December budget deficit is $23.2B
Three-month total of $224.9B is 7.2% higher than last year
WASHINGTON — The federal government recorded a budget deficit of $23.19 billion in December, smaller than a year ago. But for the first three months of this budget year, the deficit is 7.2 percent larger than the same period last year.
The December deficit was 15.2 percent lower than the $27.3 billion imbalance in December 2016, the Treasury Department reported Thursday. For the first three months of this budget year, the budget deficit totals $224.96 billion, up from a deficit of $209.8 billion for the same period a year ago.
The new tax measure passed in December is expected to trim personal and individual tax collections by $1.5 trillion over the next decade, with individual taxpayers starting to see the reductions in February based on revised withholding tables prepared by the Internal Revenue Service.
Private forecasts project that the current fiscal year’s deficit to be well above last year’s deficit of $665.8 billion, reflecting increased spending in such areas as defense and hurricane relief and reduced revenue as last month’s major tax-cut package takes effect. Economists at JPMorgan Chase are estimating a budget deficit of $765 billion for the current budget year, which would be 15 percent higher than last year’s deficit.
It would also be higher than the estimate made by the Congressional Budget Office in June for a deficit of $563 billion this year. That estimate by the budget office was made before the tax bill passed or the government boosted disaster spending to deal with a series of devastating hurricanes.
The Trump administration contends that the tax cuts will not widen the deficit as much as forecasters are estimating because the lower taxes will spur increased economic growth.
Treasury Secretary Steven Mnuchin repeated at a White House press briefing on Thursday that he expects a jolt to economic growth from tax cuts, which will offset any revenue losses.
The federal government’s budget year runs from Oct. 1 through Sept. 30. Spending and revenue for the first quarter of this budget year both set records.
Revenue from October through December totaled $769.5 billion, up 3.9 percent from the same period last year, while spending totaled $994.5 billion, 4.7 percent higher than a year ago.
Among the areas seeing the biggest increases in spending were the Department of Homeland Security, up $10 billion from the same period a year ago, reflecting increased spending for hurricane relief. And, spending by the Treasury Department was up $10 billion, reflecting higher interest payments as inflation boosted Treasury payments on its inflation-protected securities.
The Congressional budget office said Medicaid spending has slightly slowed, probably to some degree because of the declining unemployment rate, which is at an almost 17-year low.