Open Thread Taxes

Deficit Falls for a Fifth Year in a Row

According to the Congressional Budget Office, the federal budget deficit for 2014 will be nearly $200 billion less than 2013, falling from $680 billion to $492 billion thanks in part to record tax revenue.

via Bloomberg

“This will be the fifth consecutive year in which the deficit has declined as a share of GDP since peaking at 9.8 percent in 2009,” CBO said. The 20-page report is an update of CBO’s 10-year baseline projections released in February.

The 2.8 figure as a percentage of gross domestic product is lower than the 3.1 percent average of the last 40 years, CBO said.

Many people look back at the Budget Control Act and lament it, and while the effects of sequestration have been unfortunate, it shouldn’t be forgotten that President Obama and the Democrats managed to insert a large tax increase on the rich into the bill without Republicans realizing it.

In addition to the lowest deficit since 2007, the Congressional Budget Office also reported today that revenue will surpass $3 trillion for the first time.

The U.S. government is projected to collect more than $3 trillion for the first time in the fiscal year ending Sept. 30, a 9.2 percent increase over last year, according to the Congressional Budget Office. CBO forecasts another 9 percent rise in 2015 and estimates that more than half of the increases in revenue stem from tax law changes.

Taxes on the lavish insurance plans of the rich under Obamacare will also lead to increased revenue.

It’s not rocket science. Raising taxes on rich allows the nation to pay it’s bill and it doesn’t kill the economy because most of that money was simply going to be collecting dust anyway.

I certainly don’t mean to gloss over spending cuts that have been reluctantly implemented over the past several years, but I do believe the next administration will be in a much stronger position because of the sacrifices and the progress made by the current administration.

  • Jado

    If we ever get to a surplus, we can give it all back to the American people a’ la GWB. Hooray!!!

  • JWheels

    And hopefully the next administration doesn’t pull a GWB and blow it all on one mismanaged war and one illegal one.

  • gescove

    Ashby – thanks for acknowledging the deleterious affects of sequestration. While a declining deficit is fine counter to the deficit fetishists, it is anathema to a robust economy. The lack of deficit spending is a chief reason the Great Recession has been so deep and lasted so long. As for @rex’s comments… that’s the first time I’ve heard a Federal budget surplus blamed for private indebtedness. Rather, on-going attacks on labor and unions, along with policies that favor financial assets over wage earnings, led to decades of falling or stagnant wages. Rising costs for energy, food, health care, and education added more burden to diminished paychecks. This pain could be masked, until the bubble burst at least, by easy credit made possible with inflated housing values and Wall Street greed. Private indebtedness does not trace back to a Clinton-era budget surpluses.

  • Eschatologisaurus Rex

    If the next administration is Hillary’s, then we should be wary of a resumption of the Clinton-era surpluses that led to the highest levels of private sector indebtedness in a generation.