The United States government’s budget deficit increased in the first eight months of its fiscal year as spending increased faster than revenues compared with the same period last year.
As reported by Bloomberg, the Treasury Department reported that the budget gap rose 66 percent last month from the previous year. Spending increased by 10.7 percent to $363.9 billion, compared with a 9.7 percent decrease in receipts to $217.1 billion.
U.S. budget deficit for the first eight months of this fiscal year was $532.2 billion. That’s an increase of $99.4 billion from the same period last year, which totaled of $432.9 billion.
During April, a month that usually ends in the black because of the federal income tax filing deadline, the U.S. government had a surplus of $214.3 billion.
Despite the surplus on April, the government recorded a budget deficit of $146.8 billion in May, causing the total deficit so far this year to be 23 percent higher than the same period a year ago.
The increase in deficit echoes the impact of President Donald Trumps’ $1.5 trillion tax cut he pushed through Congress during December.
The Congressional Budget Office expects to push the budget deficit to $804 billion, an increase of $138 billion from last year’s deficit of $665.8 billion. Furthermore, the CBO predicts by 2020, the annual deficits will surpass the $1 trillion-mark, under the impact of the 10-year tax cut passed last year, along with increasing costs for Social Security and Medicare as more baby boomers reach retirement age.
For the first time since the Reagan era, Social Security will have to rely on general revenue funds. Trustees for Social Security and Medicare projected that $416 billion will need to be transferred from the government’s general revenues to pay for benefits this year.
Economists believe that the Trump’s administration’s corporate and individual tax cuts along with increase in government spending will increase U.S. budget deficit despite this year’s robust economy from an unemployment rate as low as 3.8 percent.
So far, this fiscal year, spending increased 5.9 percent to $2.76 trillion and revenue increased by 2.6 percent to $2.22 trillion.