Sunday, June 16, 2019

Budget deficit keeps running higher, and corporate taxes keeps going down

The dividends from the Trump/GOP Tax Scam continue to come in. Just this week, another high monthly budget deficit was reported for May.
The federal government's budget deficit in May rose to a record $207.8 billion, 41.5% higher than a year ago. Most of that increase reflected the impact of calendar quirks that shifted $55 billion in June benefit payments into May....

Through the first eight months of this budget year, the budget deficit totals $738.6 billion, an increase of 38.8% over the same period last year. For the full year, it is expected to climb sharply, with the Trump administration forecasting it will top $1 trillion from $779 million last year.

The Congressional Budget Office is forecasting a slightly lower deficit of $896 billion for this year, but that would still be up 15% from the 2018 deficit….

Interest on the $22 trillion national debt is one of the fastest growing parts of the budget with net interest payments totaling $268.3 billion, up 15.6 percent from a year ago. That reflects the fact that interest rates have risen and there is now more debt to finance.

And this report in Politico from Friday reiterated a main reason for the increased budget deficit - corporate tax revenues that keep going down after they received major breaks in the GOP's Tax Scam of 2017.
Federal tax payments by big businesses are falling much faster than anticipated in the wake of Republicans’ tax cuts, providing ammunition to Democrats who are calling for corporate tax increases.

The U.S. Treasury saw a 31 percent drop in corporate tax revenues last year, almost twice the decline official budget forecasters had predicted. Receipts were projected to rebound sharply this year, but so far they’ve only continued to fall, down by almost 9 percent or $11 billion.

Though business profits remain healthy and the economy is strong, total corporate taxes are at the lowest levels seen in more than 50 years.

At the same time, overall taxes paid by individuals under the new tax law are up so far this year by 3 percent, thanks to higher wages and salaries, according to the Congressional Budget Office. Last year tax payments by individuals went up 4 percent.

And even that 3% tax "growth" is misleading, because if you dig into the US Treasury Statement that reported the deficit, you'll see all of that growth can be accounted for through higher Social Security and Medicare payroll taxes, which weren't touched by the Tax Scam, and new Trump tariffs that have been imposed over the last year.

Change in federal revenues, FY 2019 vs FY 2018 through May
Individual Income taxes +$17.2 billion
Corporate taxes -$10.6 billion
Estate taxes -$4.0 billion

Social Security/Medicare taxes +$39.4 billion
Tariffs/customs duties +$20.1 billion
All other receipts -$11.7 billion
TOTAL CHANGE +$50.4 BILLION

Last month, the Congressional Budget Office projected the budget deficit to hit $896 billion for the Fiscal Year that ends on September 30, but that projection also counted on corporate taxes to go up by $40 billion for this year. But that's not happening so far, and if it doesn't turn around in the next 4 months (doubtful), then that's going to have to be made up in some way.

As you see here, the CBO projects the deficit to level off for FY 2020 and then rise more from 2021-2023. And that's before we account for these lower corporate taxes.


On the spending side, if you adjust for the timing differences due to June 1 happening on a Saturday this year, it seems mostly in line with a $300 billion increase in spending for FY 2019 (a hidden reason behind our higher GDP growth, by the way).

Even if you figure that the deficit doesn't grow any bigger for the last 4 months of this Fiscal Year, and you adjust for the timing differences in spending, the deficit would jump to over $929 billion for 2019. And if things slow even further, we may head toward $1 trillion even sooner than the CBO thinks.

No, this GOP Tax Scam sure as hell isn't paying for itself. But if you think of it as a method to funnel more money to corporations and Wall Street stock buybacks while leaving crumbs to the average American, it's absolutely doing that.

2 comments:

  1. This nation can simply no longer afford monstrous levels of corporate and one-percent welfare. Far too much money is sheltered from just taxation and sequestered from circulation.

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    Replies
    1. Especially when corporate America relies on infrastructure, research and other tax-funded goods and services more than the average person does. Why aren't they paying what they're taking?

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