Wow, how typical, you believe human nature is going to be the same regardless of the taxes. Very few economists consider human behavior in their analysis and it is human behavior that drives the number one component of GDP which affects govt. revenue. It isn't tax cuts that cause deficits it is spending. Learn that and you will have more credibility.
Human nature and human behavior are two different things. Human nature governs human behavior. The former has remained remarkably constant over history. The latter responds to, for lack of a better term, various stimuli (including how others behave).
It is too simplistic to say that spending alone creates deficits. Let's set government aside for a moment. Instead, consider a company. The company has a cost structure. It also has revenue. The difference is a profit or loss. If one assumed that spending only creates deficits, then the company should be able to continually cut its prices and maintain (even increase) its profits. That doesn't happen. Elasticity of demand determines the revenue change (change in quantity demanded given the price change) and elasticity of demand is not linear. Therefore, at some point if a company continues to reduce its prices, its revenue is no longer sufficient to cover its cost structure. It can cut costs, but there are limits to how far it can cut its costs without sacrificing production. As it continues to cut its prices and cut its costs, there comes a point where it can no longer produce enough of its products to meet demand. It can no longer be profitable at some price point. The empirical evidence is strong. One finds a lot of examples in in price war cases where firms aggressively cut their prices and ultimately wind up passing what would have been their profits to consumers in the form of savings. In the end, their market share changes little, but their profits have been reduced.
A similar but not identical dynamic applies to government. As tax rates are reduced, there is a macroeconomic impact, but the multiplier is < 1. Hence, a $200 billion tax reduction is not going to trigger a $200 billion increase in GDP, much less the much larger increase that would be required to immediately prevent a loss of tax revenue from the tax rate reductions. In general, government gives up a share of its revenue in the short and medium-term. In the longer-term, the picture is a little more ambiguous, and a lot depends on whether the economy is put on a permanently higher growth path, which depends far more on investment (private and public). Even if it is, absent corresponding spending reductions or offsetting tax hikes elsewhere, the short- and medium-term impact is more debt (with interest charges) than would otherwise be the case.
At some point, foregone revenue exceeds any long-term impact from growth on a net present value basis. In other words, diminishing macroeconomic returns and eventually negative returns apply to tax rate reductions, as they do elsewhere in economics. Bureau of Economic Analysis data reveal that during the 1990-99 period, domestic business investment increased 6.5% per year and household/institutional investment increased 6.3% per year. During the 2001-07 period (to exclude the financial crisis and great recession), domestic investment increased 5.6% per year and household/institutional investment rose 5.3% per year. Hence, despite the tax cuts, increases in investment actually slowed. Overall gross domestic investment, which includes federal, state, and local government investment, saw a slowing of increases from 4.3% per year to 4.1% per year for the same periods of time. At the same time, gross domestic investment, saw an acceleration of its decline relative to GDP. Gross domestic investment comprised 19.6% of GDP at the beginning of the 1990s and 17.5% at the end of the 1990s. By 2007, it had fallen to 14.5% of GDP.
If one goes into details, one finds that a large share of this "investment" during the 2001-07 period was directed toward real estate, hence a share of those expenditures was not the kind of investment that yields long-term macroeconomic benefits. The bottom line is that it is difficult to argue that the 2001 and 2003 tax rate reductions created a foundation for stronger long-term growth.
In terms of the fiscal impact of the tax rate reductions, it is no big surprise that the 2001 and 2003 tax cuts created a structural drag on the government's long-term fiscal situation, as they were renewed and then almost all of them were made permanent. Tax rates were already very low relative to the historical experience, so one reasonably should not have expected the kind of response one would have witnessed from the 1960s and 1980s tax rate reductions. This long-term adverse fiscal impact was repeatedly discussed by CBO in its alternative scenarios. The trade-off was, at best, a modest macroeconomic benefit (and that is arguable given the investment data) and one that was insufficient to ward off what would become the nation's most severe macroeconomic contraction since the Great Depression.
In sum, the evidence suggests that the CBO's sober analysis of the impact of the 2001 and 2003 tax policy changes is reasonable. Furthermore, that analysis is consistent with economic theory.