2025 to more than $11 trillion per year in 2036 — an increase of 63%.
As the numbers show, rising taxes do not reduce deficits and debt. Higher tax revenue just leads to more spending, resulting in bigger deficits and higher debt. Our fiscal problems are caused by too much spending, not too-low taxes.
Bruce Thompson was a U.S. Senate aide, assistant secretary of the Treasury for legislative affairs, and the director of government relations for Merrill Lynch for 22 years.
