A previous blog
outlined how the national deficit is running at nearly a trillion dollars ($1T) a year now, which is unheard of in a boom economy. The Office of Budget estimates this deficit will continue at least until 2021, and will increase over the $1T level in 2022, and that's assuming growth continues at above 3% annually. As mentioned, this is the first time that the current national debt (total) will exceed 5% of GDP since WW2 and the all-out commitment to that war, and the total financial meltdown in the fall of 2008. This time we are running at a boom economy with maximum tax receipts (albeit at the lower rates), so this time it's an entirely different situation.
But I repeat myself. Consider these additional facts. Federal revenue fell in 2008 by 0.4% at the same time federal spending increased by 4.4%, compared with the previous fiscal year. Even math minors can see how we are approaching the 5% deficit referred to in paragraph one at this point. In 2018, the budget gap was $883 Billion compared with an already high $680 Million in 2017. So if you don't totally understand the claim that the growth from the tax cut would pay for the lower tax rates, go to the front of the line for your blue ribbon.
Two of the largest components of the spending increases in 2018 were the increased interest costs due to larger deficits along with sharp increases in military spending. Hey, being the greatest country in the world isn't cheap! (MAGA)
To be fair, growth has picked up, with strong consumer spending (2.6 million new jobs in 2018) and business investment (up 3.1% in 2018), but not enough to make up for the drop in corporate tax collection. However this sharp uptick will not continue as the stimulus effects fade. In fiscal 2019, tax receipts are roughly flat compared with 2018 due to the reduced business tax rates, and outlays (spending) have increased by a whopping 10%. The fiscal deficit was $319 Billion in the first quarter alone, or $1.2 Billion on an annualized basis.
To the credit of our administration, or to the detriment, depending on how you look at it, a significant part of the revenues this year have come from tariffs! Yes, those tariffs imposed. This is not "free" to us citizens since they add costs onto steel, solar panels, cars, and lumber. While we all want trade to be more fair and less unfair, getting into trade wars is a tricky business. This protective wrapping around the country along with immigrant phobia doesn't sound like traditional Republican orthodoxy for sure, but the current occupant in the White House certainly is different. So far, he has managed to pretty well take over the party. If you don't agree, just try to run for office in a Republican primary if Mr. Trump endorses your opponent. His loyal base rules. The country is in his hands. Until the next election.
And off we go.
Enjoy life, it's the only one we will get.
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