In 2010, we introduced the Zero Deficit Line, which visualizes the trajectory of U.S. government spending per household with respect to U.S. median household income. The zero deficit line is simply a straight line on that chart, which happens to represent the amount of government spending that the typical U.S. household can actually afford.
Here's what an updated version of that chart looks like, nine years later.
The chart covers the period from 1967 through 2018, where we won't be able to update it to includes 2019's data until September 2020, when the U.S. Census Bureau will publish its estimate of the number of households in the U.S. for 2019.
Back in 2010, we only had data through 2009, which turned out to be the peak year for U.S. government's annual budget deficits when framed in this context. 2010 and 2011's government spending per household remained near 2009's peak value, where it wasn't until 2012 that spending level dropped to become relatively more affordable.
That was largely due to the Budget Control Act of 2011, which reined in excessive government spending. For a while anyway. Government spending per household levels fell until 2014, after which, they've followed a steady upward trajectory through 2018, largely paralleling but well above the zero deficit line.
The U.S. government's fiscal situation is worse than that appears however. In the following chart, we've presented the U.S. government's spending and tax collections per U.S. household with respect to U.S. median household income from 1967 through 2018.
What stands out in this chart is the most recent years, from 2015 through 2018, where a yawning gap opens up between the U.S. government's spending per household and its tax collections per household. While the U.S. government's spending rises steadily, over this period, the U.S. government's tax collections hold steady.
This is largely due to the Bipartisan Budget Act of 2015, which coupled increased spending with tax cuts and was signed into law by President Obama in December 2015. Although the data for 2018 reflects the effects of the Tax Cuts and Jobs Act of 2017, signed into law by President Trump in December of that year, we can see it didn't materially alter the trend established since 2015 under President Obama's administration.
All in all, it doesn't look like the U.S. government is on a sustainable fiscal path.
References
White House Office of Management and Budget. Historical Tables, Budget of the U.S. Government, Fiscal Year 2020. Table 1.1 - Summary of Receipts, Outlays, and Surpluses or Deficits (-): 1789-2024. [PDF Document]. Issued 11 March 2019. Accessed 11 March 2019.
U.S. Census Bureau. Current Population Survey. Annual Social and Economic Supplement. Historical Income Tables. Table H-5. Race and Hispanic Origin of Householder -- Households by Median and Mean Income. [Excel Spreadsheet]. Issued 10 September 2019. Accessed 19 December 2019.
Labels: data visualization, politics, taxes
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