This graph shows how out of control the US budget deficit is

in #economy4 months ago

Normally, budget deficits widen during recessions or wars. In recessions, tax receipts are not coming in, and the government is spending more than usual on unemployment benefits. During wars, expenditure is higher than normal.

Conversely, when the economy is doing well, the budget deficit narrows and can even go into surplus; more people are in work, more tax is received, and spending on unemployment benefits is down.

In other words, when the unemployment rate is high, so is the budget deficit, and vice versa. So the difference between the budget deficit and unemployment rate ought to be zero or less.

Here is the graph:


source

As you can see from the graph, something has gone wrong since the Great Financial Crash, and something has gone badly wrong since the pandemic.

Unemployment is low, the US economy is apparently booming. But either there is hidden spending somewhere. Or something has gone wrong with tax collection. Or both.

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