Northwest Arkansas Democrat-Gazette
Deficit surges 41.8 percent from year ago
Spending gap for fiscal ’19 forecast to hit $897 billion
WASHINGTON — The federal budget deficit in December totaled $13.54 billion, helping to push the deficit for the first three months of this budget year up 41.8 percent from the same period the previous year.
The Treasury Department said Wednesday that the budget deficit from October through December, the first quarter of the fiscal 2019 budget year, totaled $318.94 billion, up from a deficit of $225 billion for the same three months a year ago. Total government receipts were $771.2 billion for the first three months of this budget year, a gain of 0.2 percent. Outlays totaled $1.09 trillion, up 9.6 percent from the first three months of the 2018 budget year.
The Trump administration contends that its tax cuts will end up boosting government revenue because they will spur increased economic growth. But private economists believe the temporary boost for the tax cuts will soon fade and growth will slow again, resulting in lost government revenue.
The new budget report showed that corporate and individual-income tax receipts both fell in the quarter, by 17.3 percent and 3.5 percent respectively, the Treasury data showed.
The $1.5 trillion tax cut that President Donald Trump pushed through Congress in December 2017 took effect in January of last year. That meant that the current budget year is being compared to a period from last year’s budget before the tax cuts took effect.
Tariffs imposed by the Trump administration on Chinese goods and other imports including steel and aluminum are boosting revenue. Customs receipts nearly doubled to $17.8 billion in the first quarter from a year earlier, according to Treasury. The trend is “largely because of new tariffs imposed by administration in the past year,” according to a separate budget analysis by the nonpartisan Congressional Budget Office released last month.
The Congressional Budget Office is projecting that this year’s deficit will jump to $897 billion, up 15.1 percent from last year’s deficit of $779 billion. Last year’s deficit had been the largest since 2012.
The budget office said last month that the annual deficits are headed higher over the next decade and will top $1 trillion starting in 2022 and will never drop below $1 trillion in annual deficits through 2029, the end of the budget office’s forecast window.
The growing budget deficit is concerning for fiscal hawks, who say it risks economic growth and U.S. credit quality. Net interest payments on the national debt jumped 19 percent to $99.6 billion in the first quarter of fiscal 2019.
Accumulating deficits add to the overall federal debt, which totaled more than $22.04 trillion as of Tuesday. 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 government ran a deficit of $13.5 billion in December, compared with a $23.2 billion-gap the same month a year prior, according to Treasury. The department’s report was originally scheduled for release in January but was delayed by the partial government shutdown.