U.S. Federal Government Posts Widest Deficit Since 2012

Lester Mason
October 17, 2018

The U.S. government's $523 billion in interest payments to service its debt in 2018 - the highest ever - was more than the entire economic output of Belgium this year, Bloomberg reported.

The government ran a $779 billion deficit in the fiscal year that ended September 30, the Treasury Department said Monday.

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.

The tax cuts have caused economic growth to accelerate this year with Federal Reserve officials anticipating gains of 3.1 per cent.

"Going forward, President Trump and this administration will continue to work with Congress to make the hard choices needed to bring fiscal restraint, which, when matched with increasing revenue, will reduce our deficit", he said.

"What's going on is revenues are not rising when they otherwise would be", said Marc Goldwein, senior vice president of the Committee for a Responsible Federal Budget.

The 2018 budget deficit was lower than the 34 percent that the Trump administration had been predicted in August.

The deficit is growing even as the government collected a record level of income tax this year.

According to the Congressional Budget Office, current policies have the United States on course for a $2 trillion deficit before the end of the next decade.

Treasury Secretary Steve Mnuchin suggested in a statement that the underlying source of the widening deficit was growth in government spending, rather than the tax cuts.

The deficit worsened because tax revenues are not keeping pace with government spending.

The corporate tax cut passed last year came into effect, reducing tax collections by $76 billion, or 22% year over year.

"Without Republicans' tax cuts, war-fighting, and defense build-up since 2001, the federal budget would have been $156 billion in surplus", Sanders said.

White House Budget Director Mick Mulvaney blamed Congress, which he said had shown a "continual unwillingness to restrain spending". At the time, the administration had projected that the budget deficit would hit $890 billion.

"President Trump prioritized making a significant investment in America's military after years of reductions in military spending undermined our preparedness and national security", Mnuchin said.

Mulvaney put the blame for this deficit increase on Congress.

Other reports by Iphone Fresh

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