WASHINGTON (MaceNews) – For deficit hawks, November looked like the perfect example of how the government’s red ink is now spreading faster but although that is expected to happen relatively soon, the acceleration this time is exaggerated.
The official deficit number is $205 billion, which would be a giant leap from last year’s November, 48%. Yet a calendar glitch that accelerated some big monthly payments – Dec. 1 this year fell on a Saturday – the apples-to-apples comparison is a lot more benign, an adjusted $159 billion or just 15% wider.
October and November, the first two months of the government’s fiscal year, turned in an official deficit total of $305 billion, or 51% higher than a year earlier. Again, adjusting for special factors, the two months are a lot more typical, a $270 billion total that’s only 8% above a similarly adjusted fiscal 2018.
There were some developments in November’s outlays and receipts worth noting, like the way the various tariff collections registered for the first time. That category was up to $6 billion from the previous month’s $3 billion, a 99% increase that attracts attention.
The deficit and outlays, at $411 billion, were both records for any November. A military pay raise helped boost the total there 121% though the numbers were relatively small going to $10 billion from $4 billion. Social Security spending rose 10% from a year earlier, due to increased enrollment and a cost of living increase. Veteran Affairs spending jumped 74% for the month.
The same disparity in tax receipts that was seen through most of the previous fiscal year was evident again, with corporate taxes going down a lot – 25% – while individual taxes not so much, slipping just 2%.
For all of the 2018 fiscal year, the deficit at $779 billion, grew to be 3.8% of GDP from fiscal 2017’s 3.5%. The most ominous number generated in fiscal 2018 was the growth in the interest on the national debt, a 20% change that took that category to 1.8% of GDP – the most since 2001.
It’s that total spent on debt service that’s set to impinge on the federal budget to a greater and greater degree as interest rates and the inflation rate go up and the size of the nation’s debt keeps expanding. In 10 years the CBO sees net interest expense up to 3.1% of GDP while GDP growth slows to its long-term average. In January the CBO will come up with a new projection. The old one has next year’s GDP up 2.4% after this year tops 3%.
Congress, far from addressing the projections of a return to trillion-dollar annual deficits in a couple of years took three actions that made the deficit picture a lot worse. The 2017 tax act lowered corporate and individual taxes, the Bipartisan Budget Act of 2018 increased spending as did the Consolidated Appropriations Act of 2018.