Up Is Down and Red Is Black: Federal Deficit Edition

Here’s the federal deficit by month for the past three years:

As you can see, the deficit through April is bigger than both of the last two years—and since a strong April (tax collection month) masked some of the ongoing weakness, the FY18 year-end deficit is likely to be even worse.

This is common knowledge, so why bother with it? Because the Trump administration, as usual, is lying about it on national TV:

Larry Kudlow, director of the White House’s National Economic Council, said on Fox Business that stronger economic growth was creating enough new tax revenue to bring down the deficit.

….It’s hard to know where Kudlow is getting his numbers. The deficit from January through April was $161 billion, according to Treasury, up from $135 billion at the same point last year. And it will deteriorate further from here, since the Treasury collects a large amount of tax revenue during April when taxes are due for most Americans.

….Commenting specifically on the 2017 tax law, the CBO said it would increase deficits by $1.27 trillion over the next decade, even when including the positive effects of the law on the economy.

….Official White House data suggest deficits are increasing, too. The White House’s Office of Management and Budget says the deficit is rising from $665 billion in 2017 to $832 billion in 2018, and will approach $1 trillion annually in 2019.

Strong April tax collections helped out the deficit picture a bit, but that’s a one-off thing. The rest of the year is still forecast to produce deficits considerably higher than the past two years. So Kudlow’s comment that stronger growth is “throwing up enormous amounts of new tax revenue” sure doesn’t seem to be true so far. Plus, as Dean Baker tirelessly tells us, the theory behind the tax cut was that it would produce a huge boom in investment, but so far the numbers for new capital goods orders just haven’t borne that out.

But those are just facts. Who cares? Kudlow is telling his fans what they want to hear, and he knows they’ll believe it. Certainly no one on Fox Business will bother challenging him. Kudlow has learned Donald Trump’s golden rule mighty fast: “Billy, look, you just tell them and they believe it. That’s it: you just tell them and they believe. They just do.”

UPDATE: The original version of the deficit chart had all the numbers backward. It’s now correct.


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