The US budget deficit has surged to US$779 billion in the most recent financial year – its highest level in six years as President Donald Trump’s tax cuts caused the government to borrow more heavily to cover its spending.
The US Treasury Department said Monday that the deficit climbed US$113 billion from fiscal 2017. Debt would likely worsen in the coming years with the Trump administration expecting the deficit to top US$1 trillion in 2019, nearly matching the US$1.1 trillion imbalance from 2012.
The deficit worsened because tax revenues are not keeping pace with government spending.
Revenues generally tumbled after December when Trump signed into law US$1.5 trillion of tax cuts over the next decade.
The tax cuts have caused economic growth to accelerate this year with Federal Reserve officials anticipating gains of 3.1 per cent.
But the Trump administration initially promised that the tax cuts would pay for themselves through stronger growth – and there was no sign so far of that happening.
“The budget numbers make very clear that the faster growth isn’t stopping the deficit from increasing,” said Marc Goldwein, senior policy director for the Committee for a Responsible Federal Budget, a group that advocates for lower deficits.
The report also comes just weeks before midterm elections in Congress and threatens to undermine a long-standing Republican argument that they are better stewards of the nation’s finances.
Reference: South China Morning Post
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