Friday's news that U.S. gross domestic product grew by only 2.5 percent came as a disappointment. After all, that performance not only fell short of the consensus expectation of three percent GDP growth, but was aided by a one-time bump for inventory expansion deferred from the last quarter of 2012. And while the strengthening housing market was a bright spot, those gains were offset by the contraction of government spending that on average has slashed half a point off GDP each quarter since early 2010. As it turns out, after years of austerity by state and local governments, Uncle Sam, too, is holding back U.S. economic growth.

As Floyd Norris explained in the New York Times, the U.S. hasn't seen this kind of contraction since the post-Korean War demobilization of the mid-1950's:

The G.D.P. report released Friday states the total government part of G.D.P. - federal, state and local - came to $3.0306 trillion in the first quarter of this year. That is 0.01 percent below the $3.0309 trillion recorded four years earlier.

Those are nominal figures, not adjusted for inflation...On a real basis, the decline was 6.5 percent.

And that kind of drag, Jared Bernstein warned, is offsetting the double-digit expansion the housing sector has enjoyed for three straight quarters:

Housing continues to be a bright spot as residential investment was up almost 13% on an annual basis. Housing has now been a positive contributor to growth for two-years running, adding 0.3% to the 2.5% growth rate for the first quarter.

But the government sector more than offset housing's contribution, shaving 0.8% off of the growth rate, with across the board declines in defense, non-defense, and state and local public spending. Since 2010q1, the public sector has, on average, taken half-a-percent from real GDP growth per quarter.

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The Obama administration on Friday lifted the covers on its compromise budget proposal for fiscal year 2014. While Obama's blueprint would slash the national debt by a projected $1.8 trillion over the next decade (bringing the total reductions since 2011 to $4.3 trillion) through painful changes to Social Security and Medicare, Republicans are predictably balking at Obama's call for $580 billion in new tax revenue. Despite the administration's up-front concessions on spending, GOP leaders including John Boehner, Mitch McConnell and Eric Cantor continue to repeat their talking points that "the President got his tax hikes in January" and "the discussion about revenue is over."

But as a quick glance at U.S. budgets past and future shows, the discussion over tax revenue should be far from over. For starters, thanks to two wars, the new unfunded Medicare prescription drug program and the government responses to the 2008 financial meltdown, federal spending surged over the previous decade even as tax revenue as a percentage of the U.S. economy hit 60 year lows. And looking ahead, the U.S. Treasury will need to raise revenues higher than the historical average not just to fill the massive hole left by the Naughts, but to fund $2 trillion more in war-related spending, to address the aging of the U.S. population and to meet the public's demands for more, not less, spending across almost every area of government.

Here are 10 reasons why Uncle Sam needs more tax revenue. (Click a link to jump to the details for each.)

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(Video removed at request of owner.)

Austerity is perhaps the single worst idea to come from the political elite over the past half decade, and that's saying a lot. It hurts people, "punishes" them as George Logothetis points out above. As he also says, it breeds extremism (the Tea Party here, Golden Dawn in Greece).

We need more smart, savvy businessmen like Logothetis out there among our elite. Ones who realize we need "capitalism with a conscience," that "the more one has, the higher the duty one has to give back," and perhaps most importantly, that "you're only as rich as the person next to you is poor."

Watch the video, it is well worth it.

So Mitt Romney has decided to end his presidential campaign the same way he started it. That is, by lying. During what his aides touted as a "major address" in Iowa Friday, Governor Romney charged that while President Obama "inherited a troubled economy," he "made the problem worse." That's the same long-debunked myth Romney used in his June 2, 2011 speech formally announcing his candidacy when he declared Obama "When he took office, the economy was in recession, and he made it worse, and he made it last longer."

But while Romney was pummeled by fact checkers last year as soon as the words first left his lips (prompting Mitt to hilariously claim for 24 hours "I didn't say things are worse; what I said was the economy hasn't turned around"), the "Obama made it worse" fraud has remained the centerpiece of his campaign. Unfortunately for Romney, the facts and the overwhelming consensus of economists - including the nonpartisan Congressional Budget Office and John McCain's 2008 brain trust - flatly contradict Mitt's closing argument. Instead, the numbers show and the experts confirm that President Obama saved the American free-enterprise system from the abyss and averted Great Depression 2.0.

Sadly for Romney and his Republican allies, history did not begin on January 20, 2009. And the data show that President Obama didn't inherit a "troubled economy," but one literally on the brink of collapse. Obama entered office in 2009 as the Bush recession was in full swing. GDP had plummeted by a shocking 8.9 percent the previous quarter. 820,000 jobs were lost in January 2009 alone; all told 2.2 million evaporated in the three months before Obama's stimulus was passed that February. (That might explain why more than three years after he left office, Americans still blame George W. Bush for the economic calamity he bequeathed to Barack Obama.) Now, even with the difficult recovery, the U.S. has produced over 30 consecutive months of private sector job gains and a return to economic growth. And despite Romney's charge that President Obama's are "the most anti-investment, anti-business, anti-jobs series of polices in modern American history," the Dow Jones has jumped by 68 percent since January 20, 2009. Corporate profits are at record highs even as firms' tax burden continues to drop.

Nevertheless, Governor Romney charged in June that the President "slowed the recovery and harmed our economy," a result he called "a moral failure of tragic proportions." Sadly for his campaign's mythmaking, just 24 hours earlier, the director of the nonpartisan Congressional Budget Office blew Romney's bogus claim out of the water.

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Former Florida Governor Jeb Bush hoped to use his Republican National Convention appearance to rehabilitate his brother's shattered reputation. After claiming on Sunday that it was "unbecoming" for Barack Obama to continue to "blame others" for the economic calamity he inherited from George W. Bush, on Thursday Jeb suggested the President should be "spanked" for pointing the finger at Dubya.

Now, there are only a few problems with this approach, not the least of which is that most Americans agree with Obama. In 2004, then Massachusetts Governor Mitt Romney defended President Bush from John Kerry by protesting that "The people of America recognize that the slowdown in jobs that occurred during the early years of the Bush administration were the result of a perfect storm." Worse still, even now Team Mitt whines that "Governor Romney inherited an economy that was losing jobs each month" back in the Bay State. As it turns out, President George W. Bush and his acolytes have never stopped blaming Bill Clinton for the GOP's lost decade.

Jeb's brother made that point during his final press conference on January 12, 2009. During a month in which Americans would only later learn that the U.S. economy shed a staggering 820,000 jobs, President Bush passed the buck forwards--and backwards:

"In terms of the economy, look, I inherited a recession, I am ending on a recession. In the meantime there were 52 months of uninterrupted job growth. And I defended tax cuts when I campaigned, I helped implement tax cuts when I was President, and I will defend them after my presidency as the right course of action. And there's a fundamental philosophical debate about tax cuts. Who best can spend your money, the government or you? And I have always sided with the people on that issue."

But while that fundamental philosophical question is still the subject of heated debate, the facts should not be.

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"Politics," Republican Senator Arthur Vandenberg declared during Harry Truman's presidency decades ago, "stops at the water's edge." Not, it turns out, for Mitt Romney. Three years ago, Romney blasted Obama's "apology tour" even as the President was visiting Cairo, Ankara and other capitals. (For that slander, the Washington Post fact-checker gave Romney a "Four Pinocchio" rating.) Now, the Republican nominee has dispatched his chief economic adviser, Glenn Hubbard, to pen an op-ed in a German paper to undermine the Obama administration's position on the economic crisis in Europe.

For months, the White House has been pressuring Euro zone leaders and German chancellor Angela Merkel to take action to stabilize Spain and Greece while backing away from the draconian austerity programs that are dragging down European economies and threatening the U.S. recovery. Even as Treasury Secretary Timothy Geithner pushed for the rescue of Spanish banks, President Obama used his press conference Friday to issue a warning:

Over the longer term, even as European countries with large debt burdens carry out necessary fiscal reforms, they've also got to promote economic growth and job creation. As some countries have discovered, it's a lot harder to rein in deficits and debt if your economy isn't growing. So it's a positive thing that the conversation has moved in that direction, and leaders like Angela Merkel and Francois Hollande are working to put in place a growth agenda alongside responsible fiscal plans.

But even as the Obama administration was sending Merkel one message, former Mitt Romney's chief economic adviser, Glenn Hubbard, was taking to the pages of the business journal Handelsblatt to argue the reverse in his screed, "Don't Learn from America." As The New York Times reported:

"Unfortunately, the advice of the U.S. government regarding solutions to the crisis is misleading. For Europe and especially for Germany," Mr. Hubbard wrote, according to a translation of his article from the Handelsblatt Web site.

He opposed what he described as the Obama administration's efforts "to persuade Germany to stand up financially weak governments and banks in the euro zone so that the Greek crisis would not spread to other states."

"These recommendations are not only unwise," he added, "they also reveal ignorance of the causes of the crisis and of a growth trend in the future."

Mr. Hubbard proposed a classic conservative pro-austerity, anti-Keynesian approach, arguing that cutting government spending will restore public confidence, encourage growth and avert future tax increases.

"Long-term confidence in solid government financing shores up growth and enables the same scope for short-term transitional assistance," he said. "Mitt Romney, Obama's Republican opponent, understands this very well and advises a gradual fiscal consolidation for the U.S.: structural reform to stimulate growth."

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In a new Gallup poll released Wednesday, small business owners revealed that the lack of need for new employees (76 percent), worries over revenue (71 percent) and concern about the state of the U.S. economy (66 percent) were the top three reasons for not hiring new workers. But you'd never know that if you just glanced at Gallup's headline, which instead warned, "Health Costs, Gov't Regulations Curb Small Business Hiring." Predictably, and despite a mountain of surveys and analyses showing that weak customer demand and not "job-crushing regulations" tops small businesses' concerns, Speaker John Boehner and the conservative blogosphere are touting Gallup's misleading headline.

On Wednesday, Gallup published this table summing up the results of its latest Wells Fargo/Small Business Index survey:

Interestingly, Gallup's headline and subhead included none of the top four factors small businesses cited as reason for not hiring. Instead, the pollsters led with the fifth and sixth items found well down the list:

While Gallup has done Americans no favors by misrepresenting its own poll results, it has done a great service for Republican propagators of long-debunked talking points. As a quick glance at Republican debate transcripts shows, the 2012 GOP presidential candidates fight each other to out-repeal regulations "off the throat of small business operators." Dire warnings about "job-destroying regulations" are regularly regurgitated by Republican leaders including Mitch McConnell, John Boehner and Eric Cantor.

Sadly for the conservative tall tale-tellers, overly zealous government regulation has little to do with the woes of America's businesses large and small.

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Among the predictable Republican reactions to the President's proposed 2013 budget is the refrain that "Obama has failed to keep a 2009 promise to cut the deficit in half by the end of his first term." Just days after Senate Minority Leader Mitch McConnell told a CPAC audience that President Obama "said he'd cut the deficit in half by the end of his first term," ABC's Jake Tapper dutifully announced "Obama's broken deficit promise." And today, the RNC debuted a new ad in which a supposedly betrayed voter warns, "President Obama, you broke your promise. I'll never forget that."

Of course, what everyone seems to be forgetting is that in 2004 President George W. Bush promised - and failed - to halve the federal budget deficit by 2009. As it turns out, Bush broke his pledge even before the economic cataclysm of 2008 that triggered the TARP bank bailout, sent government revenues plummeting, and required President Obama's rescue programs that saved the U.S. from "Greet Depression 2.0."

As he faced reelection in 2004, George W. Bush famously committed to cut the deficit in half by 2009. As it turned out, the budget Bush bequeathed to Barack Obama didn't even get close to that target. The FY 2009 budget Bush proposed in February 2008 called for a deficit of roughly $400 billion, almost identical to the result in 2004. But that January 2004 promise, as the Washington Post, CNN and The New York Times among others noted at the time, was premised upon two parallel frauds. As Perrspectives explained four years ago:

First, Bush's pompous prediction used as its baseline a wildly inflated White House deficit forecast of $521 billion, well above the CBO's estimate and the actual figure of $413 billion. More importantly, President Bush conveniently chose 2009 as his finish line, the year before his tax cuts were set to expire. Making them permanent (which he and all of the GOP presidential candidates endorse) would blow another $2.2 trillion hole in the federal budget by 2014.

(It's also worth noting, as the Obama administration has this week, that Bush's budget plans always understated the real deficit, because they routinely failed "to account for the costs of the wars in Afghanistan, the cost of preventing cuts to Medicare doctors, and the price of staving off an expansion of the alternative minimum tax.")

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If nothing else, Mitt Romney seems dedicated to proving that repetition of a lie will make it true. On no point is Romney's tilting against the windmill of truth more comically pathetic than his long-ago debunked claim that President Obama "did not cause this recession, but he made it worse." After a tidal wave of fact-checkers demolished his mythology last summer, Romney on June 30 pretended, "I didn't say that things are worse" before reinstating the falsehood in his stump speech just days later. Now, Mitt has a new twist on his "Obama made it worse" fraud, declaring in light of the improving economic outlook that "It's getting better not because of him, it's in spite of him and what he's done."

Sadly for the myth-maker from Massachusetts, the numbers and the overwhelming consensus of economists - including John McCain's 2008 brain trust - demand Mitt Romney give credit where credit is due.

That, of course, is something the serial deceiver Romney is refusing to do, even as he acknowledges the economy is improving. As Mitt put it in New Hampshire ten days ago:

"I'm sure the president will want to take credit for it, for any improvement. Guess what? He doesn't deserve it."

Two days later during a GOP debate, Romney repackaged his con job this way:

"The president is going to try and take responsibility for things getting better. You know, it's like the rooster taking responsibility for the sunrise. He didn't do it," Romney said. "In fact, what he did was make things harder for America to get going again."

But back on planet Earth where the force of gravity still applies and the sun rises in the east and sets in the west, Romney's slander shuold receive the ridicule it rightly deserves.

This summer, Time blasted Romney's accusation that "the recession is deeper because of our President," concluding "that Romney's claim has no credible basis" because "there's no credible economic data showing that Obama has inflamed our economic problems." As Greg Sargent noted on June 27, both the AP and the Washington Post's own fact-checker demolished Romney's talking point on the recession which the NBER declared over in June 2009. Confronted three days later by NBC producer Sue Kroll about the growing economy, modest job gains and surging stock market, Romney simply denied he ever made the charge:

"I didn't say that things are worse...What I said was that economy hasn't turned around."

Nevertheless, just four days later Romney marked Independence Day by returning to his lie. As the New York Times reported:

Speaking at the annual July Fourth parade here on Monday, Mr. Romney told a crowd of supporters and passersby, "the recession is deeper because of our president," adding, "it's seen an anemic recovery because of our president."

Mr. Romney made a similar assertion earlier when reporters had pressed him on the point near the parade staging grounds, after initially seeming to limit his commentary to the president's handling of the recovery, which he said, "has been slower and more painful,'' But then he went ahead and said it, that the president "made the recession worse."

As it turns out, it's not just the tidal wave of reporters and fact-checkers that washed away the mud Mitt Romney hurled at President Obama on the economy. A bevy of economists, including ones who worked for Romney endorser John McCain, long ago concluded that Barack Obama saved the U.S. economy from calamity.

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When President Obama on Tuesday declared that decades of Republican trickle-down economics "never worked," conservatives were predictably apoplectic.

But for all of their protests of "class warfare", "socialism" and worse, Obama was being kind to the Republican ideologues. After all, as the historical record shows, from economic growth and job creation to stock market performance and just about every other indicator of the health of American capitalism, the modern U.S. economy has almost always done better under Democratic presidents. Despite GOP mythology to the contrary, America generally gained more jobs and grew faster when taxes were higher (even much higher) and income inequality lower. And while the U.S. recovery from the Bush recession remains painfully slow, most economists - including the nonpartisan CBO and some of John McCain's own 2008 advisers - believe President Obama saved it from the abyss.

(Click a link below for the details on each.)

• Job Creation and Economic Growth
• The Stock Market
• Income Inequality
• National Debt
• The Bush Recession and the Obama Recovery

Job Creation and Economic Growth

To be sure, George W. Bush provided the perfect bookend to era of modern Republican economic management ushered by Herbert Hoover. The verdict on President Bush's reign of ruin was pronounced even before Barack Obama took the oath of office. Just days after the Washington Post documented that George W. Bush presided over the worst eight-year economic performance in the modern American presidency, the New York Times on January 24, 2009 featured an analysis ("Economic Setbacks That Define the Bush Years") comparing presidential performance going back to Eisenhower. As the Times showed, George W. Bush, the first MBA president, was a historic failure when it came to expanding GDP, producing jobs and fueling stock market growth.

On January 9, 2009, the Republican-friendly Wall Street Journal summed it up with an article titled simply, "Bush on Jobs: the Worst Track Record on Record." (The Journal's interactive table quantifies his staggering failure relative to every post-World War II president.) The meager one million jobs created under President Bush didn't merely pale in comparison to the 23 million produced during Bill Clinton's tenure. In September 2009, the Congressional Joint Economic Committee charted Bush's job creation disaster, the worst since Hoover:

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