As reported by the Wall Street Journal two weeks ago:
Federal revenues were essentially flat in the budget year that just ended, despite stepped up economic growth, strong hiring and rising wages for workers, according to new estimates from the Congressional Budget Office that show the effects of last year’s tax law. Government spending rose 3% in fiscal year 2018, pushing the budget deficit to $782 billion, up from $666 billion the previous fiscal year, CBO estimated. As a share of gross domestic product, the deficit totaled 3.9% in fiscal 2018, which ended Sept. 30, the third consecutive increase. The deficit would have been even higher if not for shifts in the timing of certain payments...The WSJ article was based on the Congressional Budget Office's "snapshot" report. This week the Treasury Department released the final fiscal-year report...
On the spending side, federal outlays rose 3% in the fiscal year, due to rising costs for Social Security, Medicare and Medicaid, as well as higher interest payments on the public debt and higher military spending.
... showing that the deficit for FY 2018 increased to $779 billion, a $113 billion (or 17 percent) increase from FY 2017. The deficit is 3.9 percent of GDP, also up from 3.5 percent in 2017...For Fox ache - is there no adult anywhere in Washington who is willing to address this problem. It seem to me these numbers have hardly been mentioned in the news, because everyone is so busy reporting on Kavanaugh hearings and hurricane damage and the Khashoggi murder and the midterm forecasts. And the baseball playoffs. And... squirrel !!!
The $113 billion increase in the deficit comes from largely flat revenue coupled with increasing spending. Revenue was up only $14 billion, or 0.4 percent. This revenue growth rate is the eighth lowest in the past 50 years, and the seven lower years either coincided with a recession or tax cuts/expiring tax increases enacted shortly after a recession...
Outlays were up $127 billion over FY 2017. Interest was the fastest growing portion of the budget, increasing nearly 24 percent since last year. Other areas of spending growing significantly were Social Security (4.5 percent) and defense (5.6 percent). Defense spending grew by a more rapid rate than recent years due to this year's budget agreement that increased the defense spending cap substantially...
Recent legislation is responsible for the deficit increase. CBO estimated that the tax law would cost $164 billion in FY 2018, which would account for more than the entire deficit increase. The spending deal (the Bipartisan Budget Act of 2018) was estimated to cost $68 billion, which would account for about 60 percent of the increase. Other deficit increasing legislation in FY 2018 added $32 billion to the 2018 deficit. These estimates suggest that if none of these laws were enacted, the deficit would have declined to about $515 billion this year. The tax bill and the spending deal are expected to cost more next fiscal year ($228 billion and $185 billion, respectively) as the deficit is expected to reach nearly $1 trillion.
Embedded image from the second link.
The tax "reform" seems to have worked its magic, for just today Mitch McConnell floated the first "we'll have to cut Medicare/Social Security" balloon. It appears to me that without the tax giveaway and Trump's extra gift to military contractors we'd have been in much better shape.
ReplyDeleteWhere's the surprise? Taxes were cut, that means government income down, hence deficit up. All was predicted when the tax cut was passed. So, this is not news.
ReplyDeleteThis ballooning deficit will be addressed when the Republicans fall out of power. Then they will begin screaming about this deficit once again (remember, just a few years ago deficits were all they could talk about) and absolutely insisting that Social Security, medicare, Medicare, SNAP, and whatever other social program you can name that actually help people must be cut to the bone or simply eliminated. But those tax cuts to corporations and those making north of $250,000; those they'll say need to be left alone because, reasons. The Republicans are swilling at the trough and soon will be trying to lay all the blame that the trough has gone empty at the feet of the Democrats when they regain power. It won't matter what has happened in the past, the optics of the Democrats being forced to be the grown ups and raise taxes will play right to the Republicans base. The Democrats will be able to get just enough done to prevent the boat from capsizing before the votes swing again and the Republicans can begin drilling hole sin the bottom of the boat again. Your voting in every single election counts.
ReplyDeleteAs I was saying...
ReplyDeleteRepublicans-want-to-take-away-your-Medicare-Social-Security-and-Medicaid
I would be interested in your take on Modern Monetary Theory. I am still skeptical myself, but I am hearing more about it from leftie circles.
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