No, Tax Cuts Are Not Driving Deficits — It's The Spending, Stupid
S E E D E D C O N T E N T
Red Ink: Are President Trump's massive tax cuts what's driving federal deficits upward. Everyone says so. But, it's not true. It's just a way for lawmakers to distract the public while they crank up the spending machine. Just like the Senate did this week.
Earlier this week, Trump's top economic advisor, Larry Kudlow, gave a talk at the Economic Club of New York in which he said that tax cuts aren't to blame for deficits .
"People are quick to blame deficits on tax cuts, but I don't buy that," he said. "The gap is principally spending too much."
You could almost hear the jaws dropping among the Washington pundits and budget "experts."
How could Kudlow make such a ludicrous claim? Everyone knows that Trump's $1.5 trillion tax cuts are fueling the increase in deficits. What explains why this year's deficit is running higher than last year's?
If anything, Kudlow could have been more emphatic. The deficit gap isn't "principally" because the federal government is spending too much, it's entirely due to spending.
How do we know that?
Each month the Treasury Department releases its tally of federal spending and revenues. The most recent data are through the month of August. Since the federal government starts its fiscal year in October, the latest report includes all but one month of the 2018 fiscal year.
What do the data show?
Through August, the federal deficit topped $898 billion. Over the same period last year the deficit was $674 billion.
So, the deficit is running $224 billion higher this fiscal year compared with last.
But the Treasury data also show that federal revenues through August totaled $2.985 trillion. That's an increase of $19 billion over the previous year.
In other words, despite Trump's massive tax cuts, federal revenues are running higher this year than last.
The problem is that federal spending has climbed even faster. Through August, outlays totaled $3.88 trillion. That's $243 billion more than the prior fiscal year.
So, do the math.
If it weren't for the increase in revenues, the deficit would be higher than it is.
Take a closer look at the revenue side of the equation and you'll see that Trump's tax cuts are, in some cases, more than paying for themselves.
The Treasury data show that while corporate income tax receipts are down, individual income tax revenue is up by $100 billion — a 7% gain — over last year. Payroll taxes are up by $5 billion. Revenues from excise taxes and customs duties are also up.
So, while corporations are paying fewer taxes, they're hiring more workers and paying them more, which is generating additional income and payroll taxes. This is exactly what advocates of the tax cuts predicted would happen.
As Kudlow explained in his remarks, increased growth has "just about paid for two thirds of the total tax cuts."
What about the spending side? Even though Republicans control the White House and Congress, there's been no spending discipline in Washington. Almost every federal agency has seen its budget increase.
Through August, for example, the Department of Agriculture has spent $11 billion more than it did over the same period last year. The Department of Energy, $1 billion more. Homeland Security, $21 billion. Interior, $2 billion. Justice, $3 billion. State, $1 billion. Defense, $37 billion. HHS, $56 billion. Social Security, $69 billion.
Even the Office of Personnel Management has seen its budget climb by almost $3 billion.
The spending splurge continues.
This week, the Senate passed an $854 billion spending bill that boosts the National Institutes of Health budget by 5% and military pay by 2.6%, among other things
That bill passed by a 93-7 margin — proving that the only thing Democrats and Republicans have in common these days is the unquenchable desire to spend more taxpayer money.
In his remarks, Kudlow said that "If you grow rapidly you're going to have lesser deficits. Growth solves a lot of problems."
He's right about that.
But faster economic growth can't solve the deficit problem if Congress continues to spend like there's no tomorrow.
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“Take a closer look at the revenue side of the equation and you'll see that Trump's tax cuts are, in some cases, more than paying for themselves.
The Treasury data show that while corporate income tax receipts are down, individual income tax revenue is up by $100 billion — a 7% gain — over last year. Payroll taxes are up by $5 billion. Revenues from excise taxes and customs duties are also up.
So, while corporations are paying fewer taxes, they're hiring more workers and paying them more, which is generating additional income and payroll taxes. This is exactly what advocates of the tax cuts predicted would happen.
As Kudlow explained in his remarks, increased growthhas "just about paid for two thirds of the total tax cuts."
"Economics is just math" - Bill Clinton. Since the gop reduced revenues and increased spending deficits increased...
The article clearly says that revenues increased after the tax cuts. So revenues up, deficits up = spending way up.
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ECONOMIC RESEARCH
FEDERAL RESERVE BANK OF ST. LOUIS
article is bs. Putin smiles.
Stop spamming my seeds with Russia and Putin comments. Your comments are totally off topic for this seed.
Absolutely not. Your seeds are off topic. Incorrect. Propaganda of the worst kind.
The seeded article on this site is the topic of each seed by each member. Don’t like my seeds, seed your own if you can’t make an on topic counterpoint on mine.
Is EVERYTHING you don't personally agree with "propaganda"?
LMAO!
Safe to say that both parties spend our tax dollars liken drunken sailors.
And it hasn't mattered who was President or which party has controlled Congress.
Why anyone who pays taxes would like to give more to the fiscally stupid defies belief.
Increasing spending with the same tax income increases debt. Increasing spending while at the same time cutting taxes only creates debt faster, so the central claim is a lie. Trump said that he would cut the debt and then did the opposite.
Tax cuts do not create jobs because they do not create significant consumer demand for goods and services. Tax cuts do not pay for themselves, despite the GOP claim.
Sounds like an overspending problem.
At least half the "money tree" is a bit pissed off about it.
The other half just wants to add to their half with imported saplings.
By the republicans. Who are robbing the poor to pay the rich.
And Nancy Pelosi wants “her” crumbs back.
Gosh....who knew that Democrats have never had "The Power" …… EVER !
Republicans have "The Power" now. They had better hurry. They have a few more weeks.
Which party hasn't.
It's grown since day one of this country. This faux outrage is ridicules. We all know the spending will never stop.
What are you wanting to happen ?
MORE TAXING to make up for it ?
If we all know the spending will never stop then it has to be the tax cuts that are driving the increases in the deficit.
Gosh.....Smart Folks still say NAY !
The yay's are still in Sleep Mode.
Don't have to hold your breath too long, relief is on the way.
Tariffs are the tax increase you're going to get to make up for it.
Then Don't buy "Made in China".
President Trump’s proposed tariffs, especially as they relate to China, will be good for Michigan.
True. States and localities most devastated by the outsourcing of companies and jobs elsewhere are the ones with robust growth as companies insource back to states with less regulatory barriers, access to fracked natural gas, right to work laws, and low taxes. All the jobs that Obama said were never coming back are coming back.
You just don't seem to understand.
It doesn't have to say "Made in China" for you to pay the tax.
I'll give you the best example you can verify anywhere you like...go to ANY car dealer, American, Japanese, Korean...find any vehicle with a 1 as the first digit of the VIN (that means built in America) then look at the factory window sticker. It tells you the percentage of American and foreign parts. ...Say hello to the new tax you cheered for.
Ames tools of Ames Iowa...."Made in USA from foreign and domestic parts"
Again, say hello to the tax you cheered for...
a can of anything...soda, beer, vegetables...hello tax
You just handed the very government you want to drown in a bath tub countless dollars and the only one that got hurt was the people cheering and their fellow working stiffs. The offshorers aren't going to lose any sleep, Anhueser Busch will still be swilling around under some bowling shirt, paying the tax and bragging about his extra $250 he kept thanks to Trump beatin' them furriners over the head with tariffs.
Congratulations.
In simple terms, you just confirmed that companies don't pay, even if they are taxed higher.
Have you always been for taxing companies more ?
Thanks !
This too will pass.
Don't know where the hell you got that from.
What is it you don't understand about the tariffs?
The one that pays the tariff tax is US.
You said "Don't buy made in China" and I'm telling you it doesn't have to say any particular country of origin. If you buy something and it says "made in USA from domestic and global or imported parts" you're paying a tariff on that imported part or that it's made here from Canadian aluminum...you're paying the tariff.
Ball mfg. Who makes the cans for pretty much the whole beverage market has already said cans will be increasing as much as $.05 each. Sounds like nothing until you add up how many people come home and grab a beer or soda and then open a few cans of vegetables for dinner.
Wait until you buy clothes! Think about that family with kids going to school...it won't be enough incentive to make Fruit of the Loom come out of S. America...you'll just pay the tariff.
Lumber, something I buy almost weekly has jumped 20%....tariffs.
Enjoy your tax break...he's taking it back from you plus a bunch more and you can't escape it.
You'll thank him for having so much money in the treasury...that you gave him in a zombie trance willingly.
Like a kidney stone.
Here's the second half of the GOP two-step!
After voting to shovel billions of dollars to the already-rich, in the form of "tax reform"
, now de GOP is already telling us not-rich that we must pay to fill the deficit.
Is anyone stupid enough to be taken in again?
Seems all of Rump's supporters are.
Republicans need to take first grade math again, to learn the relationship between addition and subtraction.
And so do Democrats.
BOTH parties got us into debt.
There, apparently, really aren't any fiscal conservatives in either party in D.C.
A Democrat administration handed a $126 billion annual surplus to Republicans in January 2001.
A Republican administration then handed a $1.4 TRILLION annual deficit to Democrats in January 2009.
A Democrat administration then handed a $533 billion annual deficit to Republicans in January 2017.
Republicans have ramped that deficit back up to $833 billion within the first year and a half of their administration.
Based on the facts, it seems far more like Republicans keep ramping up the overspending while Democrats continue to work at cutting the overspending.
I am SURE you can find some people who will swallow the lie that Democrats did not do anything to add to the debt.
You can find SOME people willing to believe almost anything.
I never said Democrats haven't added to the debt. They, just like Republicans, have been a large part of the $21 trillion of overspending. But the reality is Democrats have attempted to curb spending and have cut Republican deficit spending far more than Republicans have ever cut Democrat deficit spending. Bill Clinton cut the $256 billion annual deficit and turned it into a $126 billion annual surplus by the time he left office. President Obama was handed a $1.4 trillion deficit and cut it by 60% before leaving office.
Jimmy Carter (D) increased the debt by 43% in four years.
Ronald Reagan (R) increased the debt by 186% in eight years.
George Bush Sr (R) increased the debt by 54% in four years.
Bill Clinton (D) increased the debt by 32% in eight years.
George W. (R) increased the debt by 101% in eight years
Barack Obama (D) increased the debt by 74% in eight years.
And yet the GOP controlled both houses of Congress at the end of both of those Democrat administration regimes and we all know which branch appropriates spending.
Your right, instead of US debt by president (who doesn't control the purse strings), it should be US debt by legislative branch. What is really telling is the debt explosion under Reagan. The democrats controlled both houses and continued increasing fed spending at Carter's inflation rate despite the objections of Reagan and inflation was nearing zero.
That and congressional democrats held Reagan’s and America winning the Cold War by increasing our military readiness hostage to matching increases in unneeded deficit spending.
But only one party decided that debt mattered when they were out of power, and all of a sudden trillion $ deficits are no big thing as soon as they have it again.
Oh, FFS.
BOTH parties do the same exact thing when they aren't in power and when they are in power.
Do you remember Democrats saying a word about debt and deficits when Obama was President? Of course not, just like you didn't hear the GOP when Bush was President.
At least be honest about it and admit that neither party is solely responsible for our debt.
SMH
All the time, and the Republicans hated to be reminded of it all the time.
Cheney: "Deficits don't matter"
The Republicans coined "deficit spending"
Bullshit on that crap.
Dems didn't say a word about the debt they helped run up while they ran up some of the biggest deficits in history.
Because they don’t care about the debt unless they are using it to avoid spending money on our fine volunteer military and the pay and equipment they need to dominate all possible opponents with the least amount of them lost in any battle or they are opposing tax cuts for we the people.
Hmmm. You weren't one of the people that screamed when Obama even stated very clearly...."We're going to have to spend our way out of this, the national debt and the deficit is going to go up"
And study after study, gao report after gao report stated this to be true.
Now you want to act like you never heard this?
He uncovered the Iraq costs that were hidden and put them on the books. The right actually had the balls to blame him for the increase in dericit for exposing that.
So now it was never discussed....
I didn't hear nary a Democrats COMPLAIN about the debt when they ran it up higher.
Did you?
The war costs were never hidden--that is simply NOT TRUE.
Do you know the difference between off budget and off the books?
Yes, I wasn't ignoring facts.
How the US Public was Defrauded by the Hidden Costs of the Iraq War
Yeah I know the difference...
Do you?
Then you ALSO know that the costs were approved by Congress, and is a matter of PUBLIC RECORD.
Saying they were hidden is simply NOT TRUE.
You can cite articles all night long and it doesn't change the FACT that Congress approved every cent. And it is a matter of public record for anyone willing to look.
Just because some didn't give a damn or were too lazy to do even a scintilla of research doesn't mean they were hidden.
And I bet you know that, too!
Well, we will have to agree to disagree. I brought facts, you brought comments with no backing.
Speaking of....you ever going to follw up on 7?
Agree to disagree.
Our elected officials have put us $20 TRILLION in debt, and some people STILL think that giving them MORE money is smart?!?
WTF?
One of the DUMBEST things I have seen!
So, you think charging Americans a tariff tax of enormous proportion, giving them countless amounts of money is a good thing?
WTF?
Yes, did you ask yourself these questions?
Do you forget how this works or something?
Please enlighten me on how this works...or something....I think you stopped there because you had to reply, but have nothing to reply with.
Exacerbated by tax cuts...
The tax cuts are only exacerbating additional economic growth and increased revenues to the federal government. Spending increases alone exacerbates deficit spending and long term debt.
I've already realized that your comments expose a severe lack of financial acumen.
The latest being this comment the most glaring is saying you wouldn't be paying tariffs on your American assembled Kia.
The most obvious whenyou tried to convince me a money market account would change individual stocks at your demand and with brokerage speed.
A money market has nothing to to with stocks or bonds and doesn’t have to be bought at a brokerage.
A) you're wrong about money markets and I mislabeled your source
Mutual funds is what you claimed to be able to place orders for stocks at brokerage speed...and you're still bs ing that.
So, now you're telling me there won't be a tariff on foreign owned manufacturers shipping their parts for assembly in to the USA?
Oh! Nope , you qualified it and still shot yourself in the foot.
Yep...so true! That leaves you with two...count 'em...two whole import owned cars that qualify..one a Toyota and the other a Honda.
Your Kia doesn't even come close.
And for such a patriot...why are you sending your money to Korea?
I won’t ever again buy a GM or Chrysler product because they took government bailouts. They should have gone through conventional bankruptcy court. So it’s still either a Ford or a domestic made foreign named car. I’ve had great results with Hyundai and Kia and see no reason to change. I still stand by the fact that the mutual funds in my 401k trade just as fast when I execute a trade as a mutual fund in my personal IRA or taxable brokerage account does.
That comment is so wrong and so dishonest it's obvious.
It’s right on as my comments are. Now that we have a new free trade agreement with South Korea I have no fear that my next Hyundai or Kia will be costing me extra.
Then you're a sucker...yet again you haven't read about it....sorry, you lose again.
Just too funny! You brag about patriotism and then send $27,000 of $30,000 to Korea plus pay a tariff tax.
How misinformed do you want to be?
Ford took bailout money but not under the TARP program.
Calling me names doesn’t detract from the fact that you are wrong on every count.
And yet you can't actually show that.
You can say it, but you can't back it up.
You brought up the trade update without reading it and stuck your foot squarely in your mouth yet again.
“There's little question among serious economic thinkers that the tax cuts that went into effect this year have given the economy a major boost. Despite what critics say, it has helped all Americans, not just the rich. It's time to make them permanent.
As early as Friday, we may get a vote on making the tax cuts permanent, rather than "sunsetting" them in 2026, as currently planned.
As we've mentioned more than once, these tax cuts aren't a "giveaway to the rich" or "fat cats." In fact, a new analysis from Congress' Joint Economic Committee (JEC) shows that the benefits of making the cuts permanent would mostly go to low- and middle-income earners.
We're not surprised. This tax cut was designed to encourage people to work more and pocket more of what they earned. It's worked spectacularly well. So-called "Tax Reform 2.0" will cement the benefits of tax cuts in place by making them permanent.”
Completely false. The tax cit has gone almost entirely to the already-rich. The only effect on industry has been record levels of stock buy-backs, to the benefit of the already-rich.
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Of course.
You often accept erroneous information as true, and then repeat it. No surprise.
According to the government source, those making under $200,000 a year get a significant majority of the benefits of the tax cuts.
Amusing how you couldn't defend your bullshit lie about the revised Korean tra de agreement and deflected to another popular lie about the tax breaks.
Is that the NEW Chistian way of dealing with falsehoods?
https://www.google.com/amp/www.latimes.com/politics/la-na-pol-tax-cuts-debt-20180626-story.html%3foutputType=amp
https://www.jct.gov/publications.html?func=download&id=5137&chk=5137&no_html=1 Take a look at change in federal taxes and you will see that those earning between 50,000 and 200,000 will get more of the federal tax cuts total amount than all the categories over 200,000 combined and then we throw in the amount of the cuts that go to those under 50,000 and its a decisive difference in total cuts to the different incomes under 200,000 compared to those over that amount.
I only wish I was this gullible.
Based on your tables provided, the average Joe "may" get up to $3000 if they qualify from their agi.
I will see a minimum of $14,000 tax savings and more once I apply other benefits I can take advantage of that most workers cannot.
Sell that bullshit to others that are as easily swayed.
Look at the total amount going to all people in all of the categories from under 10k to over 1 m and you will see that I’m right. More of the benefits go to those earning 100k to 200k than those in any other category. I’m talking about the amount going collectively to all the people in any category/ bracket not how much a single person might get.
Of course you want to go that way.
Easier to point at the big number and bullshit than to show them the actual "crumbs" you and others have chided about Pelosi.
The fact remains that the majority of the money used to direct the tax cuts to the people goes to those under 200k which means that professional class, middle class and working class get the bigger pieces. Of course there’re many more people in the middle three quintiles of income categories than in the top and bottom ones.
The cuts for businesses favor only the shareholders. Did you forget them?
First, that’s not true. We were talking individual income taxes primarily. Also, cuts to business taxes create additional jobs which we needed and we got bonuses and pay rate increases because of them. Those business tax rate cuts caused many of them to bring capital that had been overseas back home. It’s better to get 21% of a large multi trillion stash held overseas over time than to get 35% of next to nothing. It must really chap our bi coastal elites that the Heartland is getting back those jobs Obama said were gone for good while the unified national caps on the mortgage interest deduction and the unified national state and local deduction cap impact areas with high real estate prices and ridiculous state and local tax rates. Fortunately out here in Ca. When John Cox is elected our new governor, he will cut our state tax rates. Oh, and I almost forgot about the shareholders you mentioned. I’m not sure how it is in France but in America about 60% of all Americans are shareholders, including me.
Sure. You're a shareholder.
So is Warren Buffet.
So you two are exactly the same.....
E.A It seems as there is a problem for you as to workers owning part of the company they work for, Why is that?
Not only that but in addition owning portions of all sorts of companies as part of a taxable investment savings, a health savings account, a 529 or other education savings, child custodial savings, savings for major life goals, and obviously for retirement in 401k, 403b, traditional and Roth IRA’s, etc. and no, I don’t consider my 150k in total most of the above to be comparable to a multi billionaire. But there are close to 100 million of us in America who are investors and who know that what is bad for Buffet is bad for us too.
E.A Yes and the Bi Product is More satisfied work force, better production, Greater Future potential, as owner/workers mean that they will contribute Ideas to improve all facets of the Company etc:
No. Never said that.
E.A Ok So please explain what DID you say?
What did you not understand?
I just ran a comparison of 2017 taxes vs 2018 taxes for two incomes: the U.S. median ($59,000) and $350,000 (top 1%) using a joint filing two person household. The tax savings for the median household is $1,000 while that of the 1%er is $16,000. So someone making 6 times the median income gets 16 times the tax cut. That is the very definition of a regressive tax code.
So funny! They spew this shit and expect one not to be able to do the math.