WASHINGTON: 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 programmes 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% this year, the biggest single-year decline since the Great Depression, while the federal deficit balloons to a record $1.8 trillion (1800 Billion $).
Other figures in an Associated Press analysis underscore the recession’s impact: Individual income tax receipts are down 22% from a year ago. Corporate income taxes are down 57%.
The last time the government’s revenues were this bleak, the year was 1932 in the midst of the depression
While much of Washington is focused on how to pay for new programs such as overhauling health care, at a cost of $1 trillion over the next decade, existing programmes are feeling the pinch, too. Social security is in danger of running out of money earlier than the government projected just a few month ago. Highway, mass transit and airport projects are at risk because fuel and industry taxes are declining.
The national debt already exceeds $11 trillion. And bills just completed by the House would boost domestic agencies’ spending by 11% in 2010 and military spending by 4%.
A small part of the drop in tax receipts can be attributed to new tax credits for individuals and corporations enacted in February as part of the $787 billion economic stimulus package. The sheer magnitude of the tax decline, however, points to the deep recession that is reducing incomes, wiping out corporate profits and straining government programs. Social Security tax receipts are down less than a percentage point from last year, but in May the government had been projecting a slight increase. At the time, the government’s best estimate was that social security would start to pay out more money than it receives in taxes in 2016, and that the fund would be depleted in 2037 unless changes are enacted.
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I think USA ppl are definitely feeling the heat of this financial meltdown. Decline in the US govt softpower is one of the major factors for this poor performance of the private sector.
It is the high time for the US government to divert their focus to the their real problems and uplift of the economy instead of indulging in the so called “War on Terror”.