Politicians routinely make fanciful claims about the federal budget. Unfortunately, most Americans do not know when they are being lied to. Can you discern the truth? Find out by taking the following quiz.
1 — True or false? Federal government revenues are stagnant. Therefore, the Biden-Harris administration is justified in repeatedly calling for trillions of dollars in tax increases.
error. Last year (FY2024), federal government revenue increased by 43.8% compared to 2020. Over the past four years, the federal government has collected a total of $18.3 trillion in revenue. — another $2.2 trillion This exceeded the expectations of the Congressional Budget Office (CBO) when President Biden took office.
The federal government has ample revenue. It’s not an income issue, it’s an expense issue.
2 — Is it true or false? President Joe Biden led the charge to reduce the budget deficit.
error. The federal government collected $2.2 trillion more in revenue from FY21 to FY24 than CBO expected, but federal spending rose $4.7 trillion more than expected over the same period compared to the baseline of current law that Biden inherited. The cumulative budget deficit worsened by $2.5 trillion. This represents a 48.2% increase in the cumulative deficit over the four years.
Last year’s budget deficit was literally twice the size In line with CBO’s FY24 forecasts at the start of the Biden-Harris administration Appointment. (Related: James Carter: Kamala Harris’ tax hikes will turn money into straw)
3 — True or false? The federal government spent an exorbitant $166,730 per second in FY24.
error. in February 2021CBO estimated that the federal government will spend $5.258 trillion in fiscal year 2024. This equates to $166,730 per second. But after enactment of President Biden’s spending initiatives, the federal government actually spent 6,752 billion dollars — $214,105 per second last year.
The federal government literally spends money faster than the speed of light (186,282 miles per second).
4 — True or false? The Tax Cuts and Jobs Act of 2017 (TCJA) eliminated the corporate income tax. As a result, companies are not paying their “fair share.”
error. In June 2017, prior to enactment of the TCJA, CBO announced that corporate tax revenues totaled $405 billion in FY24. actually, Corporate tax revenue increased by 26% Revenues reached a record $529 billion in fiscal year 24. This was a 30.6% increase over the FY24 revenue that CBO had projected before the enactment of the TCJA.
Additionally, businesses pay no taxes. Corporations collect and pay taxes, but ultimately the tax burden is borne by shareholders, employees, and consumers.
5 — True or false? Federal taxes are based on current law and are expected to increase unless Section 119 is enacted.th Congress and the next president are blocking the increase.
truth. Key elements of the TCJA are set to expire, including lower personal income tax rates and key business provisions, which would roughly double the federal tax burden. 5 trillion dollars Comparison with current policy baseline over 10 years.
According to non-partisan tax foundation“Making the TCJA permanent would increase long-term GDP by 1.1 percent and increase employment by 913,000 full-time equivalents…”
With so much at stake for next year, Rep. Jason Smith, chairman of the House Ways and Means Committee, correctly calls 2025 “super bowlof tax policy.” The permanence of the TCJA, combined with additional growth-promoting tax reforms, would make the 119th Congress could further boost long-term economic growth in the United States. Accelerating economic growth is essential to America’s finances and national well-being.
6 — True or false? Annual net interest expense on the federal debt is exploding.
truth. Over the past three years, the federal government’s net interest spending has grown at an average annual rate of 39%. Net interest expense totaled $950 billion in FY24. That’s more than the federal government spends on national defense! (Related: James Carter: How Three False Beliefs Threaten America’s Future)
To make matters worse, in February 2021, CBO estimated that net interest for FY24 would total $284 billion. President Joe Biden’s policies, combined with high inflation and soaring interest rates, led to net interest spending more than tripling last year compared to FY24 projections when Biden and Harris took office. Ta.
7 — True or false? The federal budget is in a debt spiral.
truth. The explosion in interest spending added to the already large federal budget deficit. As a result, the federal debt has ballooned and interest expenses have increased.
So the federal government is now in the unenviable position of being stuck in a debt spiral. According to the CBO Director Philip Swagel“It’s a slow spiral, but it’s still a spiral of increasing debt and increasing debt repayments. This situation is unsustainable.”
As the old saying goes, “How can you tell if a politician is lying?” The answer is “his lips are moving.” But sometimes the truth comes out.
The truth is that the federal government spends too much and borrows too much. The situation is becoming increasingly unsustainable, and if nothing is done to curb these excesses, the United States will eventually face a fiscal crisis of unimaginable proportions.
After two years in the White House as deputy director of the National Economic Council, James Carter served as assistant secretary of the treasury and deputy secretary of labor under President George W. Bush.
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