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Editorial: Spending, Not Tax Reduction, Fuels Deficits

A February 12th article in the Wall Street Journal reports -- correctly -- that the U.S. budget deficit grew by 25% in the first four months of fiscal year 2020. The deficit, of course, is the differential between the amount the federal government collects and the amount that it spends. Every year that the U.S. accumulates a deficit, our national debt -- which currently exceeds $23 trillion -- becomes larger and larger.

Many in the commentariat ascribe our runaway deficits to the 2017 Tax Cuts and Jobs Act, which reduced the corporate tax rate by 14 points and lowered individual tax rates. However, the article's fine print refutes that sentiment: "Federal outlays rose 10%, to $1.6 trillion, and federal tax receipts grew 6%, to $1.2 trillion—both record highs for the four-month period" (emphasis mine). Later on, the article notes that "corporate tax revenues, which have been rising since last summer, were up nearly 27%..."

So much for the doomsday projections that the government would go bankrupt in the wake of the TCJA!

I digress, but the fact of the matter is that profligate spending -- not tax cuts -- has fueled our deficit crisis. The tax cuts should stay, but spending should go -- and the president's most recent budget proposal would go a long way toward ameliorating the problem.