Tuesday, January 8, 2019

With 1 year of the Tax Scam in the books, the deficit is blowing up as predicted

As 2018 ended, we found out that the GOP Tax Scam still wasn't paying for itself. That came courtesy of the December 2018 budget statement from CBO.
The federal budget deficit was $317 billion for the first quarter of fiscal year 2019, the Congressional Budget Office estimates, $92 billion more than the deficit recorded during the same period last year. Revenues were about the same and outlays were $93 billion (9 percent) higher than during the first quarter of 2018.

Because January 1 is a holiday, outlays this year and last year were boosted by the shift of certain payments from January to December. However, last year’s outlays for the quarter were reduced, on net, because of additional payment shifts from October 2017 (fiscal year 2018) into September 2017 (fiscal year 2017). (October 1, 2017, the first day of fiscal year 2018, fell on a weekend.) If not for those timing shifts, outlays so far this year would have been $49 billion, or 5 percent, larger than those in the same period last year, and the deficit would have risen by $47 billion.
If you dig into the revenue picture for the first 3 months of the 2019 Federal Fiscal Year, you’ll see that the GOP’s Tax Scam is reducing what government gets from individuals and corporations, but the Trump tariffs and other GOP actions has allowed Uncle Sam to get a little bit of that back.

Change in Federal Revenues, Oct-Dec 2018 vs Oct-Dec 2017
Income tax -$17 billion (-4%)
Payroll taxes (Medicare, Soc Security) +$15 billion (+6%)
Corporate taxes -$9 billion (-15%)
Excise taxes +9 billion (+46%)
Tariffs +$8 billion (+83%)
Payments to Treasury from Fed Reserve -$5 billion (-26%)
TOTAL CHANGE +$2 billion (+0.2%)

And don’t count on that increase in excise taxes happening in the future, because it’s the result of a GOP modification to the ACA where health insurance providers have to pay a fee in 2018 that they didn’t have to pay in 2017, and won’t pay in 2019.

While revenues flatlined in the US, spending by the Federal Government kept rising in the last 3 months of 2018.
Outlays for the first quarter of fiscal year 2019 were $1,088 billion, $93 billion higher than they were during the same period last year, CBO estimates. If not for the shift of certain payments, that year-to-year increase would be much smaller—$49 billion rather than $93 billion.
Change in Federal Spending (with timing shift), Oct-Dec 2018 vs Oct-Dec 2017
Social Security Benefits +$12 billion (+5%)
Medicare +$3 billion (+1.7%)
Medicaid +$2 billion (+1.6%)
Military/Defense +$9 billion (+5.8%)
Interest on the Debt +$16 billion (+19.4%)
Other spending +$7 billion (+2.3%)
TOTAL CHANGE +$49 billion (+4.8%)

This is going pretty much as predicted, where the CBO's full-year projections from last month indicated a slight increase in revenues for 2019 (which is likely to happen when you start seeing year-over-year comparisons with the lower tax brackets starting in February), and decent-sized spending increases.

As for December itself, the same pattern held, with income tax withholdings and corporate taxes down, tariffs up, and the deficit up.
The federal government incurred a deficit of $11 billion in December 2018, CBO estimates—$12 billion less than the deficit in December 2017. As was the case last year, outlays in December were affected by shifts in the timing of certain federal payments that otherwise would have been due on January 1, a holiday; those shifts increased December outlays by about $20 billion in both years. However, because December 1, 2018, fell on a weekend, certain payments shifted from December to November; those shifts lowered outlays this December by $45 billion. If not for those shifts, the deficit for the month would have been $36 billion—$32 billion more than the deficit in December 2017.

CBO estimates that receipts in December 2018 totaled $312 billion—$13 billion (or 4 percent) less than those in the same month last year. Withholding of individual income and payroll taxes declined by $2 billion (or 1 percent) and corporate income tax receipts declined by $14 billion (or 23 percent). Excise taxes and customs duties increased by $1 billion and $2 billion, respectively.
So despite good jobs and GDP numbers for 2018, the GOP Tax Scam is failing to "pay for itself", as the Trump Administration promised us.

And now 2019 will give us the payback for those tax cuts. Not just in the form of higher expenses due to added interest on the debt, but also due to the checks many of us will be writing to the IRS in the next 3 months due to the smaller deductions for state and local taxes (SALT), which will make taking many types of deductions worthless.

You've been warned.

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