Press Yawns as Federal Finances Deteriorate, Indicating a Slow Economy

July 13th, 2016 6:04 PM

It's a safe prediction that there will be renewed interest in the federal government's perilous financial situation if the country elects someone not named Hillary Clinton as its next president in November.

One reason why this prediction is so safe is how little interest there has been in even covering today's news about Uncle Sam's troubling June surplus of only $6.3 billion. The Associated Press, via Martin Crutsinger, devoted three whole paragraphs to the news during the first two hours after its release before lengthening it with the usual static analysis pablum about the presidential candidates' tax plans. A 4:30 p.m. Eastern Time Google News search on "deficit," which encouraged users to "Explore in Depth (9 more articles)," returned only three additional items when I followed that suggestion.

June's $6.3 billion surplus came during a month when tax collections are usually quite high because of estimated payments made by corporations, sole proprietors and partnerships. Its result is down steeply from the $50.5 billion surplus seen in June 2015.

The government's year-to-date deficit through the first nine months of its 2016 fiscal year, at $401 billion, is almost 27 percent higher than the $313 billion reported at the same time last year. Year-to-date outlays are up by $109 billion, which is bad enough. The bigger problem is that collections have only increased by $11 billion, and are showing signs of significantly slowing down.

As seen below, the Congressional Budget Office's baseline projection in March assumed that full-year fiscal 2016 collections, aka "Revenues," at $3.364 trillion, would come in $114 billion higher than fiscal 2015:


Through nine months, at $2.469 trillion, actual year-to-date collections are only $23 billion higher than the $2.446 seen in June 2015. There's almost no chance that CBO's collections prediction will materialize. So far, individual income tax collections are only up by 0.4 percent. Corporate income tax collections are down by $32 billion. The only major increase in collections has been in payroll taxes (i.e., Social Security and Medicare), which have increased by over $30 billion.

Though disgraceful overspending obviously continues to be a huge problem during the Obama era, this year's spending increase is on track to be significantly lower than the $209 billion CBO predicted in March ($3.897 trillion minus $3.688 trillion).

Readers should also note that the national debt continues to grow faster than the deficits Uncle Sam reports. Despite the reported $6 billion June surplus, debt held by the public grew by over $46 billion, while the total national debt increased by $116 billion to $19.382 trillion.

But the big story going unreported is that federal collections are slowing down because economic growth has been slowing down.

In 2000, Mark Helprin predicted in the Wall Street Journal that "If George W. Bush becomes president, the armies of the homeless, hundreds of thousands strong, will once again be used to illustrate the opposition’s arguments about welfare, the economy and taxation." Sure enough, press interest in homelessness, which, despite the relatively good economy of the late-1990s was a problem the media underplayed during the Bill Clinton era, increased during Bush 43's terms in office.

During the Obama era, with a Democrat in the White House, the press has again quite predictably lost most of its interest in homelessness, especially at the national level, even thoough the problem has become more acute in many areas in Calfornia, the state of Washington, New York City and elsewhere. Now the press has also lost interest in covering the federal government's deteriorating financial situation — an interest guaranteed to be revived if someone other than Mrs. Clinton becomes this nation's next president.

Cross-posted at