File:Revenue and Expense to GDP Chart 1993 - 2007.png

English: Revenue and Expenses to GDP 1993-2007

The chart shows that the Bush tax cuts of 2001-2003 reduced revenue relative to GDP (despite rising Social Security tax revenues), while expenses began to climb relative to GDP. Both increasing expenses and tax cuts contributed to the large deficits and debt increases. The CBO, Harvard University, and Treasury Department studies cited in the United States federal budget article indicate that tax cuts do not pay for themselves; tax cuts cause deficits to increase dramatically without commensurate spending cuts. See Washington Post for a summary of these studies. Much of the growth of the economy in recent years can also be attributed to the fiscal stimulus provided by the spending (see Keynesian economics), not just tax cuts.

Francis Fukuyama summarized these concepts: "Prior to the 1980s, conservatives were fiscally conservative— that is, they were unwilling to spend more than they took in in taxes. But Reaganomics introduced the idea that virtually any tax cut would so stimulate growth that the government would end up taking in more revenue in the end (the so-called Laffer curve). In fact, the traditional view was correct: if you cut taxes without cutting spending, you end up with a damaging deficit. Thus the Reagan tax cuts of the 1980s produced a big deficit; the Clinton tax increases of the 1990s produced a surplus; and the Bush tax cuts of the early 21st century produced an even larger deficit. The fact that the American economy grew just as fast in the Clinton years as in the Reagan ones somehow didn't shake the conservative faith in tax cuts as the surefire key to growth."^[1]