RALEIGH – After a week of raucous budget debate in Washington, a ratings downgrade of federal bonds, stock market declines, and furious finger-pointing, some Americans are panicking.

I don’t blame them for being worried. I’m worried, too. But you should never let panic guide your actions. I’m not selling off my investments or storing canned goods for the apocalypse. Instead, I’m paying close attention to what’s being said by the political class.

Some understand the fiscal challenge facing the United States and have proposed serious policies to address it. I’ll call them democrats, lower-case, in the sense that they favor devolving both power and responsibility to the American people themselves, rather than entrusting more power to elites.

These democrats favor reforms that give people more ability to make decisions for themselves – decisions about their own retirement, health care, education, housing, and transportation, for example.

Other politicians are just old-fashioned demagogues attempting to use the current crisis to accumulate power and advance a social and economic agenda at odds with American liberty and free enterprise. They welcome the panic. They want Americans to be terrified enough about the future to be willing to surrender more of their incomes, assets, and liberties to government elites.

As I have arguing for several days now, you can’t understand the biggest sticking points in the recent budget debate – taxes and entitlements – without recognizing the differing assumptions and objectives of America’s democrats and demagogues.

The democrats, for example, argue that raising the federal tax burden will worsen our fiscal and economic problems, not alleviate them. They have the facts on their side.

Since the end of World War II, the United States government has collected an average of around 18 percent of the gross domestic product in federal revenue. During this period, changes in tax rates have affected revenues far less than changes in economic growth.

In the 1950s, when the top income tax rate was 90 percent, federal revenues averaged about 17.5 percent of GDP. In the 1960s, during which the top rate fell to 70 percent, federal revenues averaged about 17.9 percent of GDP. In the 1980s, when the top rate fell first to 50 percent and then below 30 percent, federal revenues averaged about 18.2 percent of GDP.

More recently, the 1990s began with two major tax hikes – signed by President George Bush in 1990 and Bill Clinton in 1993. The top marginal tax rate climbed to just shy of 40 percent. During the first half of that decade, federal revenues averaged about 17.8 percent of GDP. Then President Clinton and a Republican Congress cut federal tax rates, including those on capital gains and imports. Federal revenues during the second half of the 1990s averaged 19.7 percent, largely explained by higher capital gains from the stock market surge.

Now, if you are empirically minded, the lesson you draw from this experience is that the amount of revenue collected by Washington is determined more by the strength of the economy than by fiddling with tax rates. When faced with the prospect of higher taxes, those with the greatest flexibility – wealthy households and large businesses – change the structure of their investments to minimize their losses. Their decisions tend to depress economic growth a bit, and push some resources from taxable to non-taxable uses.

Since Washington collected 18.5 percent of GDP in federal revenues as recently as 2007, under the Bush-era income tax rates of 35 percent and below, there is no reason to think that economic recovery wouldn’t boost federal revenues back to historical norms. Once again, the real problem is excess spending – our current federal budget at 25 percent of GDP and projected budgets at or above that level in future decades. No matter how punitive we make the tax system, we can’t pay for that level of spending and balance the budget.

There is, in short, no valid fiscal or economic reason to ratchet up the tax burden. But if your goal is social – to redistribute income or punish productive people you don’t like, for example – then these empirical details don’t matter to you.

That makes you a demagogue, in my book.

Hood is president of the John Locke Foundation.