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Noem Wrong on Budget: Revenues Low, Deficit Mostly from Recession

Rep. Kristi Noem justifies the GOP's destructive fiscal policy with this inaccurate statement:

We’ve got more federal revenue coming into our coffers this year than we ever have in history. We haven’t seen a dramatic downfall in tax receipts or income. So we know that really what has caused this deficit spending and continued debt to accumulate has been the actions of what this government is doing [Rep. Kristi Noem, unofficial transcript, radio interview with Mike Adams, AgriTalk, 2013.03.18].

Rep. Noem is parroting numerous fellow Republicans with this deceptive "record federal revenue" line. In raw dollars, yes, Uncle Sam will set a record for collections. But in nominal dollars, we're still at a remarkable low for federal revenues as a chunk of the total economy:

This Republican talking point is rooted in a government report issued Feb. 5 by the nonpartisan Congressional Budget Office, “The Budget and Economic Outlook: Fiscal Years 2013 to 2023.” CBO projects that the U.S. government will collect more than $2.7 trillion in fiscal 2013. In nominal dollars, that would be higher than any year in history — topping the previous peak of $2.57 trillion in 2007 (See Table 1.1).

But it’s misleading to talk about revenues in nominal dollars. Economists prefer to view historic revenues as percentages of GDP. In fiscal 2013, federal tax revenues are projected to equal 16.9 percent of the nation’s economy, which is below the post-World War II average of 17.7 percent [Jesse DuBois, "Record Revenues,", 2013.03.21].

So far, every year under the Obama Administration, the federal government has collected less than 16% of GDP in revenue. From 1950 to 2008, Uncle Sam collected between 16.1 and 20.6% of GDP in revenue. President Obama is still taking less of your money than Dwight D. Eisenhower or Ronald Reagan did.

Year Revenue (billions) %GDP
2005 2,153.6 17.3
2006 2,406.9 18.2
2007 2,568.0 18.5
2008 2,524.0 17.6
2009 2,105.0 15.1
2010 2,162.7 15.1
2011 2,302.5 15.4
2012 2,449.1 15.8
Source: Congressional Budget Office, Feb. 2013

The "record revenues" Rep. Noem and the GOP are squawking about are really a return to the low end of the recent historical normal range of net investment in federal services. (But I keep forgetting that Noem wants to send fiscal policy back to 1910.)

Rep. Noem's claim that "We haven’t seen a dramatic downfall in tax receipts or income" ignores reality... or at least redefines dramatic. From 2008 to 2009, federal revenues dropped 16%. If you wouldn't consider a 16% drop in your income dramatic, you've got steelier fiscal nerves than most of us.

Economist Dean Baker explains that Rep. Noem's portrayal of the expansion of the deficit as a result of irresponsible spending is simply wrong:

The deficit expanded enormously in 2008 and peaked in 2009 at 11.1 percent of GDP. But this wasn’t caused by some extravagant spending spree or an orgy of permanent tax cuts. It was caused by the fall in tax collections that occurs every time the economy goes into a downturn, coupled with the increase in spending for countercyclical programs like unemployment insurance and food stamps. There were additional spending and tax cuts associated with President Obama’s stimulus plan. But the overwhelming majority of them were explicitly temporary, and the impact on the deficit would be negligible by 2011 [Dean Baker, "Fix the Debt's Fuzzy Math," The Nation, 2013.02.20].

When Rep. Kristi Noem starts talking about fiscal policy, you might as well check your text messages. Our Congresswoman's pronouncements on the budget are just repetitions of propaganda you can hear from any other Republican, and they are just plain wrong.


  1. Steve Sibson 2013.03.25

    "But it’s misleading to talk about revenues in nominal dollars. Economists prefer to view historic revenues as percentages of GDP."

    Once you understand "government spending" is a component of GDP you then understand that said economists are blowing smoke...just like Cory is doing on his post. If you increase GDP with government spending and revenues don't change...then of course the percentage will go down. This is how propagandists use statistics to distort the truth into complete lies.

  2. Rorschach 2013.03.25

    Rep. Noem is a finger pointer trying to score points for her party. She wouldn't be talking like this if she were a problem solver. What we need is more statesmen(women) in office who tone down the rhetoric and look for common ground. Rep. Noem will never be that person.

  3. Vincent Gormley 2013.03.25

    Look out Sibby's blowing smoke again! Do you roll your own? Remember that stuff in the pack deprives your brain of much needed oxygen and that other stuff by the side of the road is just wacky.

  4. Vincent Gormley 2013.03.25

    Rorschach that was brilliant and very aptly stated. Now if only voters would use that thought as a starting point we might accomplish something.

  5. Steve Sibson 2013.03.25

    Vincent, so are you saying that "government spending" is not a component of GDP?

  6. Vincent Gormley 2013.03.25

    Let's be clear Steve you need serious help and tat does not begin with trying to either put words in my mouth or pretend that you know anything.

  7. John 2013.03.25

    Noem's hypocritical "sister" Bachman is having a predictable hissy fit. Seems that nasty sequester shut down the highway projects and the control towers in her district. Oh my. Sequester, baby - bring it on!

    Thankfully there is talk she under investigation for campaign financing so maybe she'll eat a little humble pie, maybe not not. We can hope.

  8. Les 2013.03.25

    Very clear and concise debate Vincent. What awards and feel good thoughts do you give yourself as you lie down for your nights rest?

  9. Steve Sibson 2013.03.26

    "Steve you need serious help"

    Vincent, you seem to have trouble with reality and truth. It is obvious to those who can think that the left-wing poster of this web site is using deception in the name of some expert economist that says we have to use % of GDP. All one has to know is that government spending is one component of GDP to understand the deception.

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