[AuH2ORepublican]

"So if this happened after all these tax cuts, this has got to mean that spending was cut.

Am I missing anything?"

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That's a common misconception perpetuated by the media. Here's a primer on supply-side economics that explains how tax cuts lead to increases in tax revenue for the government (please keep in mind I'm no Dr. Laffer, so my explanation may not be perfect):

1. When taxes are too high, people do not have as much of an incentive to work or invest, so the economy stagnates (thus reducing taxable income). In addition, people have a larger incentive to avoid taxes (whether legally or illegally), so the government tax revenue is reduced further.

2. When high taxes are lowered, people have a greater incentive to work and invest, and less of an incentive to avoid taxes. This leads to much higher taxable income (and thus much higher tax revenue, even with a lower tax rate), and also leads to less tax avoidance (which also results in more tax revenue).

So the Bush tax cuts of 2003 are the reason for the increase in tax revenues, which have resulted in a reduction in the budget deficit in spite of the fact that government spending has increased (albeit at a lower rate than the rate of increase in tax revenues).

For the record, when Reagan cut in half the rate of the highest income-tax bracket in 1981, it led to such an economic boom (and reduced tax avoidance to such degree) that federal tax revenue nearly doubled between 1981 and 1989.

[AuH2ORepublican]

Reading your other posts, I guess you were asking a rhetorical question when you mentioned that the deficit had been reduced "in spite" of Bush's tax cuts (and without any spending cuts). So feel free to correct any points that I may have mistated in my "primer on supply-side economics."

I hope my explanation wasn't wasted, though, and that it helps FReepers who have been misled by the media to believe that tax cuts necessarily imply reduced tax revenue for the government.

[expat_panama]

True, my question was rhetorical, but I was hoping someone would post an answer.  IMHO what you wrote in post156 was very well written-- it was what I was trying to get across later but was unable to communicate.