Federal Government's Budget Deficit 'Skyrockets' To Highest Level Since 2012

Deficit Don

Deficit Don

The cost of financing the deficit have increased following Trump's tax cuts, with the interest charged on the 10-year U.S. Treasury note rising to roughly 3.15 percent from 2.46 percent at the start of the calendar year.

"President Trump and this administration will continue to work with Congress to make the hard choices needed to bring fiscal restraint", Mulvaney said in a statement.

The Federal budget deficit is now $779 billion, the highest its been since 2012, when the deficit topped $1 trillion.

The government's fiscal year runs from October to September, unlike calendar years that begin in January.

The Trump administration in July sharply revised higher its deficit estimates for coming years when it released its mid-session budget review.

Secretary of the Treasury Steve Mnuchin announced the shortfall Monday, but said that because of a combination of factors, the Treasury Department had predicted a budget deficit $70 billion higher. It was the largest deficit since 2012.

Driven by old-age entitlements and surfing on a wave of retiring boomers, the federal government will continue to pile on more debt unless serious structural reforms are undertaken.

Corporate tax collections in the USA fell 22 percent, or $76 billion, in the fiscal year, which ended September 30.

Revenues generally tumbled after December when Trump signed into law US$1.5 trillion of tax cuts over the next decade.

Experts have urged the Republican Congress to take care in reining back spending to help balance any lingering revenue loss from last year's tax cuts.

During a strong economy, the government typically collects more taxes, resulting in a lower budget deficit.

The Trump administration has been trying to remedy the situation with tax cuts, but critics argue that approach will only make the problem worse. 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.

Mulvaney put the blame for this deficit increase on Congress.

"America's booming economy will create increased government revenues - an important step toward long-term fiscal sustainability", Office of Management and Budget Director Mick Mulvaney said in a statement accompanying the data.

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