Revenue - Spending = Deficit It is a simple equation, really...why does Washington not seem to understand it? Our country's debt problem is simply a matter of spending more than the available revenue.
Government revenue historically averages about 18% of Gross Domestic Product (GDP). This seems to be the level that the voting public and the economy will stand. But, tax revenue per household, adjusted for inflation, as Professor Davies explains in the video below, has risen, by about 300% since the 1950s.
So, if revenue continues to grow over the years, but we also continue to have deficits, what is the problem? I'll wait a little while for some of you to catch up...That's right, it's spending! Our rate of spending continues to grow at an even faster rate than revenue. Professor Davies explains the issue very clearly and succinctly in the video below.
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