In a growing economy, both tax revenue and spending tend to rise over time in real terms. In good times, tax revenue usually goes up faster than spending; during recessions, revenue falls and spending jumps.
…In the two years since the Tax Cuts and Jobs Act of 2017 took effect on Jan. 1, 2018, the annual U.S. federal deficit has grown from $681 billion to a bit over $1 trillion.
…There’s not much evidence yet that the incentive effects of the tax cuts will contribute significantly to future growth.
…Put the two calendar years since the tax cut together and compare them with the “normal” of the previous 35 years, and it’s clear that recent revenue growth and spending growth have both been out of the ordinary.
…The rise in the deficit since 2017 has so far been accompanied by solid if unspectacular economic growth
…Real outlays grew 1.7 percentage points a year faster than the historical average since the end of 2017; real receipts grew 1.8 percentage points slower. Both thus seem about equally to blame for the rise in the deficit.
…Net interest on the debt accounted for the biggest part of the spending rise from fiscal year 2017 to FY 2019, according to the Congressional Budget Office. …The rise in net interest payments has thus far been kept somewhat in check by extremely low interest rates, which may or may not continue in the future.