U.S. national debt at record $25 trillion, budget deficit in April at $738 billion
(The Center Square) – As the House of Representative moves to vote on its $3 trillion Testing, Reaching, And Contacting Everyone Act, the U.S. Treasury Department announced a $738 billion budget deficit for April, after the national debt surpassed a record $25 trillion.
The deficit rose after increased government spending in March and April to offset the economic losses caused by state executive orders, which shutdown economies to slow the spread of the coronavirus.
In March, the spending and tax cuts allocated by the CARES Act, and the Families First relief bill, were expected to increase debt by $1.76 trillion, and $192 billion, respectively, according to CBO projections. The small business relief act added $480 billion to the total.
Government spending for April 2020 was $979.7 billion, an increase of $600 billion from the previous month, according to the Treasury Department. Stimulus checks totaled $217 billion, state governments received $142 billion, and unemployment benefit payments totaled $46 billion.
At the end of April, unemployment stood at 14.7 percent. The total U.S. national debt has now surpassed a record $25 trillion.
“In contrast to Pelosi’s government leviathan blueprint,” Steve Cortes a RealClearPolitics contributor and host of Salem radio show AM560 Chicago, proposes that the federal government “eliminate all federal taxes for a recovery year.”
In a column for RealClearPolitics, he also suggests, “Putting the Internal Revenue Service on furlough would provide an immediate pay raise for the 120 million Americans still working. This proposal would immediately assist small business owners who will struggle, even in the best circumstances, to maintain their franchises once present loan programs run out.”
Others have called for eliminating the payroll tax and providing targeted assistance to get companies back to work.
Kevin Roberts, executive director of the Texas Public Policy Foundation, argues that immediately halting the payroll tax would have longer lasting effects than going into debt to send stimulus checks.
Tom Donohue, CEO of the U.S. Chamber of Commerce, proposed an elimination of the tax in a March 16 letter to President Donald Trump and the leaders of the House and Senate.
“Each month, employers remit more than $100 billion to the federal government in the form of Social Security, Medicare, and unemployment taxes,” Donohue said. “Collectively, these taxes add just over 15% to the cost of employing the average employee.”
Donohue argues that temporarily cancelling the collection of these taxes will reduce the costs for employers and put more money immediately into workers’ pockets.
The federal government levies a payroll tax on employers of 6.2 percent on their employees’ wages. Both employees and employers pay the tax. For example, Roberts explains, an employee who earns $50,000 pays $3,100 of his or her salary every year to the federal government.
“There’s also a very fundamental difference between a tax cut and deficit spending,” Roberts said. “When government enacts a tax cut, it allows taxpayers to spend their own money on what they need. When a government in the red enacts a stimulus package that includes checks sent out to all Americans, it’s simply spending their money in advance, on programs that may or may not work.”