Rhetoric vs Data

With all of the mud slinging going around about the different budget plans for the federal government, I thought it would be interesting to look if there is any support for or against either side of the “Bush Era Tax Cuts” debate. Everyone is concerned with two things… the health of the government and the health of the economy, so lets look at both:

Source: http://www.usgovernmentrevenue.com

I don’t have a graph for the second data set but take a look at this to see US adjusted GDP by quarter.

The first graph doesn’t really show the health of the government, but the total income of the government is very important because that defines how much the government can really do, which I think is what people are worried about. Looking at both sets of data, I don’t think the Democrats have a great argument. The revenue dropped substantially in the recession after 9-11 but went up significantly (even a better year-over-year growth than the Clinton years) after the tax cuts in ’02 and ’03. The GDP leveled off after the recession and also picked up again after the tax cuts. Obviously, correlation is not causation, but other than demonizing the rich and corporations, what else do the Democrats really have to support their continued obstinacy? I fully support getting rid of tax loopholes and most exemptions/deductions out there (doing so would require lowering the top tax rates per income bracket so that the middle class isn’t trampled by taxes) and expanding the tax base, however, I think the Democrats are approaching the issue from the wrong starting point and probably going after the wrong tax changes.