U.S. Budget Deficit Widens 23% October Through May on Weak Revenue Growth
Federal budget deficit was $146.80 billion in May, 66% wider than same mont
h a year earlier
Updated June 12, 2018 5:43 p.m. ET
WASHINGTON—The U.S. government’s budget deficit widened in
the first eight months of the fiscal year, reflecting lower revenue from co
rporate taxes combined with ramped-up government spending.
The deficit, or the difference between the amount of money the federal gove
rnment spent and what it took in, totaled $532.24 billion in October throug
h May, the Treasury Department said Tuesday. That was 23% more than the def
icit of $432.85 billion during the same period a year earlier.
On Tuesday, June 12, 2018 at 9:08:24 PM UTC-4, Vic Smith wrote:
onth a year earlier
ht months of the fiscal year, reflecting lower revenue from corporate taxes
combined with ramped-up government spending.
overnment spent and what it took in, totaled $532.24 billion in October thr
ough May, the Treasury Department said Tuesday. That was 23% more than the
deficit of $432.85 billion during the same period a year earlier.
At least with conservatives the money stays in people's pockets. With you l
ibs we have horrible deficits with high taxes because you piss the money aw
ay on welfare and big govt domestic spending.
U.S. Budget Deficit Widens 23% October Through May on Weak Revenue Growth
If by "people" you mean shareholders
Your Money, Your America
Tax cut scoreboard: Workers $6 billion; Shareholders $171 billion
by Matt Egan @MattEganCNN
February 16, 2018: 7:42 AM ET
Current Time 0:14
Duration Time 2:26
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Blankfein: Tax bonuses are 'symbolic' - but symbolism matters
It's raining stock buybacks on Wall Street -- thanks to President
Trump's massive corporate tax cuts.
The White House has celebrated the tax cut bonuses unveiled by the likes
of Walmart (WMT), Bank of America (BAC) and Disney (DIS).
Yet shareholders, not workers, are far bigger direct winners from the
Tax Cuts and Jobs Act of 2017.
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American companies have lavished Wall Street with $171 billion of stock
buyback announcements so far this year, according to research firm
Birinyi Associates. That's a record-high for this point of the year and
more than double the $76 billion that Corporate America disclosed at the
same point of 2017.
Wall Street loves buybacks because they tend to boost the share price in
part by inflating a key measure of profitability. In just the past three
days, Cisco (CSCO), Pepsi (PEP) and drug maker AbbVie (ABBV) have
promised a total of $50 billion of buybacks.
"It's the largest ever -- and nothing has really changed, except the tax
law," said Jeffrey Rubin, director of research at Birinyi Associates.
chart stock buybacks high
Related: Only 13% of business' tax cuts are going to workers, survey says
Under pressure from Washington, dozens of major companies have decided
to share the tax windfall with workers -- or at least some of it. Trump
said during his State of the Union that roughly three million workers
have received tax cut bonuses. Other companies like Wells Fargo have
raised the minimum wage for workers, providing a lasting boost in pay.
But the amount of money allocated so far on bonuses and wage hikes pales
in comparison with Wall Street's buyback bonanza.
S&P 500 companies have devoted about $5.6 billion to bonuses and wage
hikes because of the tax law, according to research from academics Rick
Wartzman and William Lazonick as well as the Academic-Industry Research
Network. The group added up commitments from the 50 companies in the S&P
500 that had announced plans to reward workers through February 15.
"Our worst nightmare is coming true," said Frank Clemente, executive
editor of Americans for Tax Fairness, a group that fights for
progressive tax reform. "We predicted that the lion's share of the
benefits of this tax cut would go to already-wealthy shareholders and
CEOs, not to a company's workers."
A survey of Morgan Stanley analysts released last week found that just
13% of companies' tax cut savings will go to pay raises, bonuses and
employee benefits. 43% will reward investors with stock buybacks and
The tax-inspired buyback boom may just be getting started. Bank of
America recently predicted that S&P 500 companies will use repatriated
foreign profits to buy back about $450 billion of stock.
The new law gives companies a tax break -- paying between 8% and 15.5%
instead of the usual 35% -- to bring money sitting overseas back to the
United States. That's in addition to the savings created by the steep
decline in the corporate tax rate to 21% from 35%.
chart stock buybacks leaderboard
Related: Blankfein: Odds of 'bad outcome' for economy have gone up
Workers have benefited in other ways from the tax law. For instance,
Visa (V) and Aflac (AFL) have boosted their 401(k) matching programs
after the tax overhaul. Boeing (BA) has promised to invest $300 million
on workers through training, upgraded facilities and charitable giving.
Workers can also benefit indirectly from stock buybacks if shareholders
end up using their winnings to make investments that create new jobs.
"It frees up capital to go back into the economy. What good does $2
trillion sitting offshore in tech companies' accounts do?" asked
Nicholas Colas, co-founder of DataTrek Research.
But some companies wishing to use their tax savings on new factories or
hiring workers may not have seen enough evidence that expansion is
"Just because you have the cash coming in doesn't magically create
opportunities to invest," said Colas.
Colas also said that buybacks provide an important signal that can boost
stock prices. "When stock prices rise, they inspire more confidence and
confidence leads to more hiring and wage increases," he said.
Critics of buybacks note that America's wealthiest families tend to
benefit disproportionately from a booming stock market -- and thus buybacks.
The top 10% of households owned 84% of all stocks in 2016, according to
paper published last year by NYU professor Edward Wolff. The richest 1%
owned 40% of stocks by themselves.
"If you want to understand why there is such extreme inequality, this
use of corporate cash is a big part of it," said Lazonick, who is a
professor at the University of Massachusetts Lowell.
Wartzman, director of Claremont Graduate University's KH Moon Center for
a Functioning Society, argues that there are more productive uses of
capital than buybacks. He suggested boosting wages, ramping up benefits
and training workers.
"It's not to say shareholders shouldn't get a piece of the pie," he
said, "but why such an inordinate piece?"
On Wednesday, June 13, 2018 at 3:18:15 PM UTC-4, email@example.com wrote:
I'd rather have the shareholders get it, than the govt piss it down
another rat hole. Trump's business tax cut was one of the things he
did that was right. Ultimately businesses don't pay those taxes
anyhow, consumers wind up paying them. And like you say, even if it
went to buybacks, a lot of that went into 401Ks and into people's
pockets. Buying back stock improves companies balance sheets too,
which is a positive for future business investment, expansion, etc.
Better than pouring it out in food stamps, welfare checks, and
crony capitalism where the feds control investment, like the Obama
solar boondoggle of bankruptcies.
Our leaders don't know the phrase "save for a rainy day".
Here's a chart going back
to 1940. The biggest surplus was in 1948.
Tax receipts are at a near record high.
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