Economic recovery and growth produce more tax revenues for the federal government, and more tax revenues help pay off the government's debt. Regarding tax revenues, President Obama in 2009 and 2010 was about where President Truman was for 1949-50: below 15% of GDP. The economic recovery that coincided with the Korean War produced more revenue for the federal government and helped Truman and the Republican Congress pay down the gross national debt – which in 1950 was a little greater than in January, 2011.
Tax revenues declined with the recovery from the 1980-82 recession that Reagan inherited, and the revenue decline continued into 1983 despite a highly successful GDP real growth rate that year of 4.5%. And through the remainder of his administration they hovered around 17.5% of GDP and in 1987-88, his last years in office, tax revenues improved. These two years had GDP growth rates of 3.2 and 4.1%. Revenues declined slightly under Reagan's successor, President Bush the elder, including through a mild recession and slow economic growth.
Revenues increased and the debt declined during the Clinton administration. Revenues decreased with the economic recession of 2008, during the presidency of George W. Bush. Revenues will increase during the Obama administration with an economic recovery.
Copyright © 2013 by Frank E. Smitha. All rights reserved.