Federal Deficit Soars 32% To $895 Billion After Passage Of GOP Tax Cuts
The federal deficit has climbed 32% to $895 billion over the first 11 months of fiscal year 2018, according to the Congressional Budget Office (CBO).
The nonpartisan CBO cited the recent Republican tax law as well as the bipartisan agreement to increase spending as the primary drivers of the increase. As a result, revenue only rose 1%, failing to keep up with a 7% surge in spending. The CBO also estimates $222 billion more than the shortfall recorded during the same period last year.
The government took in about $105 billion more in individual and payroll taxes but $71 billion less in corporate taxes. Spending on interest on the public debt increased by $55 billion, or 19%.
Spending on the three largest mandatory programs – Medicare, Medicaid and Social Security — grew by 4% during the period, while defense spending rose by 6%. Spending on net interest on the public debt jumped by 19%.
Council of Economic Advisers Chairman Kevin Hassett acknowledged the 2017 tax cuts have increased the deficit “a little bit,” during a Monday press briefing, but added that the economic growth spurred by the tax cuts have nearly paid for the reduced corporate rate.
“I think that the notion that the corporate tax side has about paid for itself is clearly in the data,” Hassett said. “On the individual side, there was about a trillion-dollar cost. About $700 billion of that was a refundable child credit that got expanded at the last minute to get the votes they needed to pass it.”
In April, the CBO had projected that the deficit would reach $804 billion by the end of fiscal 2018, at the end of September, and surpass $1 trillion by 2020 — which pushed up the CBO’s previous projection for hitting $1 trillion by two years. Now, the deficit will near $1 trillion by the end of fiscal 2018 and almost certainly top it by the end of the calendar year.