Please consider the CBO’s Monthly Budget Review, January 2023.
- The federal budget deficit was $459 billion in the first four months of fiscal year 2023, the Congressional Budget Office estimates—$200 billion more than the shortfall recorded during the same period last year.
- Outlays were 9 percent higher and revenues were 3 percent lower from October through January than during the same period in fiscal year 2022.
- Outlays in fiscal year 2023 were reduced by the shifting of certain payments—totaling $63 billion—from October 1, 2022 (the first day of fiscal year 2023), into fiscal year 2022 because October 1 fell on a weekend. If not for those shifts, the deficit would have been $522 billion, double the shortfall during the same period in fiscal year 2022.
Thanks to a bit of fortunate luck, the four-month budget deficit was only $459 billion instead of $522 billion.
For the same four months a year ago, the deficit was $259 billion. $522 billion is a bit more than double the deficit from a year ago.
Well, not to worry, jobs are so strong that tax receipts will surely make up for it. Right?
Spotlight on Receipts
Hmm. How Strange
Jobs are so strong that individual income taxes for the October-January period declined from $825 billion to $782 billion.
That’s a decline in income taxes of 5.2 percent while the economy is allegedly adding jobs like mad.
Meanwhile, Payroll taxes jumped from $469 billion to $504 billion, an increase of 7.5 percent.
This is not just a January payroll fluke of some kind.
US Fiscal Year 2023 Tax Receipts vs 2022 October-December
For the three months ending December payroll taxes also outpaced last year while income taxes lagged.
Q: Does this make any sense?
A: Yes
FICA Limit and Part Time Job Explanation
When people hit the FICA limit, payroll taxes stop. This happens at at increasing rate as the year progresses.
But that’s if someone has a single job for the year. People who hop jobs or work more than one job (think multiple part-time jobs), can easily overpay on FICA.
This discrepancy is yet another indication we are adding masses of part-time jobs while full-time jobs are stagnant.
The deficit is likely worse if government collected too much payroll taxes because over-collections will be refunded.
Unemployment Rate Hits New Low of 3.4 Percent as Jobs and Employment Jump But…
Jobs and employment rose more than expected in January. But because of massive revisions, the BLS cautions all of its household data is full of errors.
Payrolls vs Employment Since May 2022
- Nonfarm Payrolls: +3,031,000
- Employment Level: +1,893,000
- Full Time Employment: -166,000
Hmm. Tax collections seem to match full-time employment numbers while payroll taxes match the multiple part-time jobs idea.
Well, that’s OK. Because people are happy when they have jobs. And there was record job hopping, not all of it at the low end.
One of my readers suggested capital gains but they are not automatically collected. Interest and dividend income would tend to be up.
Regarding payroll taxes, wages rose 5% so FICA should be up 5%, way more than 5% actually since nonfarm payrolls were up about 5 million. For the three months, October-December, Payroll taxes were up 6.6%.
Perhaps this is just preliminary vs final but either way, the deficit is soaring for one reason or another.
Fifty Percent Say They Are Worse Off Than a Year Ago
Hmm. Fifty Percent Say They Are Worse Off Than a Year Ago
How can that be? People are supposed to be happy.
After all, Biden spent half of his State of the Union address telling us how much better off we all are.
For discussion, please see Biden Gives a Well-Delivered SOTU Speech Begging for More Inflation and Tax Hikes
This post originated at MishTalk.Com.
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Mish
There will come a time (unpredictable) when it will be
impossible for the government (federal) to collect enough in taxes to pay all
of its expenses, including interest on the national debt. The Gov’t can of
course borrow an indefinite amount through the Fed. (concealed green backing)
given a few changes in existing law. But that would lead to hyper inflation –
i.e., a collapse in the credit of the Gov’t.
So the easy way, is the way the French did it in 1960.
Simply say that beginning Jan 1 (or any other date), new dollars will be
issued, and that each new dollar is worth 100 old dollars. Then follow that up
with a largely state controlled economy.
In 1960, the French economist / mathematician Jacques Rueff,
during Charles de Gaulle’s presidency, converted the old franc, to a nouveau
franc, equal to 100 of the old franc. However, even with this substitution,
inflation continued to erode the currency’s value, though at lower rates of
change, in comparison to other countries. And this new franc equaled 20 cents
to a U.S. dollar. The old rate was 5.00 to a dollar.
In 1960, the French franc, which was one of the weakest
currencies, overnight, became one of the strongest. Correcting policies
included plans to 1) balance the budget, 2) stabilize the currency, and 3)
eliminate currency controls.
The gold content of the franc increased 100%, & 1)
foreign exchange rates, and 2) France’s internal prices, reflected the
conversion overnight. Internally, prices dropped about 90 per cent, and the
foreign exchange value rose from about 0.238 cents per franc, to about 20.389
cents per franc.
Domestically, France was on a managed paper standard;
externally, on a modified gold bullion standard. With the new policies,
France’s economy strengthened, and the franc became fully convertible @
approximately its gold par, into gold for foreign exchange and into foreign
currencies.
With the introduction of the Euro, the franc in Jan. 1,
1999, was worth less than 1/8 of its Jan. 1, 1960 value.
Perhaps this is just preliminary vs final but either way, the deficit is soaring.
How can that be? People are supposed to be happy.”