Skip to comments.No, Tax Cuts Arenít Causing the Latest Deficit Spike
Posted on 06/14/2019 10:28:10 AM PDT by SeekAndFind
The Treasury Department reported a $208 billion deficit for the month of May which is $61 billion higher than May 2018. To put that in perspective, the deficit for the entire year of 2007 was $161 billion.
In the first eight months of the current fiscal year, red ink has already reached $738 billion. Even adjusting for inflation, the total annual federal deficit has exceeded that only six times in the nations history (five of them under President Obama).
Not surprisingly, the Republican tax cuts are taking the blame for this years extraordinary deficits.
But wait a minute. Overall federal revenues were up in May by $15 billion thats a 7% gain over May 2018 the latest monthly Treasury report shows.
So where did Mays big deficit increase come from? Well, spending in that month was $440 billion. Thats $76 billion or 21% more than last year.
Some of that increase in spending in May was the result of a quirk of the calendar. But the same trend holds true for the fiscal year.
For the first eight months of the fiscal year (which started last October), revenues climbed more than $50 billion, compared with the first eight months of the previous fiscal year.
The press has focused on the fact that Trumps tariffs boosted customs duties by $20 billion so far this year.
But that conveniently overlooks the fact that individual income tax revenues are up by $17 billion, and payroll taxes are up more than $30 billion. Both are signs of a healthy job market that pushed the unemployment rate to 50-year lows and is boosting wages as the labor market tightens.
Over these same eight months, however, spending exploded by almost $257 billion an eye-popping 10% increase.
And where have the big spending increases come from? Mostly from entitlements and interest payments on the national debt.
Spending by Health and Human Services which runs Medicare and Medicaid is up more than $100 billion so far this year. Social Security spending is up by $47 billion. VA spending is up $26 billion. Interest on the debt, up $36 billion.
Spending on aid to children and families, in contrast, climbed a mere $1 billion.
And while overall Defense spending is up $49 billion, less than half of that $20 billion went toward new equipment and R&D.
So once again, we have the data showing the out-of-control spending is driving up the deficit, not Trumps tax cuts. Yet its tax cuts that get the blame.
This is the swamp in action. The denizens of Washington want the government to grow perpetually bigger. So blaming deficits on tax cuts keeps the focus off the spending side of the equation.
The truth is that any tax hikes would, at best, only mask the problem of runaway entitlements, and put off the inevitable day of reckoning.
> we have the data showing the out-of-control spending is driving up the deficit, not Trumps tax cuts <
That is a very good point! But it is also worth noting that those spending bills were approved by a GOP Senate, and then signed by Trump. No one has clean hands here.
(And yes, I know that Trump had to sign those bills to get what he wanted. Nevertheless, I’m sad to see that everyone involved is just kicking the deficit can down the road.)
I’m not convinced everyone is kicking the ball down the road.
You touched on the fact Trump had to sign to get some important things. What else could he do? Refuse to sign. Refuse to get some very important things remedied?
One thing the Republicans could do if they ever get the majority again, and have the guts to actually act like Conservatives for once, is pass a line item veto for the president.
SPENDING causes deficits, not lower taxation.
There is a law on the books that states that the Federal government can not spend more than it takes in. This law was adopted in 1981, Public Law 95-435, Section 7. Its still valid, so why do our elected officials in Congress not obey that law?
That raises a number of other questions. Is there a penalty clause for violations of the law? Can every politician who voted in favor of violating the law be punished? Is a violation a misdemeanor or a felony? Who would be in charge of prosecuting the offenders?
We the people are expected to obey the law; why wont we hold our servants (who have, regrettably, morphed into masters) to the same standard?
Finally, since the law is already being ignored, what makes us think that an amendment would not also be ignored? The Second Amendment being a prime example in New Jersey; what part of shall not be infringed do they not understand?
This was the text of a letter to the editor I submitted some years ago; it refers to a balanced budget amendment proposed at the time.
> You touched on the fact Trump had to sign to get some important things. What else could he do? <
Yeah, in many ways you’re right. And that’s why this deficit problem will never be solved. NEVER. So there’s only one possible end to this story: runaway inflation as the Fed’s ramp up the printing presses.
The only question is when. Not for at least 15 - 20 years, I think.
It is a problem, and we need to address it.
I don’t know of a way other than the line item veto for the president.
That way he can stop the ability for the House members to vote each other as much as they can plunder from the federal budget.
Until then, we’ll face this problem.
“But that conveniently overlooks the fact that individual income tax revenues are up by $17 billion, and payroll taxes are up more than $30 billion. Both are signs of a healthy job market that pushed the unemployment rate to 50-year lows and is boosting wages as the labor market tightens.”
Funny how Corporate Income Tax numbers are conveniently not mentioned.... Could it be, that they are DOWN from last year?
If they are, and since this article explicitly leaves them out, then you better believe they are, that, like it or not, falls at the feet of the tax cut put into place. Payroll Taxes are not “REVENUE” per se as they are supposed to be going to Social Security, not fund the government operation, although everyone knows they do... So if personal income increases are not above corporate tax decreases, we are looking at a net negative in revenues that can be laid right at the tax law that was passed.
Like it or not, blaming the new tax law (at least in part) is NOT being dishonest.... Yes spending needs to be reigned in, no doubt, but when your revenues are net down, you can’t blame that on run away spending.
The previous line-item veto provision was struck down by SCOTUS. It wont likely be tried again.
I’ll wait for the production of some data...
I would keep trying it until they stood down.
That’s what the Leftists do.
The only alternative is to shut down the government. That hasn’t paid off yet.
Also need an audit. Just for the record: the Feral Governments books are, and have been, inauditable. A large number of billions goes to the Deep State, aka as slush funds, dispensed to who know for who knows purpose. Not on the books, except for the sum.
Plus, the Fed needs an audit. The gold held by the U.S. Government needs an audit, as it may have been pledged as collateral. In fact, may have been pledged as collateral more than once, then sold, then shipped out of the country. Without a total audit/inventory count, only the crooks know what they have stolen.
And like I stated, here you go...
You can tell as much by what an article leaves out, as what it tells you... corporate tax revenues are down over 20% in 2019....
Blaming the tax cuts (at least partially) for the deficit increase is not unjustified or fake news.
Well, I’d be careful of doing an audit that might cause people to lose confidence in the dollar.
I understand why you want it done.
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