A campaign pitch for an incumbent member of Congress you will not hear: You are getting $4 worth of government for every $3 you pay in taxes and fees, and the other buck is piled on as debt for your kids and grand kids to pay! You should vote me back in!
The Treasury Department’s own news release Monday, flagged by The Republican Standard, attempted the spin that this is not the fault of President Donald Trump and the halcyon days coming thanks to his wise policies will soon begin to reverse this. Hang with us! Reading through the actual reports on income and spending, however, it is impossible to build up any hope.
This is another one of those cases where I indulged my own morbid curiosity and am now sharing the results. I do not spend much time with the federal reports, compared to the state spreadsheets, but from time to time everybody should dig into the depressing details. Stop reading my observations and dive into the actual reports – I won’t be offended.
The federal budget is broken into two big categories: on budget and off budget. This in no way correlates to the state’s system of splitting things into general fund and non-general fund. The federal off-budget component is mainly Social Security pension and disability payments. Other situations where specific taxes or fees pay for specific programs, including Medicare and the Post Office, are lumped into the on-budget categories.
When Social Security was collecting healthy receipts exceeding its annual outlays, it was producing surpluses. These off-budget surpluses provided a nice way to hide the true size of the deficit in the on-budget category. Well, for federal fiscal year 2018 (which ended September 30) that was a very small fig leaf indeed – about $6 billion, compared to $49 billion the year before. Will the current fiscal year 2019 produce the first cash flow deficit for Social Security? Will that wake up anybody?
When you back out that small off-budget surplus, the on-budget deficit was $785 billion, just under 25 percent of the $3.26 trillion in on-budget spending. That on-budget deficit grew $70 billion, almost ten percent in a single year. You can choose whether to blame higher spending or tax cuts. Machts nichts.
The big federal tax cut went into effect three months into this past fiscal year and was in play for nine months, but individual income tax receipts grew 6 percent for that year. Perhaps it’s too soon to judge the impact until people file next year. But the impact of the corporate income tax changes did show up last year, with a $92 billion (31 percent) drop in CIT revenue. There was a healthy boost in customs duties and that will really take off for 2019. (Is that the plan? Make tariffs the main source of federal income for the first time since President Polk?)
The federal officials quoted in the official release make much of slight decreases in a couple of social benefit programs, such as SNAP (a.k.a. food stamps), but reviewing the spending sheets really reveals the depth and breadth of income-based transfer programs, plus the political genius of sprinkling them through so many difference parts of the budget.
SNAP and other food programs are in the Agriculture Department ($91 billion). Federal student aid ($46 billion) is in Education. Medicaid ($389 billion), Temporary Assistance for Needy Families ($21 billion) and Children’s Health Insurance Program ($17 billion) are in Health and Human Services.
Housing gets its own programs for the economically challenged ($48 billion). The Earned Income Tax Credit ($59 billion) is buried under the Treasury Department and the Social Security Administration handles the Supplemental Security Income payments of cash ($55 billion) that are not part of the regular disability coverage, which is (of course) off budget. I’m sure I missed some. I think the Veteran’s Administration still makes some pension payments based on poverty (maybe not.)
A single Department of Federal Need-Based Assistance which puts all those programs in one basket would approach $800 billion and would be larger than defense spending or the payments on the debt ($521 billion). Which of course is why no politician of either party will ever, ever do that and make things that clear.
What is the choice on November 6? There really is no reason to differentiate the parties on this issue any more, or to believe any candidate promising something else. A bipartisan deal on Fiscal Year 2019 explodes spending and the projected deficit this year approaches $1 trillion. We are in this condition in a strong economy and looking at the deficits run coming out of the last recession indicates the deficits in the next one (inevitable) will approach $2 trillion.