The editors of the Wall Street Journal give us the numbers:
The Congressional Budget Office reports in its April budget review that revenues rose 2% to $2.041 trillion in the first seven months of fiscal 2019 from a year ago. Payroll tax revenue rose 4.7% due in part to rising employment and wages.
Individual income taxes were essentially flat in the wake of the tax cut, but corporate income taxes were down only $7 billion for the first seven months to $114 billion despite the cut in the corporate tax rate to 21% from 35% in the 2017 tax reform. April was the deadline for final 2018 tax payments for most corporations, and tax revenue from higher corporate profits partly offset the lower rate.
Overall revenues increased despite a sharp decline in payments to the Treasury from the Federal Reserve of $15 billion, or 34%. The decline is due to higher short-term interest rates that lead the Fed to pay banks more interest on their reserves. Watch this account closely in the future if the Fed’s reserve payments become a net Treasury drain. This is one cost of the Fed maintaining a very large balance sheet.
That’s the revenue side. Here’s the expense side of the ledger:
So why has the federal deficit increased by $145 billion this fiscal year to $531 billion? Because federal spending continued to rise rapidly—7% in the first seven months to $2.571 trillion. That’s $178 billion more than in the same period a year ago. As you’d expect, Social Security benefit payouts rose 6%, Medicare outlays 5% and Medicaid 4%. Anyone who thinks federal deficits and debt can be contained without entitlement reform probably still believes in the Russian collusion story.
Defense spending rose 10%, or $33 billion, in the first seven months, as intended by Congress and the White House after eight years of neglect under Barack Obama. The higher outlays went for much-needed operations and maintenance and R&D. Outlays for the Pentagon are still only about 3.2% of GDP, which is close to the historic low since World War II.
Interest payments on federal debt held by the public rose 13% to $234 billion, due to higher short-term interest rates and more debt. The Fed’s zero-rate policy disguised the size of the debt’s budget burden during the Obama years, but it is now coming due.
The second responsibility of government is to restrain the rate of increase of its outlays to the increase in national income. If you are not willing to do that, you are not a moderate. You are not a conservative. You are not a liberal. You are either an authoritarian or simply irresponsible. Outlays are increasing far faster than the national income. Do the math.
A bit rushed, but it looks like this is reported in nominal dollars. So what it really says is that revenue was flat and we spent much more than we took in. I will disagree with your conclusion (though I understand what you are trying to say) and point out that in fact this is exactly what conservatives willing do when they do budgets. They cut taxes while increasing spending. It is the one consistent policy choice they have made since Reagan. (Please note that the WSJ makes sure that they try to justify the increased spending that they like.)
Steve
Today’s “conservatives” are divided between anarcho-capitalists and Jacksonians who don’t care about deficits at all.
I think I’ve made my views on defense pretty clear. I believe in a strong defense but I don’t think that invading countries as a preventive measure falls under the rubric of defense. We’ve cut defense spending a lot in real terms over the last 40 years but there’s still room to cut but only if we decrease the size of the army and reduce our overseas commitments and adventures, both of which I favor.
“Today’s “conservatives†are divided between anarcho-capitalists and Jacksonians who don’t care about deficits at all.â€
In fact, the Republican Party’s biggest problem is the size to which the state capitalist contingent has grown. They are indistinguishable economically from Democrats.
I’ve pointed that out any number of times in the past. There is a distinction, however. They want different groups to benefit from handouts they want to give.
I think you guys are mostly correct, but there are a couple of small differences. The Democrats are still the tax and spend party. They will try to increase taxes to pay for the spending they want. The GOP cuts taxes and continues to increase spending. Look at the difference between the ACA and the Medicare Drug bill that was completely unfunded by the GOP. Otherwise have to agree that both sides want to give out goodies, they just want different groups to benefit.
Steve
That’s somewhat true, Dave. I think HRC had a Goldman contact or two…………
@steve
[…] The Democrats are still the tax and spend party. They will try to increase taxes to pay for the spending they want. […]
So, it was just Obama that wanted to “spread the wealth around”? So, the Democrats who say they want to hike taxes even if it decreases revenue are lying?
I would suggest that you stand up and turn around. You will see that what you have been watching are shadows on the wall, and if you get really adventurous, you can leave the cave.
” who say they want to hike taxes even if it decreases revenue ”
So all tax increases lead to a loss of revenue? Go read.
Steve