Budget Deficit

It’s Official: 2018 Federal Deficit Largest Since 2012

The federal government spent $790 billion more than it taxed during fiscal year 2018. The deficit is about to get worse. Much worse.

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Christian Ohde imageBROKER/Newscom

The federal government finished the 2018 fiscal year—it ended on September 30—a whopping $779 billion in the red, the largest annual budget deficit since 2012.

The current fiscal year is likely to see an even larger deficit, potentially in excess of $1 trillion.

The Treasury Department's final data for the 2018 fiscal year, released Monday, shows that the deficit was driven by a combination of higher spending and additional borrowing. The latter was necessary to finance the former, of course, though last year's tax cuts contributed to the widening gap between how much money the federal government takes in and how much it spends.

Tax revenues were flat during 2018 and corporate tax collections fell by $76 billion, Treasury reported.

On it's own, the fact that American companies were able to keep $76 billion out of the government's hands is cause for celebration. Those funds will certainly be put to more productive uses because they won't be funneled to Washington. Trump's corporate tax cuts brought the United States in line with the rest of the world, thereby increasing U.S. competitiveness in a global market.

But tax cuts without spending cuts are a recipe for disaster. While the Treasury's data for fiscal year 2018 looks backwards, the trajectory for the future is the bigger story.

The $779 billion deficit for fiscal year 2018 was up 17 percent from the $666 billion deficit recorded in fiscal year 2017. The data show that the deficit is growing faster than the economy as a whole. In 2017, the federal deficit was equal to 3.5 percent of gross domestic product (GDP), but grew to 3.9 percent of GDP in 2018.

According to the Congressional Budget Office, current policies have the United States on course for a $2 trillion deficit before the end of the next decade.

"It's an unsustainable fiscal course that will lead us to debt overtaking the size of the entire economy in as soon as a decade, and not long after topping all-time highs as a share of the economy not seen since World War II," said Maya MacGuineas, president of the Committee for a Responsible Federal Budget, which advocates for balancing the budget, in a statement.

Driven by old-age entitlements and surfing on a wave of retiring boomers, the federal government will continue to pile on more debt unless serious structural reforms are undertaken. A new analysis from longtime congressional budget aide Brian Riedl, now a senior fellow at the Manhattan Institute, a free market think tank, shows that Social Security and Medicare will run a $100 trillion deficit over the next 30 years. With the country already facing a national debt of more than $20 trillion, massive annual deficits in future years are likely to drive-up the cost of borrowing and cause America's already astronomical debt to grow at a faster pace, he warns.

That this latest increase in the deficit happened during a period when Republicans had full control of the federal government reveals that they were never very serious about balancing the budget. Even now, they refuse to recognize the problem. Democrats, meanwhile, are promising to spend even more on entitlements, if and when they return to power.

Almost nothing about the current state of affairs in Washington suggests that policy makers are prepared to deal with this looming catastrophe. Today's news is a reminder that the reckoning is coming, regardless of whether our elected officials are ready for it.

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99 responses to “It’s Official: 2018 Federal Deficit Largest Since 2012

  1. On [its] own, the fact that American companies were able to keep $76 billion out of the government’s hands is cause for celebration. Those funds will certainly be put to more productive uses because they won’t be funneled to Washington.

    This guy gets it.

    1. That is almost certainly false, unless you consider whatever companies or individuals do with extra cash by definition productive.

      1. The great thing is that productive is in the eye of the beholder.

        1. But more relevant to the discussion if the beholder is an economist.

          1. When companies keep more money, they have more to re-invest in their respective business. It’s almost certain to be more productive than what the politicians would do with it.

            1. For many a re-election is a product worth buying with public funds.

      2. People and companies know more about their immediate needs than some bureaucrat in Washington, so yes whatever they do with the money will be better than how government would squander it.

        1. Even if they put the money in a big pile and set fire to it, as long as it didn’t manage to burn down several homes and other businesses across the US, it would still be better than what the government was going to do.

          Even if they set fire to the money with the intent of burning down other homes and businesses, they’d do it more cost effectively than the US government.

          1. Utterly insane dogmatism. Just as I said.

            1. Dogmatism is believing that wise men in government have godlike powers that enable them to know the needs of people and businesses better than the people themselves.

              1. That would be, but of course I don’t believe that and nobody else does either. It’s not godlike powers, it’s simply power. Governments can mobilize resources on the largest of scales, just as you are perfectly fine admitting when they’re killing Nazis.

                1. “Governments can mobilize resources on the largest of scales”

                  Yes, governments such as… the nazis.

                2. So, wait — you think military procurement and organization are models of fiscal efficiency? More so than private companies that must earn profits or go out of business? Do you also think that, given this great efficiency of the U.S. military, we should be taking even more money from taxpayers and spending it on the military (because it’s so efficient)? If so, you’re a very odd sort of progressive.

      3. Taxed money that goes to the government is distributed to those with the most political power.
        Untaxed money that productive enterprises get to keep stays with productive enterprises.

        Guess which one is better for economic growth in the long run?

        1. What about unproductive enterprises? Like, I dunno, Trump?

          But then we get into the nonsense of claiming that putting one’s gilded name on a building is productive because that’s what the market wanted, yadda yadda.

          1. If the market didn’t want it, or at the very least had an aversion to it, the business would fail.

            Jesus Christ Past Me, you are really bad at understanding how markets work.

            1. Maybe Tony believes that governments that spend more are intrinsically better than governments that spend less. Some folks believe really weird things. Then, he goes to the spending during wartime. Does he think the world would not be a better place without war? Imagine the pain and suffering that could have been avoided had we stayed out of Vietnam.

      4. Your statement, like every single fucking one of your statements, is presumptuous.

  2. Obama’s fault.

    1. To some degree yes. He and the various Congress’ who were in power during his administration is responsible for about half of that nationla debt. I know it is all racist to hold the Chocolate Jesus at fault for anything. But, sometimes reality is just a big old mean racist.

      1. But, sometimes reality is just a big old mean racist.

        That’s the most racist thing you ever said, Johnno.

      2. On this issue, there’s tens of trillions of dollars of blame to hand out.

        1. Yes there is. There seems to be no stopping them from spending. At this point, worrying about it is like worrying about volcanos or hurricanes. It is just not something that is going to change and it seems to be a waste of time to try.

          1. Yes. And in the meantime, we need to elect Republicans because they understand fiscal stuff something something something

            1. Then vote Democrat. Thjat seemed to have helped a lot back in 06 and 08. God you are a tiresome half wit.

              1. Well if government spending is akin to a natural disaster, like a volcano or hurricane, then what is the *fiscal* reason to vote Republican?

            2. Let’s be honest… Voting for Republicans is a lot like voting for getting herpes… But voting for Democrats is more like voting for cancer.

              They both suck, but one sucks A LOT LESS.

              It is unfortunate we cannot vote for bacon, or vodka, or an ice cream sandwich… Which are all good things! But it is what it is.

          2. It’s not a waste of time, but it’s sad that our single greatest problem gets virtually no coverage. Not even much lip service.

  3. It would be nice if we could cut spending. You know, for the children.

    1. Hey Pro, how have you been? Doing all right? How’s everything? It’s always nice to see you comment!

      1. All good, thanks for asking. In “remission” as much as that word can apply to glioblastoma. Three years plus.

        1. Great news!

          1. Yeah, welcome back Pro.

          2. Good to “see” you, P L!

        2. Awesome! That is great to hear. Every year counts. I hear from people in the know that there are some breakthroughs on the horizon. I think the next 5-10 years are gonna see great strides in cancer treatment.

          1. I actually have a GBM friend who is in the Duke polio trial, who is doing well. I think the immunological path is really hopeful. If I have recurrence, I’ll likely do something like that.

        3. Great! We need sane people here…and in DC.

        4. Holy fuck, PL! Glad you are doing ok!

  4. OK, what happens if we amend the Constitution to partially repudiate existing national debt and provide that, in future, peacetime debt will require voter approval?

    Will it plunge the world into a new economic Dark Age? I’m curious, because I’m not ruling out any scenario.

    1. Why an amendment? I can’t think of anything preventing just repudiating it right now, or intentionally inducing hyperinflation until it’s down to some reasonable value.

      Sure it’ll fuck up economies all over, but then no one can blame fucked up economies on the trade wars, and that’s all that really matters.

      1. The debt is constitutionally guaranteed

  5. Yehbutsee3dchess

    See, here’s the deal. Trump is a master negotiator and will use this yuuuge deficit to scare Congress into cutting spending.

    You betcha.

    1. Oh come now. Leave Trump out of this. It’s not his fault. It’s Congress’ fault. It’s Obama’s fault. It’s the voters’ fault for demanding all the spending. It’s the Democrats’ fault for forcing Congress to approve of all the spending. It’s SCOTUS’ fault for approving of the entitlement state as constitutional. But it’s not Trump’s fault. Geez can’t you be fair to the man just once? Stop picking on the man. He’s doing the best he can. He loves America and has the country’s best interests at heart. You can’t fault him for his good intentions, you see.

      1. Trump is a dictator who sets the budget. Congress has nothing to do with it. I know you are stupid Jeff, but you are not the cute kind of stupid like Eric is.

        1. Trump is a dictator who sets the budget.

          Only in LC1789’s wet dreams.

          1. Boy, you non-libertarians are really butt hurt that Trump is doing extremely well.

            You’re even mistating what I say about Congress controlling the purse strings.

      2. If only this wasn’t sarcasm. Trump has little to do with the debt increase. Personal tax revenue increased, but Corp taxes decreased THIS year. As corps adjust the revenue should increase as the money flows home.

  6. But tax cuts without spending cuts are a recipe for disaster

    Its cute Eric thinks that increased tax rates would actually raise more money or that that extra money wouldn’t have been spent rather than going to reduce the deficit. As I get older, I find stupid people kind of cute.

    1. He never mentioned raising taxes. Maybe stupid people look cute because you’re in that club now?

      1. I mean, the paragraph right before repudiates that:

        Those funds will certainly be put to more productive uses because they won’t be funneled to Washington.

        You’ve got to stretch real hard to take it so wrong.

      2. “increased taxes” doesn’t mean raising taxes youhalf wit. Lets walk you through this again and see if you can understand it. Eric says that tax cuts without spending cuts is a disaster. I then say it is cute he thinks raising taxes would not just be spent. Think hard about that. My point is that even if they hadn’t cut taxes, the deficit would be just as high because the resulting higher tax rates would have likely not raised more money and even if they had, Congress would have certainly just spent more than they did.

        I don’t know how else to explain it to you. You seem to be profoundly stupid. I doubt there is any fixing it.;

        1. Income tax revenues increased, as you suggest. It was the Corp tax rev that shrank. In future years this revenue will increase, however, as money comes home.

        2. Its cute Eric thinks that increased tax rates would actually raise more money

          “increased taxes” doesn’t mean raising taxes youhalf wit.

    2. Well stop voting for Republicans if you don’t like that behavior.

      1. Naw, America will keep voting for Republicans AND get congress to cut spending.

        Democrats wont cut spending and they hate America, so voting for them is pointless

  7. The good news is, when Democrats see this deficit, they’ll definitely move to cut spending.

    1. Yes, that’s right, the gig is up! I’m so relieved.

      1. I seem to remember the Demcorats caring deeply about the deficit in 2006 and then suddenly forgeting all about it once they controlled Congress.

        1. At least they were bothering to lie about it then.

          1. They have gone so insane they don’t even pretend anymore.

        2. You mean when the entire global economy was melting down?

          It’s like you know you’re a disingenuous shit. You’d be better if you were simply stupid.

          1. ^Inserts red herring, calls someone else disingenuous.

            1. The Democrats eploded the deficit the moment they took over Congress in 2007. The economy didn’t “melt down” until the fall of 2008. But Tony is a victiously stupid person and doesn’t really do that whole facts and logic thing.

              1. Surely you can refer specifically to the legislation the 110th congress passed (and George W. Bush signed) that exploded the deficit oh so much.

              2. The Democrats eploded the deficit the moment they took over Congress in 2007. The economy didn’t “melt down” until the fall of 2008.

                If the economy is good when your team is in power, your team gets the credit.

                If the economy is good when the other team is in power, your team gets the credit for setting the stage.

                If the economy is poor when your team is in power, the other team set the stage.

                If the economy is poor when the other team is in power, it’s their fault.

            2. It’s entirely relevant. There’s a reason deficit spending increased by a large amount in the first years of Obama’s terms. Recessions are when it’s supposed to go up. And it saved the global economy more or less. Republicans do pro-cyclical nonsense in an evil attempt to bankrupt the country and make someone else cut programs instead of taking the heat on themselves. They are in every which way deliberately the more fiscally irresponsible party. Democrats pay for the shit they buy, except when Republicans won’t let them.

              1. Democrats pay for the shit they buy, except when Republicans won’t let them.

                No. Democrats want Republicans to pay for the shit Democrats buy. Republicans want to make sure kids pay for the stuff Republicans buy.

              2. “It’s entirely relevant. There’s a reason deficit spending increased by a large amount in the first years of Obama’s terms. Recessions are when it’s supposed to go up. And it saved the global economy more or less.”

                Another Keynesian Kool-Aid drinker,

                Obama’s porkulous spending didn’t help the economy one iota. Nor could it ever. Government spending amounts to nothing more than forced transfer payments. And those can never net to any value greater than zero.

                1. How does an exchange become automatically unproductive just because it’s forced?

                  1. Right out of the gate, Tony, a forced exchange is automatically less productive than a voluntary exchange because it costs more to complete. You do understand the concept that forcible compliance requires that more resources are brought to bear in order to achieve compliance.

                  2. Force is precisely the automatic reason it’s zero sum – at best.

                    It can also be sub zero.

                    It can never exceed zero.

              3. “”There’s a reason deficit spending increased by a large amount in the first years of Obama’s terms. Recessions are when it’s supposed to go up. And it saved the global economy more or less.”‘

                So now you are justifying that which you just slammed.

                Bipolar?

          2. Good! Use your aggressive feelings, Tony. Let the hate flow through you.

        3. I seem to remember the Republicans caring deeply about the deficit in 2010 and then suddenly forgetting all about it once they controlled Congress.

  8. Deficits don’t hurt anyone.
    Just ask the Soviet Union.

  9. shows that the deficit was driven by a combination of higher spending and additional borrowing. The latter was necessary to finance the former,

    No. The Federal government does not ever need to borrow it’s own currency. It can create an infinite amount of money at anytime for any purpose. Whether it should create the money and fund whatever the money will be spent on is a different issue.

    The “debt” is just a bunch of savings accounts that generate interest for the owners of the accounts. They get paid a little something to keep the money out of the economy as a means of inflation control.

    It’s the same with taxes. At the Federal level your taxes fund nothing. That money is just soaked out of the economy. Taxes (and fees and fines) are there as a means of inflation control, as a means of encouraging or discouraging certain behaviors, and to create demand for people to actually accumulate the currency as if you don’t have it you can’t pay taxes and if you can’t (or won’t) pay taxes the government will cause you to suffer.

    Even if taxes dropped to zero and the government stopped selling Treasuries the government could still spend.

    The government doesn’t need a pot of money to spend out of. They contact wherever the account is they want to fund and say “mark up this account by $X” The institution so contacted is never going to say no.

    1. All of that is strictly speaking true. And it should also be noted that the arguments Reason uses to claim that the trade deficit doesn’t matter apply equally well to the budget deficit.

    2. The institution where the account is isn’t ever going to say “You know, we don’t think you’re good for it. You massive nuclear-armed super-power with the largest economy on Earth, we’ve seen the news and we think you’re broke. You have no way of making good on this money. So no, we’re not going to credit this or any other account with any amount of money.”

      You people are focusing on the wrong thing. You can eliminate the ‘debt” and reduce taxes but won’t you be surprised when that has no effect on spending?

      The government is not going to go away in our lifetimes, it can always spend and always will spend. So focusing on deficits and “debt” is a waste of time. Focus on getting rid of programs, like the drug war, and reducing and eliminating regulations on businesses, and propping up dictatorships and so forth.

      1. The government is not going to go away in our lifetimes, it can always spend and always will spend. So focusing on deficits and “debt” is a waste of time. Focus on getting rid of programs, like the drug war, and reducing and eliminating regulations on businesses, and propping up dictatorships and so forth.

        That is exactly right.

      2. The government will just inflate the debt away. Keep printing money so the value of the dollars with which they pay the debt back are worth a fraction of the dollars they borrowed.

  10. Citizens! In all times, two political systems have been in existence, and each may be maintained by good reasons. According to one of them, Government ought to do much, but then it ought to take much. According to the other, this two-fold activity ought to be little felt. We have to choose between these two systems. But as regards the third system, which partakes of both the others, and which consists in exacting everything from Government, without giving it anything, it is chimerical, absurd, childish, contradictory, and dangerous. Those who parade it, for the sake of the pleasure of accusing all governments of weakness, and thus exposing them to your attacks, are only flattering and deceiving you, while they are deceiving themselves.

    Bastiat

    1. So Bastiat not a Trump fan.

      1. He just had TDS. Probably a prog too.

  11. But tax cuts without spending cuts are a recipe for disaster.

    Spending increases that are significantly bigger than the revenue increases following the tax cuts also seem to be a problem.

  12. “It’s an unsustainable fiscal course”

    Then why do we hear this utterance year after year, decade after decade?

    1. Yup, it’s been going on since at least the 40s.

      Politician deal in crises and the deficit and the “debt” are evergreens.

    2. Because the baby boom wasn’t retirement age then, and we started with very little debt

    3. “This time is different. We’ve figured out how to break the laws of economics now!”

  13. Good stuff. Let’s take this baby out for a spin.

  14. The federal government spent $790 billion more than it taxed during fiscal year 2018

    That is getting close to the Bushpig’s record deficit of $1.2 trillion in 08/09.

  15. They cut taxes and they left cutting spending for later. Because everyone wants lower taxes, but no one likes spending cuts…

    I could have told them that, but no one ever asks my opinion.

    So now let’s get ready for the Mother of All Train Wrecks.

  16. But tax cuts without spending cuts are a recipe for disaster.

    Raising taxes enough to cover the spending would also be a recipe for disaster.

    Conclusion: too much government spending is a recipe for disaster. QED

  17. Don’t worry everybody, we’ll get this all paid down NO PROBLEM… When our currency gets inflated by double digit percentages for 5-10 years in a row… Which is probably inevitable if we don’t change course. Mostly, we’ll just be screwing foreign debt holders who are stupid enough to buy US government debt. I can’t for the life of me understand why ANYBODY would ever buy a US government bond at the rates they pay, combined with the shit fiscal position we’re in. You’d be better off buying toilet paper, because at least it keeps up with inflation!

  18. Yes, the spending remains off the charts and out of control, but Reason sure would have a lot more credibility if it weren’t for their ludicrous claim that Block Yomomma bore no responsibility whatsoever for the $9 trillion in debt accumulated during his tenure, while at the same time they demanded that the republicans just shut up and give him everything he wanted.

  19. Spending by 2008 was up $327B over 2006. One session of Democrat-controlled Congress…spending up 11%.

    The temporary stimulus, 2009’s AARA, created a $535B year-over-year increase, and a deficit of $1.412T on spending of $3.517T.

    That “temporary stimulus” is now baked in. That spending never went away. Or rather, even as temporary programs ended, that money was spent on other things…god forbid we spend less, so a dollar that was freed up from temproary programs was immediately retargetted to other spending.

    Every year since then has seen spending spending of $3.5T or more. By 2011, the spending was up to $3.603T and in 2017 spending was $3.981T, although 2013 saw a slight decrease in spending level to 3.454T.

  20. “…was up 17 percent…”

    “Federal Deficit Explodes”

    pick one

  21. An under-reported and unnoticed report was issued recently by the Office of Management and Budget which is required to from time to time review and update the U.S. federal budget. The report titled the “Mid-Session Review” paints a far bleaker forecast of the deficit going forward than originally predicted.

    James Grant and Jim Chanos recently participated in a talk at the New York Historical Society, both men make it perfectly clear they see what is being cast upon us is a giant fraud. We should be dubious of those making promises this will end well. The article below delves into the bleak deficit numbers now being predicted.

    http://brucewilds.blogspot.com…..-cast.html

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