Federal Deficit Jumps 32 Percent Amid Booming Economy
The federal budget deficit grew to $895 billion for the first 11 months of fiscal year 2018, according to a Congressional Budget Office estimation released late Monday.
The estimated deficit grew by $222 billion, or 32 percent, over the shortfall recorded during the same 11-month period in fiscal year 2017, and comes amid a booming economy with the number of Americans filing for unemployment benefits hitting its lowest level in nearly 50 years and GDP growth of 4.2 percent in the second quarter of 2018.
The national debt when President Donald Trump took office was $19.9 trillion and has since surpassed $21 trillion.
Increased spending and the impacts of Trump’s tax cuts were the primary drivers for the federal deficit’s climb to $895 billion, according to the CBO.
Spending increased 7 percent over the first 11 months of the fiscal year, however, revenues increased by only 1 percent.
The CBO attributed the marginal revenue growth to an additional $105 billion collected from individual income and payroll taxes, which was mostly negated by corporate tax receipts falling by $71 billion, or 30 percent, due in part to the reduced corporate tax rate put in place by Trump’s tax cuts.
On the spending side, Social Security and Medicare expenditures rose by 4 percent and a higher rate of inflation drove outlays on net interest on the public debt to swell by 19 percent.
Council of Economic Advisers Chairman Kevin Hassett acknowledged the 2017 tax cuts have increased the deficit “a little bit,” during a Monday press briefing, but added that the economic growth spurred by the tax cuts have nearly paid for the reduced corporate rate. (RELATED: Obama Has Been Claiming Credit For Trump’s Economy – Trump Marches Out Economist, With Receipts)
“I think that the notion that the corporate tax side has about paid for itself is clearly in the data,” Hassett said. “On the individual side, there was about a trillion-dollar cost. About $700 billion of that was a refundable child credit that got expanded at the last minute to get the votes they needed to pass it.”
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