US annual budget deficit nears US$1 trillion

WASHINGTON: The US budget deficit widened to almost US$1 trillion in the latest fiscal year, surging to the highest level since 2012 as President Donald Trump cut taxes and boosted spending.

The gap increased by 26% to Us$984bil in the 12 months through September, representing 4.6% of gross domestic product, the Treasury Department reported Friday. The fourth straight increase confirms that the deficit under Trump is on pace to expand to historic levels.

Few economists outside the administration expect the GOP’S US$1.5 trillion in tax cuts to deliver a sustainable economic boost that would narrow the gap. The deficit – which has little precedent at these levels outside recessions or wartime – is set to widen further as spending increases for mandatory programs and interest payments.

The ballooning gap has stirred vigorous debates over how much the government can borrow and spend without driving up interest rates or inflation. At the same time, price gains and yields remain historically low despite the expanding deficit.

For the 12-month period, spending rose 8.2%, the most since 2009, totalling US$4.45 trillion on increased outlays for the military, health care and education. Revenue advanced 4% to US$3.46 trillion, helped by Us$70.8bil in customs duties. For September alone, the surplus was Us$82.8bil, compared with Us$119.1bil a year earlier.

“President Trump’s economic agenda is working,” Treasury Secretary Steven Mnuchin said in a statement accompanying the release. “In order to truly put America on a sustainable financial path, we must enact proposals – like the president’s 2020 budget plan – to cut wasteful and irresponsible spending.” — Bloomberg