December 2018 Treasury Deficit

Now that the government shutdown is over, the bureaucrats at the Treasury Department are back to work producing statistics on the nation’s budget.  While the December 2018 figure is a tad late, the counting is done, and we now know the budget was once again in the red.  The shortfall was $13.5 billion.  On a year-to-date basis, the red ink totals $318.9 billion, an increase of 41.8 percent versus the same period a year ago.

Government outlays fell $84.741 billion to $325.123 billion.  So far this fiscal year, defense spending is up 8.0 percent, accelerating from a 5.0 percent uptick this time last year.  Health insurance is up 7.3 percent and Medicare is up 20.6 percent.  Finally, interest on debt is up 18.6 percent fiscal year-to-date and is now equal to over half the total of defense spending. 

Meanwhile, receipts (mostly taxes) gained $106.623 billion to $312.584 billion.  Individual income taxes are still the largest component of receipts, comprising nearly half of the government’s income.  Compared to the same period last year, this source of revenue is down 3.5 percent so far this fiscal year.  Corporate taxes are lower as well, falling to $53.1 billion from $64.2 billion.

Debates on budget deficits continue.  Some are worried about ballooning deficits to be paid in the future by generations still to come.  Others argue there is nothing worth fretting over since America is the world’s dominant economic and military power with the distinct advantage of having the world’s reserve currency.  There is no telling when this debate gets settled.  If the latter are correct, the answer could be never, but if the former are right, it will feel like too soon whenever it is proven.