Bush and Revenue

A reader tackles both Brian Riedl and the Economist. Since I linked to them, I'm happy to air the contrary view. The key difference is that the revenue numbers before 1986 don't include the social security surplus. Over to my reader:

From CBO numbers going back to 1962 (45 years) Bush's overall revenue numbers rank 25/44/45/34/16. That we can merely approach slightly above average is nothing to be proud of.

But the real error of Riedl and The Economist is that they don't look at why the numbers are what they are. Pre-1986 numbers don't include the social security surplus (because it didn't exist). So one would expect every year after that to be above average simply because of the extra money earmarked for future retirees.

The 10/20/30/40/45 year averages of overall revenues as % of GDP are 18.7/18.4/18.3/18.3/18.2. Government revenues have been increasing steadily since the early 60s. Looking at the revenue from 1962-2006 in discrete 10-year increments (with one five-year increment covering Bush's five years) we have percentages (in reverse chronological order) of 17.3/19.1/18.0/18.2/17.9. The increase is almost solely from Clinton's years in office.

But why did that increase occur? Stripping out "Social Insurance" revenues (FICA, Medicare, etc.) the 10/20/30/40/45 averages are 12.1/11.8/12.0/12.4/12.6. Using discrete 10-year increments (five years for Bush) we have (again, in reverse chronological order) 10.8/12.4/11.8/12.8/14.2. Revenues are decreasing, not increasing. Revenues are higher in recent years because of increased FICA and Medicare taxes. Bush again comes up well short.

Using 10 year increments (five for Bush) we have (reverse chronological order) revenues excluding the Social Security Surplus of 15.9/18.0/17.5/18.2/17.8. Bush's numbers are awful. Bush's ranks are 42/44/45/43/35. The FOUR WORST in the last 45 years. Houston, we have a revenue problem.

This is not my area of expertise but it seems plausible to me.