The federal government is on pace to take in record revenue in absolute dollars this year, yet the deficit will increase from last year. That has become the story of our budget, yet neither party has gotten the message that spending is the problem.
According to the Treasury Department, the government took in roughly $28.7 billion more in revenue for the first quarter of this year than in the same period in FY 2017. However, the deficit still increased by $15 billion relative to this time last year because we spent $44 billion more in the first quarter of this year than the first quarter of last year. Yes, for those keeping score, that was the final quarter of Obama’s final year.
In total, for the first quarter of the fiscal year, the federal government has taken in $769.5 billion in revenue and expended $994.5 billion, for a deficit of roughly $225 billion. That is dangerously close to a trillion-dollar deficit, if extrapolated over the entire year. The last time we had trillion-dollar deficits was during the Great Recession. Now the economy is booming. But spending still increased by 4.6 percent, more than double the rate of inflation.
Keep in mind, spending already increased last year by $130 billion despite revenue increasing by $47 billion.
This is GOP governance, folks.
Sadly, there is no relief in sight. Everything being discussed for the remainder of the year revolves around more spending and growing government.
After likely passing another short-term stopgap funding bill at the end of the week, both parties are negotiating a longer-term deal to break the “sequester” budget caps for the next two years. The only point of contention is how much non-defense spending will increase in return for the request for more defense spending.
There is a rough sketch of a deal on the table to increase non-defense discretionary spending by $95 billion and defense spending by $152 billion. Neither side is trying to first address the waste in the Pentagon or properly use the defense authorization bill to understand the scope of our defense needs before randomly selecting appropriation numbers to massively increase spending. Much of the increased funding is coming from the Overseas Contingency Operations (OCO) account, with no understanding of exactly what we are doing in each overseas theater and why. That is why we have authorization bills before appropriations, yet the National Defense Authorization Act (NDAA) has become a rubber stamp with no broader foreign policy and military vision.
Consider the following: The tax cut bill “cost” $1.5 trillion, and it was a pretty big deal, as we witnessed Democrats finally discovering deficits because of it. Yet the verdict is now in about the result of the tax cut, and we are witnessing job creation and wage hikes beyond what even the biggest optimists predicted. The stock market is roaring. This enormous economic growth will bring in more revenue.
Now consider the fact that both parties will blithely increase spending by $250 billion over two years without much fanfare. That is $1.25 trillion over 10 years — almost as large as the tax cut, except this is dead-weight spending that will not grow our economy nor hand people back more of their wealth.
Then there is the plan to reauthorize the Children’s Health Insurance Program (CHIP), even though they are retaining the Obamacare subsidies for those at or below 400 percent of the poverty line, rendering this program superfluous. There is no need for this program, and even Obamacare drafters intended it to lapse in 2015.
Then there is the plan for more disaster funding filled with agriculture bailout programs and pet projects.
Then there is the plan to bring back earmarks.
Trump originally promised in his budget blueprint to cut $1.5 trillion in non-defense spending over 10 years. Not only would this have saved taxpayer funds, it would also have taken a hatchet to harmful government bureaucracies that shouldn’t exist in the first place and that take even larger sums of money out of the economy in the form of lower wages and higher cost of living. Now that budget plan seems to be a thing of the past.
One thing is clear: There is no fiscally conservative party in Washington. And we will all pay for it down the road, because no amount of revenue can feed this leviathan.
Daniel Horowitz is a senior editor of Conservative Review. Follow him on Twitter @RMConservative.