Monthly bud­get gap hits $214.1B

U.S. red ink in Au­gust pushes 11-month deficit to $898.1B

Arkansas Democrat-Gazette - - NEWS - MARTIN CRUTSINGER

WASH­ING­TON — The fed­eral gov­ern­ment racked up a $214.1 bil­lion deficit in Au­gust, dou­ble the red ink from a year ago, an in­crease that the Trea­sury Depart­ment said could be par­tially at­trib­uted to quirks in the cal­en­dar.

Trea­sury of­fi­cials said Thurs­day that the monthly deficit in Au­gust pushed the over­all deficit for the first 11 months of the fed­eral bud­get year to $898.11 bil­lion, 33 per­cent higher than the same pe­riod a year ago.

With just one month to go in the cur­rent bud­get year, which ends Sept. 30, the gov­ern­ment is on track to run up the big­gest an­nual deficit in six years.

The Au­gust im­bal­ance, which was a record for the month of Au­gust, looked worse be­cause large ben­e­fit pay­ments that would have been made in Septem­ber got pushed into Au­gust be­cause Sept. 1 fell on a Satur­day.

In ad­di­tion, So­cial Se­cu­rity pay­ments, which are nor­mally made on the 3rd of each month, were pushed into Au­gust be­cause Sept. 3 was the La­bor Day hol­i­day.

Pres­i­dent Don­ald Trump’s ad­min­is­tra­tion is fore­cast­ing that the deficit for the cur­rent fed­eral bud­get year, fis­cal 2018, will to­tal $890 bil­lion. That would rep­re­sent a 33.7 per­cent in­crease from last year’s deficit of $665.8 bil­lion. It would be the largest deficit since an im­bal­ance of $1.1 tril­lion in 2012.

While the 11-month to­tal is al­ready above the $890 bil­lion mark, it is ex­pected that Septem­ber will show a small sur­plus given that so many Septem­ber ben­e­fit pay­ments were made early.

Pres­i­dent Don­ald Trump won a ma­jor leg­isla­tive vic­tory when he got Congress to ap­prove last De­cem­ber a tax cut of $1.5 tril­lion over the next decade, ful­fill­ing a long­time Repub­li­can goal of cut­ting the cor­po­rate tax rate from 35 per­cent to 21 per­cent.

The tax cuts, which also in­cluded re­duc­tions for in­di­vid­u­als, be­gan tak­ing ef­fect on Jan. 1 and have played a big role in re­duc­ing the growth in tax rev­enue this year.

So far this year, gov­ern­ment rev­enue is up 0.6 per­cent to $2.99 tril­lion. That re­flects a 1 per­cent gain in in­di­vid­ual taxes with­held from pay­checks and a 20 per­cent drop in cor­po­rate tax pay­ments.

Gov­ern­ment out­lays have far out­paced the small rise in rev­enue, in­creas­ing 6.7 per­cent to $3.88 tril­lion for the pe­riod Oc­to­ber through Au­gust.

The big spend­ing in­creases in­clude a 13 per­cent rise in in­ter­est pay­ments on the pub­lic debt and an 8 per­cent rise in So­cial Se­cu­rity pay­ments, re­flect­ing the grow­ing num­ber of baby boomers who are re­tir­ing and a 9 per­cent rise in pay­ments for Medi­care, re­flect­ing ris­ing re­tire­ments and ris­ing costs for med­i­cal care.

Ac­cu­mu­lat­ing yearly bud­get deficits adds to the over­all fed­eral debt, which to­taled $21.45 tril­lion as of Wed­nes­day. That fig­ure in­cludes more than $5.6 tril­lion the gov­ern­ment owes it­self, in­clud­ing about $2.8 tril­lion bor­rowed from the So­cial Se­cu­rity Trust Fund, ac­cord­ing to Trea­sury Depart­ment reports.

The Trump ad­min­is­tra­tion in July sharply boosted its deficit es­ti­mates com­pared with the pro­jec­tions it had made in Fe­bru­ary when it sent its 2019 bud­get to Congress. The ad­min­is­tra­tion now ex­pects the deficit will top $1 tril­lion next year and re­main above $1 tril­lion for three con­sec­u­tive years.

The only other pe­riod when the fed­eral gov­ern­ment ran deficits above $1 tril­lion was for four years from 2009 through 2012 dur­ing Pres­i­dent Barack Obama’s ad­min­is­tra­tion when the gov­ern­ment was us­ing tax cuts and in­creased spend­ing to com­bat the af­ter­math of the 2008 fi­nan­cial cri­sis and a deep re­ces­sion.

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