Grover Norquist apparently thinks supply and demand doesn’t apply to taxes.
He praises Republican Congresscritters on the “supercommittee” here for holding the line on low taxes, with the aim of limiting the size of goverment. The thing is, not unlike Walmart, low taxes equals “low prices every day” for government services, and does nothing but stimulate demand for them.
Using data from the Office of Management and Budget (note: Excel file), for decades there’s been a very clear trend in the relationship between revenues and outlays:
When taxes go up, government shrinks.
When taxes go down, government grows.
This is completely unsurprising. Replace “taxes” with “prices,” and “government” with “sales,” and those two statements would be wholly uncontroversial.
During the Eisenhower administration, revenues were 18.7% of GDP, while outlays were 20.4% of GDP.
Today, after decades of tax cuts starting with JFK, revenues are 14.9% of GDP… and outlays have reacted exactly as one would expect from putting an “ON SALE!” sticker on them — they’re 23.8% of GDP.
It goes the other way, too: I’m looking here at the combined GHW Bush and Clinton administrations, known for raising taxes.
Grover Norquist has done more to expand government than anyone else alive in America today.