WASHINGTON: The US budget deficit expanded to an estimated US$782 billion in Donald Trump’s first full fiscal year as president, which would be the widest fiscal gap since 2012 when the country was still emerging from the Great Recession.
The Congressional Budget Office expects the Treasury Department to report a September budget surplus of US$116 billion next week, which would subtract from the deficit of US$898 billion reported in the October-through-August period. The CBO published the estimate late Friday as part of its monthly budget review.
That compares to the prior year’s gap of US$666 billion and would be the largest deficit in six years, when the country was still reeling from the worst downturn in generations. The fiscal 2018 deficit would have been US$826 billion had outlays not been affected by shifts in the timing of certain payments, the CBO said. The government’s fiscal year runs from Oct 1 to the end of September.
The 2018 deficit was equal to an estimated 3.9% of gross domestic product, up from 3.5% the prior year. Government revenues were about the same as the prior year while outlays grew about 3%, the CBO said.
The budget deficit has continued to climb in recent years, raising concerns the country’s debt load, now exceeding US$21.5 trillion, is growing out of control. The Treasury reported Thursday that the government paid US$523 billion in interest in fiscal 2018, the highest on record.
A combination of Republican tax cuts, increased federal spending and ageing population are adding to budget strains, though the GOP says tax reform will spur economic growth and lift tax revenue.
The widening of the deficit comes just ahead of midterm elections, when congressional Republicans will fight to maintain control of the House and Senate. Trump said on the presidential campaign trail he could improve the government’s fiscal position, though the deficit hasn’t emerged as a hot-button issue ahead of next month’s vote.