Unsurprising news

The Associated Press reported today the US deficit for the first ten months of the 2018-19 fiscal year has increased by 27% over last year’s ten month deficit. The $867 billion deficit is in line to pass $1 trillion for the year ending September 30, 2019.

This is not a surprise as the tax law passed in December, 2017 is projected to increase the debt by $1.5 trillion over the next ten years. That is on top of the expected increase without change of $10 trillion. And, to make matters worse two spending bills in 2018 and 2019 have increased spending, with the latter increase yet to be felt.

Expenses are up 8% and revenue is up only 3% with such a good economy. As mentioned before, we should be paying down the debt in good times, but the tax bill reduced the revenue from where it would have been.

Politicians, including this president, have an unhealthy focus on short term results. The long term impact can be blamed on future politicians, in their minds. We have a ticking time bomb, where our $22 trillion debt will be closer to $35 trillion in ten years sans change.

Some poor president and Congress will have to step up to solve this problem. And, they will unfairly get blamed.  It will take both spending cuts and tax increases to get us there. And, to show how frustrating harmful action is, a Senator from Florida yesterday said we need a tax cut to spur the economy with the pending recession – really? More debt is the answer?

We need fiscal stewardship and leadership. We are not getting it from these incumbents. And, that is a dereliction in duty.

 

7 thoughts on “Unsurprising news

  1. Note to Readers: I have said several times before, that I found the 2017 Tax Bill an act of malfeasance and hypocrisy. I was in favor of cutting the corporate tax rate some to help repatriate corporate income. Yet, I was hopeful the bill would be accretive not dilutive. The hypocrisy relates to the Freedom Caucus complaining when the debt was $5, then $8, then $13 trillion, yet members voted to increase the debt. When I raised this issue with a staff member of a leading Freedom Caucus member, he took offense saying the tax cut would pay for itself with growth. According to a nonpartisan group called the Committee for a Responsible Federal Budget, the best a tax cut has done is pay for just under 30% of its cost with increased revenue. So, no, tax cuts do not pay for themselves.

  2. Keith – It’s always concerned me that fiscal stewardship (I love that term!) is something I’ve always had to practice at home, but so often it isn’t practiced by our elected officials. I tremble at the idea of that much money, but really it is as simple as managing how to pay for groceries and utilities and clothes and future savings. Thanks, as always, for your thoughtful analysis – Susan

    • Susan, agreed. We must do this State government and local governments must meet budgets, but the federal government does not. This is now beyond a balance budget amendment – we need to run a surplus to pay down debt. Keith

  3. Note to Readers: Today, Bloomberg News had the following article:
    https://www.msn.com/en-us/money/markets/us-budget-gap-to-top-dollar1-trillion-2-years-sooner-than-expected/ar-AAG7FCs?ocid=spartandhp

    This is a key reason Trump’s discussion of reducing payroll taxes is malfeasance, even worse than the tax cuts. The latter borrowed from the future to make a pretty good economy a little better. This former would be making Social Security/ Medicare less secure, while stimulating an economy when it is doing pretty well. This a measure to be used when the situation is dire. If we use our tools when the market is doing well, it takes them away when they are needed more.

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