The White House said Friday that worsening tax revenues will cause the budget deficit to jump to $702 billion this year. That's a $99 billion spike from what was predicted less than two months ago.These figures are independent of what might happen with the GOP's attempts to repeal and replace Obamacare, but the lower revenue projections should not be a surprise, as yesterday's Treasury statement shows that revenues continue to slump in the 2017 Fiscal Year.
The report from the Office of Management and Budget comes on the heels of a rival Congressional Budget Office analysis that scuttled White House claims that its May budget, if implemented to the letter, would balance the federal ledger within 10 years. The OMB report doesn't repeat that claim and instead provides just two years of updated projections.
The White House budget office also says the deficit for the 2018 budget year that starts on Oct. 1 will increase by $149 billion to $589 billion. But lawmakers are already working on spending bills that promise to boost that number even higher by adding to Trump's Pentagon proposal and ignoring many of Trump's cuts to domestic programs.
Change in US revenues vs FY 2016
FY 2017 budget +5.9%
FY 2017 year-to-date 1.6%
And as alluded to in the article, the news of higher deficits and lower revenues comes one day after the Congressional Budget Office gave its evaluation of the Trump Administration's first budget. Interestingly, the CBO did say that the Trump Administration's budget would reduce the deficit by a total of more than $3.4 trillion over the next 10 years compared to current law, but that would be because of severe cuts in domestic spending, including Medicaid.
A decrease of $2.0 trillion in mandatory spending (which is spending for programs generally governed by provisions of permanent law), including a $1.9 trillion reduction in spending for health care, as well as cuts to income security programs and student loans;The flip side of that is the CBO says that the Trump Administration's promises of 3% GDP growth isn't close to what they think will happen over the next 10 years, and that the Trump Administration's proposed tax cuts will not magically pay for themselves.
O A decrease of $1.9 trillion in discretionary outlays (which result from funding provided or controlled by annual appropriation acts) stemming from substantial
reductions in nondefense discretionary spending and from sharply lower outlays for military operations and related activities in Afghanistan and elsewhere
(known as overseas contingency operations, or OCO); and
O A decrease of $0.3 trillion in net interest costs because of lower deficits.
CBO projects that revenues under the President’s budget would total $3.6 trillion (or 8 percent) less than the Administration estimates for 2018 through 2027. CBO attributes the bulk of that difference, about $3.4 trillion, to differences between its economic projections under current law and those of the Administration under its proposed policies.Related to this, the CBO estimates average GDP growth in the US to be 1.9% over the next 10 years under this Trump budget, not really any different than the 1.8% average growth that they predict for current law.
What's kind of been hidden with all of the discussion with Trumpcare bill and the increasingly obvious TrumpRussia collusion is that we only have 2 1/2 months to get a new budget through before the government shuts down. In addition, Congress likely has to raise the debt ceiling this Fall, and with revenues falling short and the current-year deficit rising, that will likely need to happen sooner than later. And a lot of those GOP nutbags in Congress won't want to go along with that.
So it's not like things are going well in DC anyway, but this disappointing budget news indicates that things may be getting soft economically and fiscally, which is likely the one thing that has kept Trump from hitting "Bush/Nixon nadir" in approval. And it also makes me wonder if those bad numbers are going to be trickling down to the state level, either in the form of Federal budget cuts, or in the form of lower state tax revenues. We're not heading toward recession at this time, but the federal budget news may be a flashing yellow light to pay attention to.