November 4, 2007

How We Build a Budget Deficit

Posted in Budget Deficit, National Debt, Taxes at 5:07 pm by davidprudente

Here’s a story from today’s New York Times that provides great background about pork barrel spending. If you wonder how we’ve amassed 9 Trillion dollars of debt, this story should help you understand.



  1. Derek Sernaker said,

    Mr. Prudente,

    How did the U.S government gain revenues before the 20th century? I was talking about taxes and what not with my dad and he said that income taxes didn’t come into effect untill the early 1900’s.

  2. davidprudente said,

    A little history lesson for y’all

    Great question. The U.S. government instituted Federal Income Taxes in 1913 with the passage of the 16th Amendment: “The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.”

    Prior to ratification of the 16th Amendment, the U.S. government had to raise revenue through excise taxes (which were regressive) or through tariffs on imported goods (this provide a disincentive for nations to trade with the U.S.).

    Before the Federal government had the power to tax income, the government was small and didn’t have the power it now has (no FBI, CIA, NSA, etc.). Hence, many people argue that if we simply limit spending we could cut many government programs.

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