U.S. bud­get deficit rises 38% in year, hits $63.2B

The Palm Beach Post - - MONEY & MARKETS - By Martin Crutsinger

WASHINGTON — The fed­eral gov­ern­ment be­gan its new bud­get year with an Oc­to­ber deficit of $63.2 bil­lion, up sharply from a year ago.

The Trea­sury Depart­ment re­ported Mon­day that the Oc­to­ber deficit was 37.9 per­cent higher than the $45.8 bil­lion deficit recorded in Oc­to­ber 2016.

Both gov­ern­ment re­ceipts and spend­ing were up for the month, with re­ceipts climb­ing 14.3 per­cent to $235.3 bil­lion, a record for the month of Oc­to­ber. The larger spend­ing fig­ure was up a siz­able 11.6 per­cent to $298.6 bil­lion.

The deficit for the 2017 bud­get year, which ended on Sept. 30, to­taled $666 bil­lion, up 13.7 per­cent from a 2016 deficit of $586 bil­lion.

Many fore­cast­ers be­lieve the deficit will rise higher in the cur­rent bud­get year, re­flect­ing the im­pact of pro­posed tax cuts Congress is con­sid­er­ing and hur­ri­cane re­lief.

The Con­gres­sional Bud­get Of­fice es­ti­mated in June that the deficit for the cur­rent bud­get year, which runs from Oct. 1 to Sept. 30, would fall to $563 bil­lion. How­ever, that es­ti­mate did not in­clude money for a tax cut be­ing pushed by the Trump ad­min­is­tra­tion and GOP law­mak­ers. It also did not in­clude in­creased spend­ing to deal with three dev­as­tat­ing hur­ri­canes that have hit the U.S. main­land and ter­ri­to­ries.

Tak­ing those de­vel­op­ments into ac­count, econ­o­mists at JPMor­gan Chase es­ti­mate that the deficit in the cur­rent bud­get year could climb to $675 bil­lion, with the deficit in 2019 ris­ing even higher to $909 bil­lion.

Law­mak­ers passed a bud­get res­o­lu­tion that would pro­vide for $1.5 tril­lion in ad­di­tional deficits over the next decade to re­flect the lost rev­enue from the pend­ing tax cuts. The Trump ad­min­is­tra­tion con­tends the tax cuts will end up gen­er­at­ing in­creased eco­nomic ac­tiv­ity and will not be that ex­pen­sive.

For Oc­to­ber, the 11.2 per­cent rise in spend­ing re­flected an in­crease of $4 bil­lion in spend­ing by the Depart­ment of Home­land Se­cu­rity, with out­lays ris­ing from $4 bil­lion in Oc­to­ber 2016 to $8 bil­lion last month, a jump at­trib­uted to hur­ri­cane re­lief.

The 14.3 per­cent in­crease in rev­enues in­cluded a $12 bil­lion in­crease in in­di­vid­ual taxes, in­clud­ing pay­roll taxes for So­cial Se­cu­rity, com­pared to Oc­to­ber 2016.

The gov­ern­ment has run deficits in Oc­to­ber for each of the past 64 years.

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