Halfway through our fiscal year, the US deficit has hit $1 trillion.
Everyone knows that the deficit is ballooning out, as the government spends wildly to prop up the economy and save the banking system.
But it’s not the spending that’s scares, it’s the collapsing revenue. We think the federal government and the states are being wildly optimistic about tax revenue.
Even if the economy stabilizes and rebounds, that extreme concentration of income — all those millionaire hedge funders and the like — is flattening out. And due to our progressive tax system, that means fewer dollar collected per unit of income or profit.
As noted in the chart below (via Zeor Hedge), revenue in March was 30% lower than it was the year earlier.