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Tomorrow, the government could cut all taxes to zero and publicly proclaim their intention of borrowing all future money required by the government. Our ability to borrow that money would likely degrade in a hurry, however.

I don't think the government should cut all taxes to zero. Capital gains though I think could be cut to zero. It would make us more competitive.

I've seen studies that suggest the government cannot realistically collect more than 20% of GDP as taxes over the long term. Sound familiar?

I don't know if you're aware but that "interesting study" was the one that I was soliciting comments on.

Duh! :^) Are you the author?

I didn't try to jigger the numbers to make GDP growth under Reagan appear sub-par.

You would have lost all credibility if you had.

You have any predictions/forecasts on how real receipts are growing/shrinking since 2001? Is the CBO still using static analysis for their tax projections?

I've seen studies that suggest the government cannot realistically collect more than 20% of GDP as taxes over the long term. Sound familiar?

I haven't seen those studies. In any case, it doesn't really seem to present a problem. The following graph shows federal outlays and receipts, as a percentage of GDP, since 1950:

The actual numbers and sources can be seen at http://home.att.net/~rdavis2/def06.html. As can be seen, tax receipts have been between 17 and 20 percent of GDP in all but about three years since 1960. Unfortunately, two of those years were 2003 and 2004 when they dropped below 17 percent. A conservative approach to the deficit problem would be to strive to keep both spending and receipts within that range. If we can do that for spending, then receipts will never need to rise above 20 percent of GDP.

Duh! :^) Are you the author?

Duh! ;^) Yes, I am!

You have any predictions/forecasts on how real receipts are growing/shrinking since 2001? Is the CBO still using static analysis for their tax projections?

As can be seen in the above graph, their fall since 2001 is now a historical fact (except for 2004 which might have been revised to a slight gain). The latest budget projects that it will recover to 17.7% of GDP by 2010. Regarding tax analysis done by the CBO, they did estimate Bush's 2004 Budget Proposal using several dynamic, supply-side models. The following graph shows the results:

The actual numbers and sources can be seen at http://home.att.net/~rdavis2/cbobud04.html. As can be seen, the supply-side models did not make that big of a difference. I believe that the demands for the CBO to always use dynamic scoring have decreased since then.