Trump tax cuts and spending to result in $2 Trillion budget deficit by 2028

Debt doubling from 2017 to $1.3 TRILLION... thanks trump!

 

So reckless.

If the economy crashes, we are so ****ed.

 

Seriously. If another great recession were to hit in the near future the government would likely be running $2 trillion+ deficits.

On that note, where is the Tea Party these days? I thought they were against big government and runaway spending? It couldn't possibly be that they were just a bunch of Republican hacks pretending to be a grass roots movement when there was a Democratic president in office...

 

Just keeps getting bigger and bigger...

 

Receipts totaled $252.7 billion last month, up 7 percent from a year earlier, while outlays climbed 18 percent to $353.2 billion, according to the department.

https://www.fiscal.treasury.gov/fsreports/rpt/mthTreasStmt/mts1018.pdf

There's the full statement for anyone who wants to read more than a headline.

 

What insight is the statement providing that headline isn't already providing? Are you arguing it isn't a 100 billion dollar deficit?

 

Did anything indicate I was?

There is more data to look at than just the headline.

 

The national debt is money owed to ourselves in our own currency. Folks need to understand money. WE are not on the gold standard. The debt is only important in the very very long term if it is completely spent on stupid things like giving **** to the wealthy who invest it overseas or create **** to blow up i.e weapons which does not lead to productive activity so we eventually have inflation. Check out modern monetary theory. http://neweconomicperspectives.org/modern-monetary-theory-primer.html

 

One more thing the wealthy Repubs and corporate Dems basically know this, but they like to play the debt worry/ austerity game (only when trying to suppress spending for health, education, social security and Medicare game to keep the 99% down.

 

Spending was up about $55 billion

• Medicare spending up about $28.5 billion (part B spending up about $12.5 billion...don't know if that includes part C also, part A about $9.5 billion, part D about $6.5 billion) - up about 84% (if I calculated right)

*Note* Total spending for Medicare and Medicaid services was up about $27.8 billion which means Medicaid spending was actually down slightly.

• VA spending was up about $8.5 billion - up about 104%
• Social Security spending up about $8 billion - up about 10%
• Interest on the debt was up about $7 billion - up about 30%
• Defense spending up about $6 billion - up about 11%
• Military retirement fund spending up about $4.5 billion - up about 6%

Receipts were up about $17 billion

• Excise taxes up about $7.2 billion - up about 97%
• Corporate taxes up about $4.3 billion - up about 114%
• Customs duties up about $2.3 billion - up about 71%

The trade related taxes are buoying receipts and I expect corporate income taxes to be significantly higher than last year. Personal income taxes were only up very slightly this month.

Interest spending is continuing it's trend upward and could be up by $80-$100 billion this year. This is starting to become a significant issue with the deficits, inflation pressures, and rising rates.

 

The corporate tax projection on what you posted is 225 billion. Corporate tax receipts was 300 billion last year. So I think corporate taxes are going to fall 33%. Which means we borrow more money and interest payments become higher.

SS+Medicare+ Medicaid+ Defense+ interest = government receipts. Basically the entire government would need to be shut down to pay for those 5 items to have a balanced budget.

The Tax cut was like taking a bunch of steroids and not really thinking about the future.

 

I don't see how the tax cut was like taking a bunch of steroids. Personal income tax receipts increased and corporate taxes decreased by an almost equal amount. I don't think corporations went on massive spending sprees with their tax savings. Also, corp tax revs were down to $205 billion last year.

 

robbie,
1. Is a tiny bit misleading to keep talking just about total tax revenue (grew a tiny amount), when the economy itself and total corporate income grew by a much greater amount (over a 6% rate of growth, roughly)?
2. I say that with an eye on spending. And it's interesting, in that context, that interest on the debt was the single largest source of new spending (roughly $62B increase, nearly as much as soc. sec. and DoD combined).

 

I wish I had all my budget and tax posts in one thread. I had another good link that broke down the corporate tax changes and how drastically they cut the corporate rates. I think it’s really interesting when you look at the numbers beyond the headline numbers to see where things are happening.

Anyhow, to the first point I’m not trying to be misleading. I don’t have an agenda. I’m just not seeing that narrative. Kind of like I don’t see the narrative that Melo is a scapegoat. He didn’t want to accept a role behind no name rookie Gary Clark so he’s leaving not being scapegoated. Totally unrelated to the discussion but my point is that it’s just my point of view based on what I see and not how I want things to be. Also I generally have more depth behind what I’m thinking and don’t post all of it because it’s just too time consuming and doesn’t really ever change anyone’s point of view on here.

I’d love to see more data and discussion about this. I am curious what has been done with all the cash repatriated since it was a titanic amount.

Also, I didn’t think I was just talking about total tax revs when I mentioned the other tax revenue sources a couple posts above when I was talking about the October budget statement. My point with that post you quoted was to show the the change in tax revs and spending from 2017 to 2018 and to show that corp tax revs were significantly lower than $300 billion.

And lastly the picture for interest spending doesn’t look very good at all to me. I don’t want to sound the red alert alarm yet but the rate at which it is increasing and the relaxed attitude towards the deficits are setting up for a very big problem in a couple years. We get to a spiraling interest problem rapidly so I guess we will see what happens but it looks almost unavoidable considering everything. Combine this with increasing Medicare and Social Security costs and you end up with a bit of a crunch. I think we have about 2 years on this current path before it blows up.

 

So this sort of thing is my day job is about, i don't usually comment, but the general discourse surrounding the current revenue and tax issues, are a crock of ****, it took me years to unlearn the assumptions that underpin university education in economics, because basically they've gotten everything wrong for 2 decades, and they continue to propagate the same bad ideas, and this is particularly bad in governmental bodies where there's no price paid for being wrong.

Ok, so here's one, it's a big one mind you, when tax rates are changed, tax revenue correlates, this is an incorrect assumption, and makes everything that follows wrong, allow me to illustrate

https://fred.stlouisfed.org/series/FYFRGDA188S

Notice how the revenues haven't really changed? they flutter around based on the economy, but as a trend, it's pretty strong, the evidence is literally staring them in the face, but they'll continue to tell you that tax rates and revenues correlate absolutely. The tax rates over this period? 70%, 50%, 28%, 31%, 35%, 39.6%, and now 37%, It's most likely due to behavioural changes, the nature of the US capital markets, and the tax regime (deductions are more influential than the rate). Those things haven't really changed this time, if anything, because the tax burden falls almost entirely on the top group, globalisation has made it easier for them to shift money out for lower tax areas, which creates a slight downward shift in the trend line. The assumptions work fine until you get to the top 10%, but since they pay almost all the taxes, that's why it all breaks.

Second part of this is the tax for high income earners hasn't really changed, it's been restructured, but the nature of this restructure is important. Yes, the face value changed for them, from 39.6% to 37%, but they capped SALT to $10,000, ultimately that deduction cap is going to eat the tax savings of the whole country of rich people, and be paid by the rich people on a handful of states, CA, NY, and NJ the most. It was a boon for the middle class, it wasn't a boon for the rich, they benefit on the estate tax and corporate taxes though (but corporate tax is just a whole lot of globalised money movement, and then there's the repatriation tax, the lack of has been a gripe of mine for years). Since the SALT deduction doesn't adjust for inflation, the gap between the deduction removal and the 2.6% will only widen in favour of the deduction removal, and since deductions tend to be more influential, the gap will likely be wider than estimates (which are around +$50b by 2025), those states could reduce their local taxes....but i don't believe that at all, hah.

https://thumbor.forbes.com/thumbor/...7/SALT-Deductions-by-state-e1532640257393.jpg

But there's a caveat here too, and it's the way the money is accounted for in federal receipts, that doesn't include deductions because it's a straight snap shot of revenue, not an accounting balance sheet (it's why you'll sometimes see an odd budget surplus in a given month here or there), The final wash up of the budget will include it all, but that won't be finalised for some time.

Interest rates though, is a result from inflation, which is itself a product of the wage growth, so the alternative is go back to the last decade of no wage growth, no inflation, insecure employment, and the social issues that have arisen from it. Pick your poison? Eat the interest or keep wages suppressed, this is the debt trap the country now faces, either owe more money to the wealthy who own the debt via interest payments, or they make higher profits due to suppressed wages....fun times (They claimed they controlled inflation with monetary policy, but for years after they flooded the global economy with money supply, and could never reverse the trend, until wage rises happened for the first time in a decade, and lo and behold, inflation!).

Of course there's the 2nd part as you showed a couple posts back, the boomers are retiring, and old people are refusing to die, the budget consequence of that is obvious, and has been known for decades but every successive congress/president simply kicked that can down the road to whichever poor schmuck inherited it, also doesn't help that old people have the highest voting rate, can't screw them over.

There is a second alternative, and that's the obliteration of the fed's powers, that's certainly not a now thing, but i personally expect central banks to start getting shelved around 2030, this technocratic pursuit of inflation has been the sledgehammer that has crippled the middle/working class for years, and its been squeezing people into desperation, which leads to populism.

 

Sucker born every minute...

 

What's crazy is WHAT WE ARE BORROWING FOR. If we were borrowing at the still super low interests rates for things that would lead to greater productivity e.g. bullet trains solar energy, even education --or maybe just saving then world. (I know Repubs/ libertarians don't believe in climate change) it would be worthwhile. Instead we are increasing borrowing just to give moregovernment debt i.e treasury bonds to the 1%.

The propaganda is strong for the REpubs/libertarians so just an example. Should a person borrow on their credit card a 20%? It depends. If it is just to eat out at expensive restaurants or buy another kitchen gadget they will not use and just put up for garage sale in a few years, hell no. Now let's say that s/.he is capped out on student loans and would have to drop out of their last semester of RN school if they don't keep borrowing at 20%. Hell yes.