Today’s Chicago Tribune published a short article containing some good news and some bad news for the economy.

Here are some excerpts:

NEWS BRIEFING
Staff and news services
U.S. budget deficit has jumped 77% so far in this fiscal year

WASHINGTON — The federal government recorded a budget surplus in January.

Federal budget surpluses always are bad news for the economy (the private sector). A federal surplus is an economic deficit.Image result for good news bad news

The federal government, being Monetarily Sovereign, produces all the dollars it needs, simply by the process of paying creditors.

The economy does not have this ability, so it suffers from federal surpluses.

But so far this budget year, the total deficit is 77 percent higher than the same period a year ago.

The Treasury Department said Tuesday that the deficit for the first four months of this budget year, which began Oct. 1, totaled $310.3 billion. That’s up from a deficit of $175.7 billion in the same period a year ago. The surplus in January was $8.7 billion.

The higher deficit reflected greater spending in areas such as Social Security, defense and interest payments on the national debt.

As we said, the January surplus was bad news, because the federal government removed $8.7 billion from the private sector, i.e. from the economy.

But the increased deficit so far this year is good news, as the government added 310.3 billion growth dollars to the private sector.

Meanwhile, the government collected lower taxes from individuals and corporations, reflecting the impact of the $1.5 trillion tax cut President Donald Trump pushed through Congress in 2017.

The GOP $1.5 trillion tax cut was good news for the economy as a whole, though of course, most of the immediate benefits went  to the “haves” and very little to the “have-nots.”

The additional dollars eventually will spread through the economy, but the Gap between the richer and poorer will grow, which is a strong negative.

Individual income taxes withheld from paychecks total $818 billion for the October-January period, down 3 percent from the same period last year. Corporate income taxes total $73 billion over the four-month period, down 23 percent.

Both of the above are good news.

Revenue, however, is up in tariffs — border taxes collected on imports — which totaled $25 billion in the October-January period, up 91 percent from the same period a year ago.

This reflects the higher tariffs the Trump administration has imposed on China and other nations in various trade disputes.

The border taxes are not paid by the countries where the goods are being produced but rather by the U.S. companies importing the products into the United States.

Those cost increases are generally passed on to American consumers.

That is terrible news. The issue is not just that the “cost increases are generally passed on to American consumers” but rather that the tariff’s cost increases always are passed on to the American economy.

Ultimately, American consumers and American businesses pay for all tariffs. This has the same effect as an overall tax increase.

The Trump administration rightfully boasts that its tax cuts will stimulate economic growth and jobs growth, but at the same time, it institutes tariffs that will do the opposite.

Further, the ones hurt most will be the middle and lower income groups, as they are more subject to the costs of tariffs and less rewarded by the tax cuts.

Rodger Malcolm Mitchell
Monetary Sovereignty
Twitter: @rodgermitchell
Search #monetarysovereigntyFacebook: Rodger Malcolm Mitchell

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The most important problems in economics involve the excessive income/wealth/power Gaps between the richer and the poorer.

Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.

Implementation of The Ten Steps To Prosperity can narrow the Gaps:

Ten Steps To Prosperity:

1. Eliminate FICA

2. Federally funded medicare — parts a, b & d, plus long-term care — for everyone

3. Provide a monthly economic bonus to every man, woman and child in America (similar to social security for all)

4. Free education (including post-grad) for everyone

5. Salary for attending school

6. Eliminate federal taxes on business

7. Increase the standard income tax deduction, annually. 

8. Tax the very rich (the “.1%) more, with higher progressive tax rates on all forms of income.

9. Federal ownership of all banks

10. Increase federal spending on the myriad initiatives that benefit America’s 99.9% 

The Ten Steps will grow the economy, and narrow the income/wealth/power Gap between the rich and you.

MONETARY SOVEREIGNTY