Shortfall is largest since 2013, sixth-highest on record
By Robert Schroeder
The numbers: The federal government finished fiscal 2017 with a budget deficit of $666 billion, an increase of $80 billion over the previous year. It was the biggest shortfall since 2013 and the sixth-highest on record.
The deficit equaled 3.5% of gross domestic product, up slightly from the prior year. Spending rose by 3% for the fiscal year, while receipts climbed by 1%. The government’s fiscal year runs from October through September.
What happened: Higher outlays for Social Security, Medicare, and Medicaid, as well as interest on the public debt, contributed to the boost in spending for the year, the Treasury Department said. Higher spending by the Federal Emergency Management Administration for hurricane relief also boosted overall outlays. The agency’s disaster relief spending climbed by 33% for the year.
Receipts grew as individual withheld and payroll taxes climbed, a factor the Congressional Budget Office has attributed to increases in wages and salaries. Tax receipts were partially offset by lower deposits of earnings by the Federal Reserve, Treasury said.
Big picture: The fiscal year numbers come as President Donald Trump and congressional Republicans are pushing a tax cut that could add even more to the deficit: $1.5 trillion over 10 years. The Senate on Thursday night passed a budget bill that paves the way for tax cuts, but lawmakers haven’t released a tax bill yet.
The Trump administration has expressed confidence that the tax cut can be paid for through economic growth. The national debt, meanwhile, has exceeded $20 trillion. In a report last summer, the CBO estimated that debt held by the public would rise to about 91% of the economy by 2027, absent major policy changes.