Here we see federal spending (the red line) vs. revenue (the yellow line) as a percentage of Gross Domestic Product (value of all goods, services, exports created annually) going back to 1940. The more the red line is above the yellow line, the greater the deficit is for that year. When the yellow line is above the red line, that indicates a surplus for that year.
During WWII, we had huge deficit spending, but we got it under control because back then even Republicans like Eisenhower knew it was irresponsible to cut taxes until the budget was balanced and debt paid off.
Then in the late 1970s, Republicans decided “tax cuts” were a sexier platform to run on than “balanced budgets.” I mean, who doesn’t like a fire-sale? Who doesn’t like Santa Claus?The GOP obsession with tax cuts sprang from a now famous 1976 editorial by Jude Wanniski. He argued that if they ever wanted to win elections again, Republicans would need to adopt a more attractive marketing strategy to compete with all the popular Democratic programs like Social Security, Medicare, Medicaid, public schools and parks, investments in roads and bridges, etc.
So instead of being the “Scrooge of Balanced Budgets,” Republicans would brand themselves as the “Santa Claus of Tax Cuts”: Government is on sale! Vote for us and you don't have to pay for anything. Based on magical math, we can reduce everyone's tax rates and still bring more money into the U.S. Treasury. You can have your cake, eat it too, and not gain any weight.
Reagan was the first President to put this new marketing gimmick into action. Let’s zoom in on the deficit graph to see what happened since the 1980s and the newfound GOP obsession with the “tax cuts” marketing strategy (see you after the orange squiggle...)