We know we're headed for a new era of trillion or possibly even two trillion dollar deficits, but it might happen quicker than anyone realizes.
Federal revenue dropped by nearly 10 percent in February according to the Treasury Department and the federal deficit has blown past $700 billion.
From the Wall Street Journal:
Meanwhile, the budget deficit reached $706 billion, 3.6% of gross domestic product, over the 12 months ended February, compared with $583 billion, or 3.1% of GDP, for the same period one year earlier.
The deficit, or the difference between the amount of money the government spent and what it took in, stood at $391 billion in October through February. That was $40 billion, or 12%, higher compared with the same period a year earlier.
The deficit is expected to widen further this year because of the $1.5 trillion tax cut.
A significant chunk of the GOP's tax cuts, such as the massive cut for pass-through income, hasn't even taken effect yet. Bloomberg reported over the weekend that the IRS isn't even sure who qualifies for those cuts and there's over $400 billion in federal revenue at stake.
There are significant differences between the trillion dollar deficits seen during the early years of the Obama administration and what we can expect to see after two years of Trump. President Obama inherited a massive deficit, multiple wars, and a recession. The federal government was also forced to spend even more money to dig the economy out of the whole left behind by George W. Bush. But Trump and today's GOP don't have any of those problems. The economy was close to full employment and growing at a healthy rate before they even laid a finger on the tax code.
I don't know who will control Congress next February, but whoever does will have a fiscal time-bomb detonate in their faces. It's imperative that Democrats win as many seats in the House as possible this year because if Republicans are in charge of responding to a trillion dollar deficit, their solution won't involve clawing back the revenue they've pissed away on tax cuts for the super-rich.