Tax revenues still crashing

No wonder Barack Obama delayed the release of the budget numbers after the second quarter.  The Associated Press took a look at the revenue side, and it’s disastrous.  Revenue continues to fall far short of expectations, which means that the budget deficits predicted will expand even further:

The recession is starving the government of tax revenue, just as the president and Congress are piling a major expansion of health care and other programs on the nation’s plate and struggling to find money to pay the tab.

The numbers could hardly be more stark: Tax receipts are on pace to drop 18 percent this year, the biggest single-year decline since the Great Depression, while the federal deficit balloons to a record $1.8 trillion.

Other figures in an Associated Press analysis underscore the recession’s impact: Individual income tax receipts are down 22 percent from a year ago. Corporate income taxes are down 57 percent. Social Security tax receipts could drop for only the second time since 1940, and Medicare taxes are on pace to drop for only the third time ever.

The AP also supplies this interesting graphic:

The big takeaway on this graph is the difference between corporate and individual tax revenues at various points on the economic cycle.  Despite the oft-repeated canard that the Bush administration favored big business, the biggest increases in corporate tax revenue in the last generation came during the Reagan and Bush years.  During most of the Clinton administration, individual tax revenues rose faster than corporate tax revenues.  That is remarkably true during the peaks of economic growth in 1984-5 and 2004-7.

With revenues dropping and with businesses struggling, those rosy deficit projections made in the first months of the Obama administration will crash on the rocks of economic reality.  That’s why Obama wanted those numbers hidden during July, when he hoped to get his ObamaCare bill passed.  The AP quotes William Gale at the Tax Policy Center as noting that the lack of recovery would mean that no one’s domestic agenda stands a chance of passing, as the money won’t exist.  Obama knows this and hoped to get it passed before people realized that the money already has disappeared.

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