The Congressional Budget Office (CBO) reported on Wednesday that the United States incurred a budget deficit of over $1 trillion for the fourth consecutive fiscal year, even though tax revenue from all major sources increased.
In October, the federal government reported a record deficit of $113 billion. These numbers prove the federal government has a spending problem and cannot tax its way to budget surpluses.
According to the CBO, “receipts from individual income taxes grew by $41 billion (or 4 percent), and remained at 7.3 percent of GDP in 2012.” More than half of the increase came from withheld taxes.
Further, corporate income taxes rose by 34% and accounted for about 40% of the increase in total revenues, rising by $61 billion and increasing from 1.2% to 1.6% of GDP.
At the same time, spending on entitlement programs such as Social Security and Medicare “rose by $43 billion (or 6 percent) and $16 billion (or 3 percent), respectively.”