Both evaporated to the extent that even lip-service regarding a balanced budget became rare until 1995. If not for the 1994 elections, a balanced budget wouldn t even be seriously discussed, much less passed by Congress. Brazen factual distortions like this brought GOP leaders to the brink of surrender. Rather than holding firm on the government shutdown, they retreated seemingly to await a November referendum on the issue. The truth is apparent to the attentive but let s review some relevant facts.
History shows that tax rate reductions result in higher tax revenues.
Tax rate cuts under Presidents Kennedy and Reagan induced economic booms that raised taxable incomes and tax revenues. A budget is only a plan. Actual balance is achieved only when actual spending is curtailed within actual revenues. Congress has complete control over spending but little over the private activity that determines taxable incomes. Hence, spending discipline is the key to fiscal responsibility.