U.S. Federal Government Posts Widest Deficit Since 2012

Trump Wants Federal Agencies to Cut Spending by 5%                 


     KEVIN LAMARQUE  Reuters

Trump Wants Federal Agencies to Cut Spending by 5% KEVIN LAMARQUE Reuters

While the Trump administration has cut taxes, federal spending has also increased.

In the 2018 fiscal year, which ended Sep 30, the United States took in US$3.3 trillion but spent US$4.1 trillion.

The $779 billion deficit for fiscal year 2018 was up 17 percent from the $666 billion deficit recorded in fiscal year 2017.

Treasury Building in Washington, D.C. The trend towards rising red ink was widely anticipated, given the GOP tax cuts and other government policies, including the president's demand for beefed-up military spending. By contrast, in 2012, when the deficit topped $1 trillion the US was still in the midst of digging itself out of a recession, and spending a lot to do so. Sanders' office produced an analysis arguing America would be running a surplus without the tax cuts passed under Trump and George W. Bush, higher military spending after September 11, 2001, and the costs of the wars in Iraq and Afghanistan. As a share of gross domestic product, the deficit totaled 3.9%, up from 3.5% a year earlier. That's mostly due to the massive corporate tax cut that slashed rates from 35 percent to 21 percent for top incomes, choking revenue for spending, which climbed 3 percent.

"Those elected to Congress this year will face stark and hard choices to put the debt on a downward path and protect our nation's social programs from insolvency", Macguineas said.

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"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.

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

In response to the Treasury's statement, Democrat Senator Bernie Sanders blamed Republicans for the deficit.

Gale said it's generally better to reduce the deficit when the economy has improved, which can minimize the sting of any changes to spending and prevent steeper cuts to spending in the future. The Republican tax law signed by Trump is expected to add at least $1.9 trillion to the federal deficit, including interest payments, according to the Congressional Budget Office.

In an effort to finance the yawning budget gap, Treasury has signaled it will step up the pace of debt issuance, borrowing $769 billion in the second half of the current calendar year.

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