Surprise, we had a $113B surplus in April. This year’s deficit is $240B less at this time than it was at the same time last year. Thankfully, the first benefit of this is that the debt ceiling and the next no-holds-barred Thunderdome death match between POTUS and the GOP Congress is delayed, a tad.
And yes, some of this is expected because of April tax income:
There is usually a surplus in April because that is when the government receives an influx of annual tax payments. But tax receipts this April are 28 percent higher than in April 2012. And the surplus is nearly twice as high.
Again, the good side of this is more revenue coming in (about 16% more), so the increase in tax rates and apparently more commerce happening out there, is salutary. On the other side, the sequester and cuts in government spending have been counter productive. If the Congress had passed any of the WH proposals for jobs, infrastructure, etc. we might be in even better shape with income, offsetting the cost of such stimulus.
Our still too high 7.5% unemployment would be around 6.5% if not for all the public employee jobs shed by states. A true Keynesian response to the downturn would have, at the very least, dictated more aid to the states so those jobs would have been retained. That’s the difference between this recession and every other recession in our lifetimes – the GOP austerity obsession in the states.
Spending has declined 1 percent in the first seven months of the budget year. Defense spending has fallen $18 billion, or 5 percent. Spending on unemployment benefits has dropped $14 billion, or 21 percent. The Treasury Department has also recalculated the cost of its bank bailout program, as more of those funds have been repaid. That’s lowered the cost of that program by $50 billion this year.
Things still ain’t good for most of us. The working class is still treading water in unpredictable seas. But it could be worse too. Maybe the new normal is less boom and bust, more slow and steady wins the race.