US budget deficit rises 27% through July
The US budget deficit widened to $867 billion for the first 10 months of the fiscal year, an increase of 27% over this time last year, the Treasury Department reported Monday.
The current shortfall exceeds the full-year deficit for fiscal 2018, which was $779 billion.
President Donald Trump, who promised during the 2016 campaign to eliminate the federal debt, has instead overseen a dramatic increase in deficits.
The White House’s Office of Management and Budget has predicted that the deficit will exceed $1 trillion for the entire fiscal year, which ends on September 30. The nonpartisan Congressional Budget Office in May had predicted a slightly smaller shortfall of $896 billion for the year, with deficits rising above $1 trillion starting in 2022.
The last time the gap was that big was in 2012, in the aftermath of the financial crisis.
There are a number of factors driving the US deficit increase, including the $1.5 trillion tax cuts signed into law by Trump in 2017 along with a massive spending package passed by Congress.
Tax revenue rose 3% to $2.86 trillion since the start of the fiscal year on October 1, but hasn’t kept up with increased federal spending, which increased 8%.
Earlier this month, Trump signed into law a bipartisan two-year budget deal that will raise spending by an additional $320 billion over the next two years and suspended the debt ceiling through mid-2021.
The Committee for a Responsible Federal Budget estimates that the 2017 tax cuts combined with new spending by Congress will add more than $4.1 trillion to the federal debt by 2029.