April 15 was a tax day record for the federal government. The Feds set a record for the amount of inflation-adjusted tax revenue for the first half of the fiscal year. The fiscal began in October 2014. In that time, tax revenue has increased to $1,477,901,000 according to the Daily Treasury Statement. The tax revenue was up over 4 percent from last year or $61 billion. Under normal circumstances, this would be a cause for celebration. Well, only the federal government would be celebrating. In fact, $1.2 trillion came from payments withheld from paychecks so I guess we all have ourselves to thank for the tax day record.
Despite the fact that tax revenue is at an all time high, the numbers still do not look good when compared to spending. In the same period spending exceeded tax revenue by $439.5 billion. According to NewsMax Finance, the deficit increased 6.3 percent compared to the same period last year. Mike Englund, chief economist from Action Economics LLC, had grim words when talking about the state of the current economy.
We’re stuck with a level of deficit that’s not sustainable in the longer term.
What does the long term look like, you ask? The Congressional Budget Office determined at this rate the deficit could hit a $1 trillion by 2020. It gets worse there according to the Brookings Instituion analysis.
In fact, CBO estimates that the debt will be well over 100 percent of GDP by 2039 under conservative assumptions about spending and revenue.
With that said, the lawmakers in Washington do not seem too worried about the deficit. What is usually a hot button topic in a time when candidates are announcing their intentions to run for office has all but vanished. Why the change? Both the White House and Congress have policy changes on the table that will require further spending according to Stan Collender of Forbes.
Virtually every policy change that has already or soon will be considered seriously in the House and Senate will make the deficit higher rather than lower.
Collender is not far off on his comments. Today, the Senate overwhelmingly voted through the “doc fix” bill that reduces reimbursements from Medicare to doctors. This one bill alone will add $141 billion to the deficit over the next 10 years according to Peter Grier of the Christian Science Monitor.
All of this can seem even more irritating to a tax payer on tax day. Most likely, few people in the country would get the same leniency if their tax returns showed even a fraction of the deficit the government’s does.
[Photo by CNSNews.com]