Wow! Proof the Tax Cuts are Working: U.S. Set a Surplus Record

The last couple of weeks have been rife with big news. The world is on the brink of a major overhaul, and if Trump wins on even half of the issues, we might be entering an unprecedented era of peace and prosperity. With so much happening, it’s easy to miss what otherwise might be huge stories.

One of those is in the tax reporting for April. As the biggest tax month of the year, April proved to be a solid win for Trump and the nation when it comes to taxes. We set an all-time surplus record.

It’s more than just an aberrant good month. It’s an important indicator that tells us a lot about the economy and how well the government is functioning.

The Surplus Cycle

It’s important to understand that talks of surpluses and deficits can take many forms. In the U.S., tax revenue ebbs and flows through the seasons. For obvious reasons, Christmas season tends to have higher revenues than other times, but the biggest month for tax revenue is always in April.

That is what we’re talking about today. This past April set a single-month surplus record. Before we get into the raw numbers of it all, we should take a moment to reflect on the politics.

The left will criticize Trump wherever they can, and one of the few complaints that has any merit at all is in deficit spending. The government is in fact spending more money this year than it did last year. That said, the blame is hardly Trump’s. He has actually cut federal spending in many places by scaling back excessive and redundant regulations.

The only thing he has really done to expand spending is signing the omnibus package, but that could have broken through a veto anyways. Still, April’s record surplus came after the omnibus was signed into effect, and that is a big deal.

The Record

Ok, let’s talk numbers. April of 2018 had more spending than any April before. Despite that, it had the largest one-month surplus we’ve ever seen at $218 billion. This happened after the critics said the tax cuts would surely send us into an inescapable debt cycle. As it turns out, Trump was exactly right when he said the tax cuts would actually increase tax revenue. We aren’t going to get into the Laffer Curve, but suffice it to say that there is ample research on this topic, and Trump was following it.

Of course, a record surplus of $218 billion doesn’t mean much without context. The second-largest surplus in history was April of 2001. It weighed in at $189 billion. The third-largest on record was last April with $182 billion. That’s right. Trump has two of the three best months. Ever.

How does Obama compare? Glad you asked. Obama’s best month in 8 years was April of 2015. The surplus was $157 billion. Ok, so maybe Trump is just reaping the benefits of Obama’s policies. Well, Obama didn’t see a surplus for his first four years in office. He also watched the April surplus shrink over his final year. Empirically speaking, Trump has reversed Obama’s losing trend.

What it Means

It’s important to emphasize that this is not a complete reversal on deficit spending. We still have to keep an eye on that. But, it does tell us that the economy is doing better than we thought. No, not better than pessimistic liberals thought.

Even on the right, we’ve been underestimating the strength of Trump’s economy. The first signal is that we beat the deficit expectations by $40 billion last month. That this has happened on the back of massive tax cuts shows that overall economic spending is higher than we thought. Tax revenue is a means to catch economic growth that can sometimes evade other measures. If we’re seeing more tax revenue after such huge cuts, it means growth is monstrous right now.

Above all else, it shows us that Trump was right again. His model for increasing tax revenue through economic growth is viable and sustainable. As long as we don’t let federal spending continue unchecked, we could be enjoying annual surpluses in just a few years. And, we can do it without raising any taxes at all.

Who would have thought that the sound capitalistic principles that have served the west for the last 100 years would still be effective?! Not liberals that’s for sure!

~ American Liberty Report

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