President Barack Obama has kicked off the 2012 budget. The reaction in Washington and beyond was predictable. Everyone has a view on the proposed spending cuts and whether they are deep enough. And what about the assumptions behind the forecasts: too optimistic or pessimistic? Cue, also, widespread concern that avoiding radical reform of military and entitlement spending makes a mockery of the process.

But lurking beneath the verbiage are two economic realities largely ignored by both political parties. First, the fact that any reduction in budget deficits – the White House is gunning for a trillion dollars over 10 years while some Republicans are even more aggressive – has to be balanced by an identical drop in private sector cash flows (assuming constant trade balances). In other words, either US households or companies have to take a hit equivalent to 7 per cent of gross domestic product over the next four years, according to budget forecasts. Republicans pushing for even faster deficit-slashing rarely add that this guarantees more pain for families, businessmen and investors.

Nor does either political party wish to air another economic reality. That is that America’s tax burden as a proportion of national income is currently a low 24 per cent, according to Credit Suisse – 2 percentage points below the 50-year average and 4 percentage points below the late-1990s peak. Under Mr Obama’s proposed budget only a quarter of the planned deficit reduction comes from tax hikes. Republicans no doubt think even this is unreasonable. But the truth is there is still capacity for taxes to take more of the strain.