US Budget Deficit Jumps 27% To $867 Billion In 10 Months
This historic spike in the U.S. budget deficit under President Donald Trump continues with the shortfall ballooning to $867 billion in the first 10 months of the current fiscal year that ends September 30.
The U.S. Treasury Department said this deficit is 27 percent larger year-on-year and exceeds the full-year deficit for fiscal 2018, which stood at $779 billion.
Trump, who promised to eliminate the federal debt, has now been responsible for the largest deficits in U.S. history due to his unneeded tax cuts in 2018 coupled with a dramatic jump in federal expenditures.
Federal tax revenue rose only 3% to $2.86 trillion since the start of the fiscal year on October 1, 2018, but has fallen far short of massive and increased federal spending, which jumped 8%.
The Office of Management and Budget (OMB) predicted the U.S. deficit will exceed $1 trillion for the entire fiscal year. In May, the nonpartisan Congressional Budget Office (CBO) predicted a deficit of $896 billion for the fiscal year, with deficits rising above $1 trillion starting 2022. These estimates have been rendered invalid by the $867 billion deficit for the first 10 months of the current fiscal year.
The last time the U.S. federal deficit hit this huge level was in 2012 in the aftermath of the Great Recession of 2008.
On the other hand, public policy think-tank the Committee for a Responsible Federal Budget (CRFB) estimates the 2017 tax cuts along with new spending by Congress will add more than $4.1 trillion to the federal debt by 2029.
Analysts said the never-ending expansion of Trump's deficit is mostly being driven by the $1.5 trillion tax cuts signed into law by Trump in 2017 plus a massive spending package passed by Congress.
On Aug. 2, Trump signed into law a bipartisan two-year budget deal that will boost spending by an additional $320 billion over the next two years. The same package also suspended the debt ceiling through July 2021, removing the threat of a default during the 2020 elections.
The law also raises domestic and military spending by more than $320 billion compared to existing law over the next two fiscal years. The law should add nearly $2 trillion to the projected national debt over the next decade.
CRFB president Maya MacGuineas said the agreement marks "a shameful period of fiscal recklessness in Washington that is unprecedented in the context of our current fiscal state."
"Going forward, neither side can claim a mantle of responsible governing, and few have any moral ground to stand on-this is a bipartisan failure," she said in a statement.