Nonsense in the Press

The AP and CBS carried a story today  which is technically correct but misleading.  The graph above shows their story visually.  They seem to concentrate on the now rather than the real long term story.  Tax collections as a percentage of GDP are down below 15% - whereas for the last several decades they have run between 18% and 20%. Income taxes will be 13% lower than they were before the recession.  That is primarily a function of the poor state of the economy.  Many of our taxes rely on economic activity from people who at this point are not that active.  The story should have been all that "stimulus" did not do much and all that borrowed money we used to pay for "shovel ready" and "cash for clunkers" has the potential to choke off growth.    The taxes that the administration has put into place are not likely to encourage growth either.  If you look at the out years of the CBO projection we go from low levels to the highest in history.