McCarthy Cites Key Stats to Show It's Spending, Not Revenue That's Causing Debt Problem
House Speaker Kevin McCarthy offered two key statistics to show the federal government has a spending problem not a taxing problem when it comes to addressing the rapidly increasing national debt.
“[W]e’ve got more revenue coming into our coffers [than] at any time in American history,” McCarthy told reporters Wednesday as he discussed negotiations with the Biden Whits House to raise the debt ceiling.
“The problem is that the Democrats have been in power, and they’ve increased the amount of spending to the highest level we’ve ever had in American history, especially [in relation] to [Gross Domestic Product],” he added.
With the 2017 Trump tax cuts still largely in place, revenue to the federal treasury hit a record $4.9 trillion in fiscal year 2022, which was $850 billion more than FY 2021’s $4.05 trillion, also a record, according to the nonpartisan Tax Foundation.
By way of comparison, revenue to the treasury prior to the passage of the Tax Cuts and Jobs Act was $3.3 trillion in FY 2017.
Then-President Donald Trump and the Republicans promoted the plan saying it would lead to more economic growth, and thereby more tax revenue, and it did.
Revenue as a percentage of GDP hit 19.2 percent in FY 2022, which is near historic highs, according to St Louis Federal Reserve Bank data.
The only other times the treasury has taken in more money in relation to the size of the entire economy was in 2000 at 19.75 percent, and during World War II, at 19.8 percent.
McCarthy is right: Democrats increased spending dramatically after taking power, setting aside 2020 when the pandemic broke out when Congress, on a bipartisan basis, authorized trillions in emergency spending.
In FY 2019, the federal government spent $4.4 trillion. In FY 2020 with Trump at the helm during the COVID outbreak, spending went up to $6.5 trillion.
When Biden came to office and Democrats gained control of both chambers of Congress, federal outlays went up to $6.8 trillion in FY 2021 and came back down somewhat to $6.3 trillion in FY 2022 though COVID was well on its way to being in the rearview mirror.
President Joe Biden submitted his FY 2024 budget to Congress in March calling for $6.8 trillion in spending.
“I just think it’s reasonable and it’s rational that we spend less next year than we did last year. Every household would do this,” McCarthy told reporters. “We cannot continue down this path.”
The federal government is collecting more money than at any time in history. But when the Democrats controlled everything over the last two years, they spent way more than ever before.
That’s why we have to tackle America’s debt crisis now—before it’s too late. pic.twitter.com/vvjDnYPiBI
— Kevin McCarthy (@SpeakerMcCarthy) May 25, 2023
The Congressional Budget Office projected this month that the deficit will be $1.5 trillion for the year, up from February’s forecast of a $1.4 trillion shortfall.
The CBO also calculated that deficits will average $2 trillion per year for the next 10 years under current spending policies.
The Republican-controlled House passed the Limit, Save, Grow Act last month.
CBO estimates that the Republicans’ plan would save $4.8 trillion in federal spending over the next decade.
The bill suspends the nation’s debt ceiling through March 2024 or until the debt increases by $1.5 trillion, whichever comes first, in exchange for setting fiscal year 2024 discretionary federal spending at fiscal year 2022 levels.
It also sets a 1 percent growth cap on federal spending over the next decade and includes a work requirement for some who receive welfare payments.
Economists have pointed to the massive deficit spending in recent years as a primary cause of the high inflation the nation has experienced since Biden took office.