February 2018 Federal Budget

Federal tax revenues fell, and outlays rose during February 2018 according to the latest from the Treasury Department.  Receipts dropped to $156 billion from $361 billion in January; this dramatic drop was expected since the first month of the year is normally a stronger period for tax collection. However, the year-over-year comparison was negative as well, dropping from $172 billion.  Outlays rose 1.9 percent versus a year ago to $371 billion.

Our nation is five months into its fiscal year, and the deficit has definitely grown.  Your government’s shortfall is 11.5 percent greater than in the same period a year ago.  Currently, 2018’s red ink is equal to $391 billion. 

Our nation’s two largest categories of revenue are higher year-to-date; taxes paid by individuals are up 6.1 percent, Social Security and other payroll taxes increased 2.7 percent.  These increases are likely due to America’s economic growth.  However, corporate income taxes have declined 14.9 percent.

Every major category of spending rose on a year-to-date basis.  Defense outlays grew 4.9 percent to $255 billion.  Social Security payouts increased to $403 billion, rising 4.1 percent.  Medicare tacked on another 2.7 percent, reaching $224 billion.  Rising the fastest on a percentage basis, interest on debt jumped 14.7 percent to $133 billion.  Finally, the “other” category rose 3.4 percent to $641 billion.

America’s budget deficit is the subject of much debate.  Some worry it will ultimately lead to unsustainable debt levels as deficits require more borrowing.  Others are more sanguine, suggesting American economic exceptionalism affords our nation more latitude when going into hock since we are the preeminent economy and military force.  How this shakes out is really anybody’s guess, but this mystery probably won’t be solved anytime soon.