(Bloomberg) U.S. tax revenue is running as much as $70 billion behind estimates more than halfway through the fiscal year, leaving the government with less cash than planned and adding to pressure on Congress to raise the debt ceiling.
Receipts totaled $2.17 trillion in the eight months through May, about 3 percent lower than projections and $29 billion higher than a year ago, the Congressional Budget Office said in monthly projections on Wednesday. The deficit was $432 billion in the period, about $26 billion wider than a year earlier.
“Taxpayers may have shifted more income than projected from 2016 to later years, expecting legislation to reduce tax rates to be enacted this year,” CBO said. The receipts may also fell short of expectations because of weaker-than-projected income growth last year, the agency said.
High-income taxpayers may have deferred as much as 20 percent of their taxable income last year, according to the Rockefeller Institute, an allowable move to delay paying taxes on non-wage earnings.
While the government hit its borrowing limit in March, it’s been relying on special accounting maneuvers to keep spending under the current ceiling of nearly $20 trillion. Increasing the debt limit—a responsibility of Congress—has become increasingly fraught in recent years as lawmakers used the debate as a bargaining chip for spending controls.
The Treasury Department has projected it will run out of money by the second half of the year. White House Budget Director Mick Mulvaney on May 24 said that date could be as soon as August, citing the drop in tax revenue, while most independent analysts still forecast October or November.
The administration is urging Congress to raise the debt ceiling as soon as possible to ensure the full faith and credit of the U.S.
The debate over how to raise the debt ceiling has already led to an internal administration dispute. Treasury Secretary Steven Mnuchin has urged Congress to back a “clean” increase in the debt ceiling, comments that put him at odds with White House chief economic adviser Gary Cohn and Mulvaney. Trump on Tuesday told Republican leaders his Treasury chief retains the traditional role of primary spokesman on the subject.
The message seems to be getting through.
“The Treasury secretary is and should always be the person in charge of debt-limit negotiations, debt-limit legislation,” House Speaker Paul Ryan told reporters on Wednesday. “That’s the natural thing.”
The Treasury’s monthly budget statement, covering May receipts and spending, is scheduled for release on Monday.