Taxes

Deficit Soars Past $100 Billion For Just October

JM Ashby
Written by JM Ashby

We knew the federal budget deficit would likely climb to over $1 trillion in fiscal 2019 and we're off to a roaring start.

The Treasury Department recorded a deficit of over $100 billion just for the month of October at the very beginning of the fiscal year.

From Bloomberg:

The U.S. recorded a $100.5 billion budget deficit in October, an increase of about 60 percent from a year earlier, as spending grew twice as fast as revenue.

The deficit widened from $63.2 billion in the same month last year, the department said in an emailed statement on Tuesday. October marks the start of the U.S. fiscal year. [...]

A ballooning U.S. budget shortfall -- fueled by tax cuts, spending hikes and an aging population -- is driving the Treasury Department to raise its long-term debt issuance.

Obviously, the GOP's tax were still two months away from passage in October of 2017. That's the biggest difference now and then. Federal spending -- particularly defense spending -- has also increased, but that would not be as much of a problem if the government had revenue to pay for it.

In closely related news, the Congressional Budget Office ran the numbers and found that we'll soon pay more in interest on debt than we spend on most government programs.

From the Wall Street Journal:

In 2017, interest costs on federal debt of $263 billion accounted for 6.6% of all government spending and 1.4% of gross domestic product, well below averages of the previous 50 years. The Congressional Budget Office estimates interest spending will rise to $915 billion by 2028, or 13% of all outlays and 3.1% of gross domestic product.

Along that path, the government is expected to pass the following milestones: It will spend more on interest than it spends on Medicaid in 2020; more in 2023 than it spends on national defense; and more in 2025 than it spends on all nondefense discretionary programs combined, from funding for national parks to scientific research, to health care and education, to the court system and infrastructure, according to the CBO.

Although Republicans are primarily responsible for creating this ticking time bomb, you can bet they will become born-again deficit hawks in the coming years as they call on Democrats to clean up their mess for them.

There's one easy way Democrats can agree to clean up the mess without compromising their core principles: raise taxes on the rich

Senate Republicans and Donald Trump will never pass or sign a bill to raise taxes, but if Republicans want to have this debate then let's have it. Let's continue to talk about the GOP's failed tax cuts. Let's remember that they said average Americans would see their take-home pay increase by $4,000 per year. Let's never stop reminding folks that Republicans said the tax cut would pay for itself.

Whoever becomes the Democratic nominee in 2020 will almost certainly run on taxing the super-rich. Doing so will be a mathematical necessity.

  • muselet

    No matter how often or how vehemently supply-siders claim otherwise, tax cuts do not and cannot pay for themselves, not at current marginal rates. At vastly higher marginal rates—a top rate above 75%, say—then cutting top marginal rates can lead to increased revenues.

    Whopping debt (to borrow a question from the late Edwin Newman, when does debt begin to whop?) was an inevitable consequence of the Rs’ tax deform legislation.

    –alopecia