U.S. piles up record October budget deficit of $284.1 billion

Expect Republicans in Congress to get religion on budget deficits now that a Democrat is in the White House again. Of course though, when one of their own is in the Oval Office, it's open season on government spending. Deficits only matter to them when someone with a (D) after their name is in office.

"In a September report, the CBO forecast annual deficits will remain above $1 trillion through 2030."

and Japan will be leading most of the $1 to America.

As long as USD remains the world's reserve currency they can keep on issuing debt to make up for the shortfall and investors will keep on lapping it up. The macroeconomic challenges that other countries with fiscal or current account deficits face do not bother the US the same way.

Expect Republicans in Congress to get religion on budget deficits now that a Democrat is in the White House again.

They have been at an impasse on this since before the election.

I gather that Republicans feel that the Democrats are trying to include spending which isn't related to coronavirus in the package?

(But you are right, Republicans generally do seem to spend money they don't have without prioritizing. The Tea Party faction perhaps an exception?)

They have been at an impasse on this since before the election.

This is more of a long term issue, since the Clinton presidency at least. When R's are in the opposition, they loudly complain to budget deficits to hamstring Democratic spending. Then when they are in office, they do nothing to contain the supposedly dire issue of deficits. The records of George W. Bush and Trump on this topic speak for themselves.

Even after the 2016 elections, with full control of the government and Mr. Fiscal Responsibility himself Paul Ryan as House Speaker, deficits actually increased for every year of the Trump administration.

It seems to be effective politically and no one really calls them out on it, so I expect R's to resume this trend once Biden takes office.

The Tea Party faction perhaps an exception?

I looked at the TP's website a couple of times recently, during the Trump years, and no mention of the national debt or deficits. They seems to have forgotten the reason for their existence. I didn't know collective Alzheimers was a thing.

The records of George W. Bush and Trump.. 

Ronald Reagan invented modern deficit spending. He cut taxes and then spent a trillion dollars on the Pentagon.

How many zeros is that?

@fxgai - correct, this non-pandemic spending requested in Democrat house bills was the stucking point to more stimulus through the summer and fall.

Now, tax cuts without corresponding expense cuts doesn't seem to bother the Republicans.

How many zeros is that?

A very, very big 'non-zero' amount of money.

tax cuts without corresponding expense cuts doesn't seem to bother the Republicans.

The plan was for the tax cuts to pay for themselves over time, due to higher growth brought on by the lower corporate tax rates.

I think the theory is sound, but from a practical political perspective it does have problems - the initial impact of the tax cuts is a big deficit and then “all else equal” the deficit then shrinks over time due to higher growth.

But with high deficits initially it makes it an easy political target - as we see in the comments here!

The other issue is that it does assume “all else equal” - no pandemics or wars to pay for, or the fact that the government may be rolled and spending could go up.

Without a really popular government that can carry through on it for a decade or cross party support, it may be hard to make it work politically.

How many zeros is that?

Not as many zeros as Trump has appointees to various government agencies, lol.

The plan was for the tax cuts to pay for themselves over time, due to higher growth brought on by the lower corporate tax rates.

I think the theory is sound, 

No it's not. Not even close. I'm an economist with a postgraduate degree. There is no econometric data anywhere in the world showing a reduction in tax rates led to an increase in tax revenues. It has never happened. Tax rate reductions always result in reductions in tax revenues. That is what actual data shows. The Laffer Curve is a nice fairy tale politicians love to tell as it gives them a story to tell about the supposed benefits of a tax cut. Tax cuts are popular and people want to believe. But it's a lie completely unsupported by any data and eventually all the tax cuts and resulting deficit are going to catch up with the US. That day of reckoning will be hard unless the US learns to exercise some discipline and run budget surpluses to pay the debt down.

Ronald Reagan invented modern deficit spending. He cut taxes and then spent a trillion dollars on the Pentagon.

Bingo! When Ronald Reagan took office in January of 1981 the national debt was 31% of GDP. The national debt as a proportion of GDP had declined steadily every year since it's 1945 high of over 100% of GDP. There was no debt spike for the Korean or Vietnam wars. Both wars were fully paid for with current year tax revenues. But by the time Mr. Reagan left office in January 1989 the national debt stood at 59% of GDP. Note that GDP grew during this period. His successor George H. W. Bush ran the debt up to 69% of GDP. During the two terms of the Clinton presidency the national debt declined to 59% of GDP, and the budgets for FY99 and FY20 had small surpluses. During the 2000 Presidential campaign Al Gore and other Democratic candidates even spoke of splitting future surpluses between paying down the national debt and building up the Social Security Trust Fund for the eventual mass retirement of the Baby Boomer Generation. That all went out the window with the election of George W. Bush. He immediately cut taxes and by the end of his two terms the national debt stood at about 73% of GDP with the economy in a free fall, the worst recession/depression since 1930.

@ desert

it seems to me that all these large debt increases occurred with a republican president

Not a problem, the U.S. Treasury will simply buy Bitcoin's...

The Laffer Curve is a nice fairy tale

It’s all good, the Laffer Curve. Glad you actually know it :).

eventually all the tax cuts and resulting deficit are going to catch up with the US.

Deficits aren’t solely a function of tax cuts.

But here. Imagine you are in a basket case where taxes are 95%. Tax rates are then cut to 25%.

This cut probably won’t result in a deficit, I wager.

But it is wrong to look at this instantaneously. It does take time for the positive impact of the cut to appear.

unless the US learns to exercise some discipline and run budget surpluses to pay the debt down.

that statement I agree with.

But here. Imagine you are in a basket case where taxes are 95%. Tax rates are then cut to 25%.

This cut probably won’t result in a deficit, I wager.

This has never happened in real life, probably because no nation has ever taxed it's GDP so high. Even at the 50% of GDP tax burdens of some Scandanavian nations the effect described by the Laffer Curve has never been shown to exist.

But it is wrong to look at this instantaneously. It does take time for the positive impact of the cut to appear.

And a major failure of Art Laffers, cough cough, "analysis" was that it was instantaneous. There is no time series data to back it. But even if you look at cross section data for a single year, there is no correlation between low taxes and GDP growth or worker productivity. By and large the Scandinavian nations have higher per hour worker productivity than the US has. They work fewer hours per year but produce more per hour worked. They also spend about half as much of their national income on health care as the US does, freeing up a lot of funds for other things. Those high Scandinavian tax rates also include their health care and retirement savings. If you took what you and your employer now spend on health care, reduced that value by half but added to the tax rates instead of taking it out of your pay as your monthly insurance premium then the nation would end up with a higher nominal tax rate but less actual money going to health care. The money freed up could be used to reduce the budget deficit. There is a lot of nonsense coming from the right regarding taxes and health care.

But here. Imagine you are in a basket case where taxes are 95%. Tax rates are then cut to 25%.

This cut probably won’t result in a deficit, I wager.

"This has never happened in real life, probably because no nation has ever taxed it's GDP so high."

My country had an income tax rate of 97.75% for the highest earners 47 years ago. It was a socialist basket case then, and it led to the practice of people figuring out innovative ways to under-report their income. Today the highest tax rate is 30%, economic growth rates are much higher and it is no longer the basket case that it used to be but still we are running budget deficits because of fiscal profligacy and also because the under reporting of income continues.

But the US is different. As long as USD remains the world's reserve currency they can keep on issuing debt to make up for the shortfall and investors will keep on lapping it up.

My country had an income tax rate of 97.75% 

Two things you didn't mention. Number one, that is a marginal tax rate, not the overall tax rate. Do you understand the difference? Do you understand how a graduated tax system works? Let's say that 97.75% tax rate applied to incomes over $1 million. That does not mean the entire income is taxed at 97.75%. Only that income above $1 million is subject to the 97.75% tax rate. The portion of the income below $1 million is taxed at lower rates. In fact the first several thousand bucks, the standard deduction, is not subject to any tax. I would bet that million dollar plus income is only taxed at an overall rate of 30-something percent.

Second, you do not tell us what the overall tax burden was. If you name this mystery country for me I can easily find that information going back decades in OECD and World Bank data bases. Then I can see if you are flim flamming me. Your use of a selectively chosen high tax rate that only applied to the highest incomes with no other information tells me you are being deliberately evasive. Your country has a larger story and if you tell me the country I can tell the whole story, not just your little tidbit. Switching from Socialism to a market economy probably had more impact that any change in the top income tax bracket. The US used to have a top tax bracket of over 90% back during the Eisenhower and Kennedy years. Back then the wage spread between hourly workers and the C-Suite was a fraction of what it is today and you didn't see CEOs and the like being paid in stock options as one does now because capital gains were taxed the same as earned income. Nobody is going to argue the US was a "socialist basket case" back then.

"Number one, that is a marginal tax rate, not the overall tax rate."

Yes correct it was marginal tax rate.

"Switching from Socialism to a market economy probably had more impact that any change in the top income tax bracket."

Yes correct but reduction in tax rates for the highest bracket coincided with the change to market economy.

The point is that sky high tax rates historically in my country have led to other problems (like an industry of accountants who employ tricks to under declare income) while doing nothing to fix budget deficits.

Evil Buddah, you still haven't told me what country you are talking about. I can't even say for sure it was socialist as an economist defines socialism (state ownership of the means of production, no private enterprise and in some cases no private property whatsoever). I have a hard time believing anyone outside the official Nomenklatura and organized crime had any kind of significant wealth in the former Warsaw Pact or former USSR. I know what happened to my own family under Mao. To quote my wife "Mao took everything". The family home was confiscated and given to a party cadre who's family still occupies it. All their wealth was confiscated too. The same was true across the Warsaw Pact and USSR. The criminals weren't filing taxes so who were these people hitting this claimed 97.75% marginal tax rate? Tell us the nation so we can see the whole pictire.

Yes correct but reduction in tax rates for the highest bracket coincided with the change to market economy.

Which means you haven't controlled for the effects of the change from socialism to a market economy. There is no way to know from what you are saying that a lower top marginal tax rate was beneficial or not.