Charlottesville
May 13, 2022
I think I’m pretty much up to speed on current events but I missed this news from earlier this week. We all should be celebrating shouldn’t we? A budget surplus? How awesome is that?!
The WSJ published the following editorial today from its Editorial Board. I take issue with their conclusion. This surplus is a step in the right direction. The only way to reduce our debt is to run budget surpluses. I would have preferred that the WSJ encourage Congress and the White House to work together to build on this data point. Instead they chose to blast Biden for what all presidents do — take credit for good news whether they caused it or not.
I have been doing some research on the 2017 tax cut. Four and a half years in, we should have some idea whether it is have the intended effect and whether it is paying for itself. More on that later.
I suspect folks disagree with me on this point — it seems to me that we both need to reduce spending and increase revenue so that we run surpluses to bring down the debt. To what level I don’t know. But down would be a good start.
From the WSJ:
Tax revenue is booming, with individual tax receipts rising 68%.
President Biden has been taking credit for the falling federal deficit, but what he won’t tell you are the real reasons. Allow us to fill in his blanks. Spending has fallen sharply this fiscal year, but the reason isn’t Congressional restraint. The explanation is “the net result of large decreases in pandemic-related spending offset by smaller increases in other spending,” as the Congressional Budget Office puts it in its April budget summary.
Democrats wanted to make many pandemic programs permanent, but Build Back Better failed to pass the Senate. Thank you, Joe Manchin and Kyrsten Sinema.
The other reason, which no one in Washington wants to report, is that tax revenue is booming. Federal receipts through April rose an astonishing $843 billion from a year earlier, or 39%, to nearly $3 trillion. There’s still a third of the fiscal year to go.
Individual income taxes rose $698 billion, or 68%, thanks to economic growth and inflation that boosts nominal incomes. The feds are getting more than their “fair share.” Corporate income-tax revenue continued its torrid pace, rising $38 billion, or 21%. CBO concedes that revenue for fiscal 2022 is likely to exceed its forecast from last summer by between $400 billion and $500 billion.
All of this adds up to boom times in the Beltway, but Mr. Biden still wants a record tax increase. Isn’t a 39% raise enough?