Make no mistake, if projected federal government budget surpluses are left in the hands of federal politicians, the money will be spent. That is, in fact, what has happened in recent years.

As noted below, annual growth in federal government revenues outpaced the annual rate of inflation from 1981 through 1999 in all but four years. Over this period, federal revenues grew at an average annual rate of 6.9%, almost twice the average annual inflation rate of 3.5%.

Year Growth in
Federal Revenues CPI
Inflation Rate
1981 15.8 8.9
1982 3.1 3.8
1983 -2.8 3.8
1984 11.0 3.9
1985 10.1 3.8
1986 4.8 1.1
1987 11.1 4.4
1988 6.4 4.4
1989 9.0 4.6
1990 4.1 6.1
1991 2.2 3.1
1992 3.4 2.9
1993 5.8 2.7
1994 9.0 2.7
1995 7.4 2.5
1996 7.5 3.3
1997 8.7 1.7
1998 9.0 1.6
1999 (est) 6.1 2.1

What happened to all these revenues pouring into federal coffers? Obviously, the money was spent.

There are many good reasons to cut taxes, including income, capital gains and death taxes in order to spur incentives for working, investing and entrepreneurship. Another good reason for instituting tax relief now is that more revenues in the hands of politicians and government bureaucrats, who lack the knowledge and incentives to be efficient, mean increased waste.

Rather than accepting ever rising government revenues and spending as inevitable, we should be looking in the opposite direction. There is no reason to accept the establishment idea that government must expand year after year. The first step to downsizing the government beast is to rollback the revenues it consumes.