Published: Tue, October 16, 2018
Worldwide | By Isabel Fisher

US Budget Deficit Surges $113Bln to $779Bln in Fiscal 2018

US Budget Deficit Surges $113Bln to $779Bln in Fiscal 2018

The budget gap for the 12 months through September was 17 percent wider than the same 12-month period a year earlier, as spending rose 3.2 percent and revenue gained just 0.4 percent, according to a Treasury Department report released Monday. A new analysis from longtime congressional budget aide Brian Riedl, now a senior fellow at the Manhattan Institute, a free market think tank, shows that Social Security and Medicare will run a $100 trillion deficit over the next 30 years.

The deficit for the fiscal year - or the 12 months through September - was the largest since 2012.

The approximately 17 percent jump in the federal deficit came despite the strong growth in the overall US economy, an unusual instance in which the economy and the deficit are expanding at the same time. Trump frequently criticized his Democratic predecessor Barack Obama for running up the deficit, and in 2012 recommended banning lawmakers from reelection if Congress couldn't balance the budget.

President Donald Trump hails the tax cuts as a boon to the economy but corporate tax receipts dropped sharply and America's growing debt burden to finance the deficit became increasingly costly, the Treasury Department said.

"Without Republicans' tax cuts, war-fighting, and defence build-up since 2001, the federal budget would have been US$156 billion in surplus", Sanders said. The CBO said that this deficit increase "would arise because spending would grow steadily under current law, and revenues would not keep pace with that spending growth".

Budget deficits occur when the federal government spends more than it earns.

"Going forward the President's economic policies that have stimulated strong economic growth, combined with proposals to cut wasteful spending, will lead America toward a sustainable financial path", Treasury Secretary Steven Mnuchin said in a statement.

The GOP tax bill and massive budget agreement helped to grow the deficit. The Congressional Budget Office estimates that the budget deficit for 2019 will top $1 trillion and will eclipse the trillion-dollar mark in 2020.

During a strong economy, the government typically collects more taxes, resulting in a lower budget deficit.

Mulvaney predicted that future economic growth will boost government revenues - an important step toward long-term fiscal sustainability. Another factor in the widening of the deficit was an increase in spending on the military.

"As expected, recent tax cuts and spending increases - all put on the national credit card - are making a bad problem even worse", MacGuineas said in a statement.

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