On Tuesday, Associated Press reporter Martin Crutsinger celebrated the federal government's large April budget surplus, caused by "a flood of tax payments (which) pushed government receipts to an all-time high." He didn't mention that the tax payments were higher largely because of tax increases passed in 2013. It certainly didn't occur because of an improving economy — because it's not meaningfully improving.
Crutsinger also noted that the April 2015 result of $156.7 billion "was the largest surplus since April 2008," without telling us that the previous surplus was achieved despite (better argument: "because of") the Bush 43 tax cuts.
The AP reporter also failed to note that the 2008 surplus occurred during the recession — at least the one declared by the National Bureau of Economic Research. Actually, though not impressively, the economy grew during the second quarter of 2008, and the arguments that the economy was truly in recession before June or July of 2008 are extraordinarily weak. The economy didn't go into a recession as normal people define it until the third quarter of 2008, which ended up being the first of four consecutive quarters of contraction in gross domestic product.
The April 30, 2015 Daily Treasury Statement, when compared to the same report three years earlier, reveals that tax increases passed in early 2013 largely caused this year's surplus. Non-withheld income and employment tax payments for all of April 2015 totaled $274.616 billion ($219.146B in "Individual Income and Employment Taxes, Not Withheld" plus $55.470B in "Individual Income taxes"). That's a 70 percent increase from the $161.772 billion seen in the April 30, 2012 statement ($139.453B plus $22.319B). 2012 was the last year before the 2013 "fiscal cliff" tax increases began to take effect.
Only small portions of this gigantic $113 billion April 2012-April 2015 increase are due to the end of a temporary 2 percent reduction in Social Security taxes and "surprise" taxes some Obamacare participants had to pay this year. The rest is due to income tax and capital gains tax increases falling on high-income earners.
The amounts to which I referred reflect final payments of taxes due on April 15 when a return is filed, as well as the first of four estimated tax installments, also due on April 15. These overwhelming majority of this money is paid by the self-employed, entrepreneurs and investors, i.e., those who were targeted with the 2013 tax increase.
An early January 2013 CNNMoney.com item explained why collections would spike:
The rich will also get hit by the increase in the tax rate to 39.6% for couples with adjusted gross incomes above $450,000, or single filers above $400,000. Millionaires (they mean "people who report income of $1 million" — Ed.) will pay $122,560 more a year just from this provision alone, according to the Tax Policy Center. And they'll have to pay a 20% levy on capital gains and dividends, up from 15%.
Of course, the reason why Crutsinger failed to mention the 2013 tax increases as the primary cause of the April surplus is because Obama wants additional tax increases. Mentioning those prior increases might make readers wonder why Obama feels like he must go to the tax-increase well again:
President Barack Obama in February unveiled a budget for 2016 - his final full year in office - that seeks authorization from Congress to spend $4 trillion next year. It projects a deficit of $474 billion.
Obama's budget would boost spending on domestic programs such as increased road construction while raising taxes by $2 trillion over the next decade by expanding levies on the wealthy, corporations and smokers.
Obama "needs" tax increases because spending, up by more than 6 percent through the current fiscal year's first seven months, is still out of control.
Of course, no report from Crutsinger would be complete without some historical revisionism:
Before 2013, the U.S. had recorded four straight years of annuals deficits above $1 trillion, reflecting the impact of a severe financial crisis and the worst recession since the Great Depression of the 1930s.
No, Marty. Those four consecuritve $1 trillion-plus deficits were largely the result of Congress's passage of Obama's "stimulus" package in early 2009. That supposedly "temporary, two-year" measure really caused a permanent 20% or so ramp-up in spending levels which have never come down. Instead, as just noted, they keep going up.
Cross-posted at BizzyBlog.com.
