The federal budget deficit expanded by nearly 42 percent in the first quarter of this year’s budget. From October through December, the deficit surged by $318.9 billion dollars. In the previous year, the deficit was “just” $225 billion. Projections currently suggest that the deficit for the total year will reach nearly $900 billion, up from $779 billion last year.
Last year’s deficit, by the way, was the largest since 2012, when the United States was still recovering from the Great Recession. At the time, the government was supporting several large stimulus measures. A high jobless rate and weak corporate earnings also impacted tax revenues.
In 2007, the federal government brought in $2.57 trillion. By 2009, revenues had fallen to $2.1 trillion. In 2012, the federal government brought in $2.45 trillion, still below 2007 revenues. Since 2015, the federal government has been pulling in over $3 trillion per year.
Tax revenue also expanded through the first three months, but grew by just .2 percent. This does mark the highest revenues ever for the federal government. The comparatively high revenues are likely due to the strength of the American economy and low unemployment rate.
Still, the recent round of tax cuts are almost certainly restraining tax revenues. The tax cuts do appear to have bolstered the economy and especially stock markets. Experts warn, however, that the effects of the tax cuts will likely start to wear off this year. Much of the money corporations received through cuts was invested in stock buybacks rather than business expansion.
Already, the deficit and the state of the American economy are turning into hot topics ahead of the 2020 presidential race. President Trump has been quick to note that the stock market has reached historical highs under his administration. Critics say that millions of Americans are being left behind.
