If the CBO’s projections hold steady, we’ll see trillion-dollar interest payments in 5 – 10 yrs which will account for approximately 25% of federal revenue, yet Congress has proved unable to rein in its spending.
— Scott Walker (@ScottWalker) March 18, 2019
There are 2 big reasons that SCOTT WALKER should not be making this statement. The first involves Walker's own record here in Wisconsin on debt. In the General Fund, Walker skipped debt payments in both 2015 and 2016 and diverted them to be paid off in future years, and constantly refinanced and extended debt terms to pay off tax cuts and spending in the short term.
And Walker was even worse when it came to paying for the needs of the Wisconsin DOT, as debt took up an increasing share of the Transportation Fund's expenses in the 2010s, and crowded out road repair and other DOT infrastructure and services.
Walker also should be laughed at because he vocally supported the Trump/GOP tax cuts of 2017, which are a big reason why the deficit is exploding to historic levels today.
The federal government ran a budget deficit of $234 billion in February, the Treasury Department reported on Friday, the biggest monthly shortfall on record.As Steve Goldstein of CBS Marketwatch notes, the deficit shouldn't be jumping at all in an allegedly growing economy.
It was wider than the $215 billion recorded in February 2018, as spending rose 8% while receipts climbed 7%. Previously, the largest monthly deficit was $231.7 billion in February 2012.
While the $234 billion deficit in February was largest ever for a month, probably better way to look at it is rolling 12-month average. Still is amazing that deficit widening while economy expanding. pic.twitter.com/bqRUKkoe2U
— Steve Goldstein (@MKTWgoldstein) March 22, 2019
In addition, those "increased revenues" for February are misleading. To begin with February is the lowest month of the year for net taxes for Uncle Sam, due to the large amount of refunds that usually come in for the month, so the difference in revenues was all of $11 billion in a budget that is well over $4 trillion a year.
With that background, I'll now go off of the February Treasury Statements for 2017 (before the Tax Scam was law), 2018 (when lower withholdings started) and 2019 (when lower refunds started to take effect).
As you will see, while income taxes withheld in February 2019 were about $6 billion more than what we had 12 months prior, that total is basically no different than the amount coming out of Americans' paychecks 2 years ago, despite growth in jobs and wages since then. Add in the fact that prices are about 3.7% higher than they were 2 years ago, and this is a real loss of revenue.
That withholdings figure is shown by the blue in this chart. February’s income tax refunds are listed as a negative of the total, and you can see those are down nearly $7.9 billion this year vs last year, which added to the “increased revenues” for this year vs 2018 (the numbers shown are in millions).
Corporate taxes often are negligible in February, because quarterly payments aren’t usually made that month, but refunds still happen.
Feb corporate income taxes
Feb 2017 +2,478 million
Feb 2018 -1,992 million
Feb 2019 -669 million
So a better comparison is showcasing the double digits drop in total corporate revenues in each of the last 2 years to date, creating a decline of more than $28 billion.
Corporate taxes Oct-Feb
FY 2017 $87.36 billion
FY 2018 $73.54 billion (-15.8%)
FY 2019 $59.19 billion (-19.5%, -32.2% vs FY 2017)
What did increase in February compared to the last 2 years are the payroll taxes for items such as Social Security and Medicare. These are allegedly supposed to be used only for those purposes, but in reality they’re not and count just like any other tax revenues. You’d think a “deficit hawk” like Walker would want that to be done, but notice he and other Republicans never ask for that kind of lock box, because the surpluses are able to improve the budget picture and make it easier to justify income tax cuts for their rich donors.
In addition to the growth of payroll tax income, note that Trump’s tariffs are having a minor effect on revenues, as they nearly doubled to $5 billion in February 2019.
So keep these different sources in mind if GOPs try to claim that “increased tax revenues” are proof that the GOP Tax Scam isn’t adding to the deficit this year. Much of the increase has little to do with increased earnings and growth in the economy, and we’re still below the levels we were at 2 years ago.
Those lower revenues show that the tax cuts have not "paid for themselves." And combined with expanded spending under spending plans passed by a GOP Congress in 2018, we now have a massive jump in the US deficit for FY 2019.
For the fiscal year to date, the budget deficit is up 39% compared to the same period a year ago.
The expanding deficit comes as the Congressional Budget Office is projecting a shortfall of $897 billion for the full fiscal year, or 4.2% of gross domestic product. That’s up from $779 billion in fiscal 2018. The CBO sees trillion-dollar deficits beginning in fiscal 2022.
The only good news on this fiscal situation is that the higher deficit isn't translating into higher interest rates. In fact, long-term rates plunged last week, and dropped again today as fears switched on Wall Street and DC toward an economy slowing toward recession. But whatever help for the deficit that we might see in future years from lower interest on new debt will be more than offset if we start losing jobs and seeing wage growth decline.
Given that the deficit is growing due to tax cuts that sent money to the pockets of the rich and corporate instead of spending money for jobs, services and infrastructure, there wasn't much bang from the buck received. And now the one-time bump is baked in and wearing off and limiting future growth. So tell us Scotty, why would we trust you or any of your fellow Republicans in solving a deficit problem that your reckless kickbacks caused in both Madison and in DC.
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