Happy Wednesday and welcome back to On The Money. I’m Sylvan Lane, and here’s your nightly guide to everything affecting your bills, bank account and bottom line.
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THE BIG DEAL–CBO projects $39B deficit rise in first quarter of 2020: The federal deficit is estimated to have risen 12 percent in the first three months of the fiscal year, according to Wednesday projections from the Congressional Budget Office (CBO).
The deficit in the first quarter of the 2020 fiscal year, which began in October, amounted to $358 billion, according to the CBO projection, an increase of $39 billion over the same period last year.
- Spending, or outlays, increased by 7 percent, outpacing the 5 percent increase in revenues. A moratorium on a health insurance tax, which was made permanent in December, accounted for the majority of a $10 billion drop in excise tax revenues.
- Spending on Medicare, Medicaid, Social Security and Defense all spiked by a range of 5 to 10 percent, with the largest increase ($16 billion, or 10 percent) going to defense.
- All in all, the deficit is expected to surpass $1 trillion in 2020 for the first time since the four-year period following the Great Recession in 2009.
CBO has called the current deficit path “unsustainable.” The Hill’s Niv Elis explains why here.
LEADING THE DAY
Grassley says he wants to rein in Trump tariff powers: Senate Finance Committee Chairman Chuck Grassley (R-Iowa) said Wednesday that he wanted to advance legislation reining in presidential authority on tariffs in 2020.
“That’s been a goal of mine and is still a goal,” Grassley said of legislation to reform section 232 of the 1962 Trade Expansion Act, which President Trump has used to impose major tariffs on close U.S. trade partners.
- Section 232 gives the president authority to impose tariffs for national security purposes. Trump’s trade critics accused him of abusing the authority by imposing steep steel and aluminum tariffs on U.S. allies such as Canada, Mexico, the European Union and Japan.
- Trump later scrapped the tariffs on Canada and Mexico after they agreed to an updated North American Free Trade Agreement. Trump has also threatened to use the authority to impose tariffs on automobile imports from the European Union and Japan.
IRS audits drop to lowest point in decades: The proportion of taxpayers facing an IRS audit has dropped to the lowest point in decades, potentially depriving the government of billions of dollars in revenue.
The IRS reported this week that it audited just 0.45 percent of individual filers last year, less than half the level from 10 years ago and a fraction of the level seen in previous decades.
In its progress update, the IRS pointed to a steady decline in employees in recent years. From 2010 to 2019, it lost nearly 30,000 full time positions.
“These losses directly correlate with a steady decline in the number of individual audits during the past nine years,” the report said.
It also noted that nearly 20,000 employees, representing 31 percent of its current workforce, are slated to retire in the coming five years, potentially leading to a significant knowledge and experience gap.
GOOD TO KNOW
- The price of oil fell after President Trump’s Wednesday morning address to the country in response to Iran’s retaliatory airstrike against a pair of U.S. military bases in Iraq.
- The private sector added 202,000 jobs in December, the most since April, according to a report released Wednesday by ADP and Moody’s Analytics.
- Congress should direct the IRS to set goals for increasing the use of its Free File program and to replace the program if those goals aren’t met by 2025, the agency’s in-house watchdog said in a report released Wednesday.
- Tesla is officially the most valuable U.S. auto company in the country’s history after its stock prices surpassed the previous record held by Ford.
- Two House Democrats pushed top financial regulators including the Treasury Department this week to step up their defenses against potential Iranian cyberattacks, with the risk of Iran attacking U.S. critical infrastructure increasing this week following the death of top Iranian Gen. Qassem Soleimani.