The party that loves to parade their supposed fiscal conservatism is at it again. Although campaigns for decreased spending are intertwined with the Republican Party, with that same party currently largely in control of the United States government, the Congressional Budget Office has now recorded a significant spike in the federal deficit.
During the first ten months of fiscal year 2018, according to the body, the federal deficit increased by more than 20 percent over what it was in the previous fiscal year’s first ten months.
In the ten month period ending in July 2018, the federal government as led by Donald Trump spent $682 billion more than it had on hand, whereas in the previous year’s same period — the first with Trump in charge — the gap between revenue and spending was $566 billion. Spending went up in the first ten months of FY 2018 by 4 percent, while government revenue increased by only 1 percent.
The deficit jump is attributable to a range of factors, although the CBO cautions against pointing solely to recent legislative changes enacted by the Trump administration. Still, the effects of the changes can’t be escaped.
During the first ten months of FY 2018, collected corporate income taxes fell by a whopping $66 billion, which translates to a 28 percent dive. A significant portion of that drop — although not its entirety — unfolded following a lower corporate tax rate Trump enacted formally going into effect. The standard corporate tax rate dropped from 35 percent to 21 percent in June of this year; Trump initially signed a sweeping tax reform bill into law in late 2017.
The expanded ability to immediately deduct the full value of equipment purchases also contributed to the dip in collected corporate taxes, according to the CBO. Overall, collected corporate taxes have been reported to be near their smallest portion of the national economy in 75 years.
Although collected corporate taxes have dropped significantly, according to the CBO, collected individual income taxes haven’t. In the first ten months of FY 2018, the amounts withheld from worker’s paychecks went up by 2 percent, which translates to an overall jump of $32 billion. Payments of income and payroll taxes made outside of the withholding system rose by $79 billion, or 16 percent.
The implication of these numbers is inescapable. The Trump administration’s fiscal policies are benefiting the upper class while leaving more moderate income people in the dust and trashing the country’s finances in the process.
Trump’s promises to elevate the “forgotten” people of the United States aren’t exactly coming to fruition.
His policies have already been estimated by the White House Office of Management and Budget to be set to push the deficit to $1 trillion in FY 2019, a level putting the deficit alone at 5.1 percent of the nation’s gross domestic product. The CBO had made their own similar estimate in April of this year.
Meanwhile, infamously, Trump maintains that everything is getting along just fine. On Monday, he wrote on Twitter that the “economy has never been better, [and] jobs at best point in history,” despite the issues with the deficit and the mounting threats to American industry and agriculture posed by his trade wars.
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