From the CBO Director:
In its latest Monthly Budget Review, CBO estimates that the Treasury Department will report a deficit of $973 billion for the first nine months of fiscal year 2011, $31 billion less than the $1,004 billion deficit incurred through June 2010. Revenues increased by $136 billion (or 8.5 percent) and outlays climbed by $104 billion (or 4 percent) from what they were at the same point last year.
Individual income taxes, the largest tax source, showed a gain of close to $160 billion, or 24 percent.
So, why is it that income tax receipts are up 24% without having to raise taxes? Because, even with anemic growth, the ~2% improvement in GDP turns into a much larger improvement in tax receipts. In other words, if the Federal Government (and in Delaware’s case, the State Government) would call off the regulatory dogs and allow businesses to compete in a level-playing field market, we would begin to see growth rates of 6-7%. Tax receipts would ramp up even more, and the deficit would come down.
This philosophy is a large reason why during Ronald Reagan’s presidency the rebound from a extremely severe recession was so much stronger. Reagan believed that government wasn’t the solution, but was a large part of the problem. He made sure that regulators played a controlled role. (Note: When Bill Clinton admitted that the era of “Big Government” was over, a similar thing happened with strong economic growth and budget surpluses). President Obama, on the other hand, believes that business owners (whom he regularly disparages) are the problem and need to be reined in by aggressive regulators and punitive taxes. He also surrounds himself with global corporation “rent-seekers”, like GE and Goldman Sachs, whose sole objective is to grab more of the pie for their oligopolistic compatriots — keeping new, entrepreneurial competitors from appearing.
The differences in philosophy are obvious. The differences in results are even more so.