The magic 18% number and its (un)reality...

A blog post at The Incidental Economist as well as Matt Miller's column in The Washington Post both talk about how capping taxes at 18% of GDP is a pipe dream:

"...if we maintain our 40 year historical average of 18 percent of GDP raised in taxes, the we will have a deficit simply due to paying for interest, health care, social security and defense in 2021. That means that even with no FBI, FAA, NIH, NEA, Homeland Security, and nothing else but these line items–18% of GDP collected in taxes still won’t be enough to produce a balanced budget. With NO federal spending other than these categories, we will have a deficit in 10 years if our tax code brings in 18% of GDP."

Miller goes on to write about how capping federal spending at 18% is not possible in this day-and-age either:

"The “cap, cut and balance” plan passed by the House Tuesday night captures Republican denial perfectly. The plan would cap federal spending at 19.9 percent of GDP by 2018, with the goal of lowering it to18 percent over time. Similar caps have been endorsed by most of the GOP’s presidential candidates.

You’d never know from listening to Republicans that these goals are mathematically and politically unattainable.

But they are. Why? If there’s one fact you need to emblazon in your mind to make sense of the current debate, it is that Ronald Reagan ran the federal government at 22 percent of GDP back when our population was much younger. (Under President Obama, the extraordinary measures enacted to fight the recession – plus a collapse in the denominator, GDP -- have boosted spending to around 24 percent, while revenue has dropped to 15 percent from its 18-19 percent longtime average).

It is simply not plausible to argue that as we double the number of seniors on Social Security and Medicare, Uncle Sam will be able to operate at spending levels 10 to 20 percent below those over which America’s modern conservative icon presided. (Though, as [The Washington Post's] Dana Milbank notes, Reagan agreed to raise taxes 11 times.) Today there’s no question: Taxes must rise."

Read both articles. You'll be much smarter having done so.