Wednesday, 21 November, 2018

Deficit balloons to $779 billion in Trump's second year

Steven Clarke | 16 October, 2018, 14:28

The Congressional Budget Office estimates that the budget deficit for 2019 will top $1 trillion and will eclipse the trillion-dollar mark in 2020.

In a possible prelude of what's to come, corporate tax revenue dropped 31% in fiscal year 2018 while personal income tax revenues ticked up 6.1%.

The federal government ran a $779 billion deficit in the fiscal year that ended September 30, the largest budget shortfall in six years, the White House reported Monday.

The current fiscal year is likely to see an even larger deficit, potentially in excess of $1 trillion. Borrowing has increased over the a year ago, partially to make up for slower growth in tax revenues due to the tax cuts.

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

The approximately 17 percent jump in the federal deficit came despite the strong growth in the overall USA economy, an unusual instance in which the economy and the deficit are expanding at the same time.

The budget deficit has continued to climb in recent years, raising concerns the country's debt load of more than $21.5 trillion will grow out of control. Annual deficits topped $1 trillion from 2009 to 2012 under President Obama, driven by greater spending on social safety net programs and economic stimulus, as well as slumping tax receipts as the economy cratered.

Data of 29 mn users hacked says Facebook
The social media company announced the breach September 28 and said at the time 50 million users could have been exposed. Using an automated access tokens theft technique, they began to do so with the accounts of the friends of these people.

"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".

But William Gale, a senior fellow at the Brookings Institution, noted that the tax cuts are unlikely to generate a long-term bump in economic growth.

Budget deficits occur when the federal government spends more than it earns.

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

"By cutting taxes in 2017 when the economy was already quite strong, Congress and the administration not only missed a golden opportunity to begin to address the fiscal problem, they actually made the problem worse", he said.

Republican tax cuts, increased federal spending and an aging population have contributed to the fiscal strains, though the GOP says tax reform enacted this year will spur economic growth and lift government revenue.

"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.

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