United States Posted Largest-Ever Monthly Budget Deficit in February

March 22, 2019 by Dan McCue
Kevin Hassett, chairman of the White House’s Council of Economic Advisers, said in 2016 the Trump team intended to lay out some of its plans for reducing the $782 billion federal deficit before the congressional midterm elections on Nov. 6. (Olivier Douliery/Abaca Press/TNS)

The federal government posted its biggest monthly budget deficit ever in February as a sharp decline in corporate revenue coincided with increased spending, the Treasury Department announced Friday.

The budget gap widened to $234 billion in February, compared with a fiscal gap of $215.2 billion a year earlier.

That surpasses the old February deficit record of $232 billion set in 2012, the last time the deficit for the year topped $1 trillion.

February’s shortfall helped push the deficit for the first five months of the government’s fiscal year to $544.2 billion, up almost 40 percent from the same period the previous year, the department said.

Tax receipts declined for corporations in the five-month period, while revenue from customs duties almost doubled, boosted by income from tariffs imposed by the Trump administration.

The 2017 Republican tax cut reduced the corporate tax rate from 35 percent to 21 percent.

As a result, corporations have so far this fiscal year paid $59.2 billion, compared to $73.5 billion in 2018, when the tax law was only partially in effect for some corporations.

In 2017, the year before the law was enacted, corporations had paid $87.4 billion by this point in the fiscal year.

The situation is not bound to change anytime soon.

In its new budget sent to Congress last week, the administration is projecting that this year’s deficit will total $1.09 trillion and will remain above $1 trillion for the next four years.

“A $234 billion budget deficit is an eye-opening number,” said Robert Bixby, executive director of the Concord Coalition, a bipartisan advocacy group that promotes seeking an end to deficit spending and a balanced federal budget. “Clearly, we’re not growing our way out of a total mismatch between spending and revenues.”

However, Bixby said, “What really surprises me is that anybody is surprised by this.”

The Concord Coalition has been advocating for budgetary responsibility since 1992. According to Bixby, the group argues for a “sustainable fiscal policy.”

“We don’t say we need a balanced federal budget every year or that we need big tax increases to close the deficit. But what we do say is that you should try to have revenues match expenditures and that you just can’t allow spending to grow on auto pilot,” he said.

“What today’s Treasury report illustrates is part of a pattern of a long-term increase in debt relative to GDP,” Bixby continued. “What’s scary is that it is happening now in a fairly strong economy.

“It makes you wonder what will happen if the economy slows down or if, as has been said, we really are on the verge of a recession,” he said.

Michael A. Peterson, CEO of the Peter G. Peterson Foundation, a foundation dedicated to increasing public awareness of the nation’s key fiscal challenges, said that unfortunately, the Treasury’s report suggests that “we will have to get used to deficits growing every year unless we start managing our debt problem.”

“This is the structural deficit at work, increasing our borrowing and compounding interest every year,” Peterson said. “It’s the definition of unsustainable.

“More important than any one month’s deficit increase is the clear upward trend of the record national debt, and the staggering interest costs that go with it,” he continued. “Interest costs are now the fastest growing ‘program’ in the budget, will exceed what we spend on national defense in five years and will total $7 trillion over the next ten years. This is not the way to build the future that Americans want or deserve.”

Also concerned about upward spiraling deficits is Federal Reserve Chairman Jerome Powell who warned Wednesday that the government’s finances are unsustainable.

“I do think that deficits matter and do think it’s not really controversial to say our debt can’t grow faster than our economy indefinitely — and that’s what it’s doing right now,” Powell said at a press conference following the central bank’s monetary policy decision. “I’d like to see a greater focus on that over time.”

In related financial news on Friday, President Donald Trump said Friday that he will nominate Stephen Moore, a conservative economic analyst and frequent critic of the Federal Reserve, to fill a vacancy on the Fed’s seven-member board.

Moore served as an adviser to Trump during the 2016 campaign and helped draft Trump’s tax cut plan.

In The News

Health

Voting

Economy

Kansas Receives Gold Shovel Award
Economy
Kansas Receives Gold Shovel Award
June 11, 2021
by Brock Blasdell

The state of Kansas has been awarded Area Development Magazine’s prestigious Gold Shovel award in recognition of its successful year attracting high-value business investment. Over $6 billion in new business dollars and more than 26 thousand jobs have been created within the state of Kansas since... Read More

Wedding Boom is On in US as Vendors Scramble to Keep Up
Business
Wedding Boom is On in US as Vendors Scramble to Keep Up

NEW YORK (AP) — Couples in the U.S. are racing to the altar in a vaccination-era wedding boom that has venues and other vendors in high demand. With restrictions on large gatherings loosening, wedding planners and others who make the magic happen said they've started pushing... Read More

US Jobs Edging Back to Normalcy as Pandemic Recedes
Employment
US Jobs Edging Back to Normalcy as Pandemic Recedes
June 4, 2021
by Victoria Turner

The U.S. employment situation seems to be edging closer to normalcy with the recent Bureau of Labor Statistics report showing a 1.7% decline in teleworking employees. This indicates more people are returning to the office, but it remains uncertain whether it is fully in-person or a... Read More

Guzman Touts SBA's Progress, but More Capital Still Needed
Business
Guzman Touts SBA's Progress, but More Capital Still Needed
June 1, 2021
by Victoria Turner

Recently, Rep. Steve Womack, R-Ark., visited family-owned oil and gas company Pruitt when the small business told the congressman that it would not have survived the pandemic had it not been for the Paycheck Protection Program funding it received. “PPP supported local jobs and that company,”... Read More

US Jobless Claims Fall to 406,000, a New Pandemic Low
Employment
US Jobless Claims Fall to 406,000, a New Pandemic Low

WASHINGTON (AP) — The number of Americans seeking unemployment benefits dropped last week to 406,000, a new pandemic low and more evidence that the job market is strengthening as the virus wanes and economy further reopens. Thursday's report from the Labor Department showed that applications declined... Read More

CEOs Say Regulatory Reform Key to Climate, Infrastructure Plan Success
Regulation
CEOs Say Regulatory Reform Key to Climate, Infrastructure Plan Success
May 19, 2021
by TWN Staff

If the White House and Democrats in Congress truly want to achieve President Joe Biden's economic goals, they should not overlook the need to modernize and improve the nation's cumbersome regulatory system, according to a new report from The Business Roundtable, a trade association of company... Read More

News From The Well
scroll top