Conversation regarding the exploding budget deficit generally focuses on the major spending increase generated by the $787 billion fiscal stimulus package.
But there's another side to the deficit — plunging tax receipts.
Federal tax revenue plummeted 34 percent in April from a year ago, to $138 billion, according to an American Institute for Economic Research report cited by USA Today. That's the largest decline in 28 years.
The recession, of course, fueled that move. As income levels drop for workers and companies, so do their tax payments. Income tax revenue cratered 44 percent in April from a year ago.
The dismal numbers "illustrate how severe the recession has been," Kevin Lynch, author of the study, tells USA Today.
John Lonski, chief economist for Moody's Investors Service, points out in the paper that, "It's one of the drivers of the ongoing expansion of the federal budget deficit."
The Congressional Budget Office forecasts a $1.7 trillion budget gap for fiscal 2009, which ends Sept. 30.
The White House predicts tax receipts will rebound in 2011, as the fiscal stimulus sparks economic recovery.
Still, the report, says, "Even if that does happen, the administration also projects that government spending will be so much higher each year that … the national debt held by the public will double over the next 10 years."
Already, concern over that debt is pushing interest rates higher. "Interest rates are going to rise and rise more than expected," financial advisor Hugh Johnson tells The New York Times. "It really scares you."
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