by Jim Quinn
Hmm. A critical thinking person might wonder why payroll tax revenue would only be .4% higher YTD when Trump has added SO MANY new jobs and the unemployment rate is SO LOW. If millions of new jobs have been added and those with jobs have gotten 2.9% raises, how could payroll taxes be virtually flat 10 months into the fiscal year? I must be missing something. I’m sure the Trump narrative of the best economy ever is true. Budget deficits always soar during economic boom times. Right? Who needs math and facts. Carry on Trumpeteers.
U.S. budget deficit widens to fifth-highest ever, CBO reports
The numbers: The U.S. budget deficit in August was $211 billion, nearly double the gap during the year-ago month, the Congressional Budget Office estimated late Monday.
Adjusted for shifts in the timing of payments that otherwise would have occurred on a weekend of holiday, the deficit would have grown by 19%. The Treasury Department will report final official numbers on Thursday, and they are usually very similar to the CBO’s.
What happened: Excluding timing shifts, outlays grew 8%, as the net interest on public debt jumped 25%, defense spending jumped 10%, outlays for Social Security grew 5%, and outlays for Medicare benefits rose 7%. There also was an Agriculture Department downward adjustment made in the year-ago August. One boost to government finances was an increase in spectrum payments to the Federal Communications Commission.
Receipts fell by 3%, with corporate taxes dropping by $5 billion, while revenue from income and payroll taxes rose marginally.
The big picture: The budget deficit is widening in a big way. In the first 11 months of the fiscal year, the deficit was $895 billion, which is $222 billion more than the previous year. Outlays have climbed 7% while revenue rose 1%.
Corporate taxes have plummeted by 30% this fiscal year, both because of the lower rate as well as the expanded ability to immediately deduct the full value of equipment purchases. Individual income and payroll taxes have climbed 4%, as increasing wages — mostly, due to more people having jobs — offset a lower withholding rate.
Spending on Social Security and Medicare have climbed 4% as more baby boomers retire, outlays on net interest on the debt have jumped 19% in part due to a higher rate of inflation triggering more payments to inflation-protected securities holders, and defense spending has jumped 6%.