Tax Take Keeps Growing—But Good Luck Catching Up With Government Spending
The U.S. government has proven itself perfectly capable of outspending the healthiest revenue stream it has ever seen.
The federal government took in $1,477,901,000,000 in federal tax deposits between October 1, 2014 and April 14 of this year—the fiscal year to date. That number comes courtesy of the U.S. government's Daily Treasury Statement. The good folks at CNSNews.com did the math so that I don't have to and found that this is "an all-time record for the amount of inflation-adjusted tax revenue brought into the federal Treasury from the beginning of the fiscal year through the April 15 tax-filing deadline."
Yay, team!
But here's the thing: That record tax take is still not enough to catch up with growing federal expenditures, or the soaring national debt.
That same Daily Treasury Statement revealed a total public debt outstanding of $18,152,014,000,000. That's $18 trillion give or take. Unlike tax deposits, it's not a record number. It's close enough though, since federal debt hit $18 trillion for the first time last November. Don't expect it to drop much. The Congressional Budget Office (CBO) anticipates expenditures to outstrip revenue, requiring more borrowing, into the foreseeable future. "[B]udget deficits are projected to rise steadily and, by 2039, to push federal debt held by the public up to a percentage of GDP seen only once before in U.S. history (just after World War II)," warned the CBO last summer.
Yes, the CBO makes projections, so the future isn't fixed in stone. Numbers go up and down a bit, but the number crunchers consistently predict a mismatch between money coming in and money going out.
Last month, a new report noted, "Under current law, CBO estimates the deficit will total 2.7 percent of GDP in 2015, drop to roughly 2.4 percent for the following three years, and then begin to rise. By 2025, debt held by the public is projected to reach 77 percent of GDP."
This is not a good thing. As the CBO goes on to warn in language that has become boilerplate:
Such high and rising debt would have serious negative consequences for the nation: When interest rates returned to more typical, higher levels, federal spending on interest payments would increase substantially. Moreover, because federal borrowing reduces national saving over time, the nation's capital stock would ultimately be smaller and productivity and total wages would be lower than they would be if the debt was smaller. In addition, lawmakers would have less flexibility than otherwise to use tax and spending policies to respond to unexpected challenges. Finally, a large debt increases the risk of a fiscal crisis, during which investors would lose so much confidence in the government's ability to manage its budget that the government would be unable to borrow at affordable rates.
So, record revenue is nice for the folks at the Treasury. But healthy revenue streams are only part of the equation; you also have to look at what's going out. And the United States federal government has proven itself perfectly capable of outspending the healthiest revenue stream it has ever seen.
