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If they did, how would we explain that tax revenues more than doubled just since 1976; yet in that same 6-year period we ran the largest series of deficits in our history. In 1980 tax revenues increased by $54 billion, and in 1980 we had one of our all-time biggest deficits. Raising taxes won't balance the budget; it will encourage more government spending and less private investment.
Several conclusions are inevitable. We must have insistent and determined reduction in Government expenses. We must face a temporary increase in taxes. Such increase should not cover the whole of these deficits or it will retard recovery. We must partially finance the deficit by borrowing.
During the existence of the Mackenzie government there was much depression in trade throughout the Dominion, and the public revenues showed large deficits in consequence of the falling-off of imports. When the elections took place in September, 1878, the people were called upon to give their decision on a most important issue.
Losses were turned into gains; deficits were converted into surpluses; and soon Garrett had gained the reputation of being the most remarkable and efficient railroad manager in the world. He seemed to be almost an Aladdin of railroad management for, even when he could not show increases in amount of business done, he reported greater profits by showing lower expenses.
Consequently every official began at once to collect more taxes than were really due, so as to be able to cover any deficits, and also to cover his own cost of living including not only the repayment of his debts but the acquisition of capital or land so as to rise in the social scale. The old gentry had been rich landowners, and had no need to exploit the peasants on such a scale.
Well, I'm sorry; they're asking the wrong people to tighten their belts. It's time we reduce the Federal budget and left the family budget alone. We do not face large deficits because American families are undertaxed; we face those deficits because the Federal Government overspends.
Even with our tax cuts, taxes as a fraction of gross national product remain about the same as they were in 1970. The fact is, our deficits come from the uncontrolled growth of the budget for domestic spending.
This realignment of exchange rates rendered imports to the USA seductively cheap and led to "unsustainable" trade and current account deficits. The IMF concluded, in its "World Economic Outlook", published on September 25, that America's deficit serves to offset actually, finance increased consumption and declining private savings rather than productive investment.
While the budget deficits during my term are higher than I would have liked, their size is determined for the most part by economic conditions. And in spite of these conditions, the relative size of the deficit continues to decline. In 1976, before I took office, the budget deficit equalled 4 percent of gross national product. It had been cut to 2.3 percent in the 1980 fiscal year just ended.
Of Australia's thirteen thousand miles of railways all but five hundred miles belong to the colonial government, and are administered in the interests of the people. So low are the freight and passenger rates that often a tax has to be levied to meet the deficits. More than half of the public debt is due to government ownership of the railroads.
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