Historical Averages Not A Meaningful Benchmark For Future Revenues

Publication Date: August 2007

Publisher: Center on Budget and Policy Priorities (Washington, D.C.)

Author(s): Matt Fiedler; Richard Kogan

Research Area:

Keywords: Economic projections; Fiscal future; Federal budget; Elderly

Type: Report

Abstract:

The simple fact that the government collected a particular level of revenue in the past says little, however, about what level of revenues is appropriate today, will be appropriate or necessary in the future, or even was appropriate in the past. The most meaningful standard for judging whether a particular level of revenue is appropriate thus is whether it provides adequate funding to support the public services that the nation judges to be worth paying for. As this analysis demonstrates, revenues at the historical average failed to meet this standard in the past, resulting in a long string of deficits, fail to meet this standard today, and will fail spectacularly to meet this standard in the future as rising health costs and the aging of the population place large additional demands on the public sector.