Dwindling Tax Receipts Highlight Looming Economic Slowdown
Tax receipts are falling, which has historically preceded economic recessions. In a recent post, we discussed the issue of rising debt levels on economic growth and increasing debt levels. To wit:
“While Washington continues a seemingly unbridled spending spree under the assumption ‘more spending’ is better, debts and deficits matter. To better understand the impact of debt and deficits on economic growth, we must know where we came from. The chart shows the 10-year annualized growth rate of the economy over time.
What should immediately jump out at you is that the 10-year average economic growth rate was around 8%, except for the Great Depression era, from 1900 through 1990. However, there has been a marked decline in economic growth since then.”
As noted in that post, the problem of rising debt and deficits is two-fold.
“First, ‘deficit spending’ was only supposed to be used during a recessionary period and reversed to a surplus during the subsequent expansion. However, beginning in the early ’80s, those in power only adhered to the ‘deficit spending part.’ After all, ‘if a little deficit spending is good, a lot should be better,’ right?
Secondly, deficit spending shifted away from productive investments, which create jobs (infrastructure and development), to primarily social welfare and debt service. Money used in this manner has a negative rate of return.”
Adding to the deficit problem is the aging demographic, which is increasingly dependent on Government welfare programs for more than 50% of their incomes. According to the Center On Budget & Policy Priorities, roughly 88% of every tax dollar goes to non-productive spending.
Here is the real kicker. In 2022, the Federal Government spent $6 Trillion, equivalent
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