The Rising Federal Deficit Is Fueling Growth
Tax cuts and spending increases are a big factor in this year’s economic boomlet. You got a problem with that?
Some things are working out.
Photographer: Alex Wong/Getty Images
The federal deficit has grown a lot over the past six months. This should come as no big surprise, given the tax cuts approved by Congress and signed by President Donald Trump in December and the spending deal reached in February, but it’s still striking to see the actual numbers from the Treasury Department, which last week released data on federal revenue and outlays in June. The U.S. government’s fiscal years begin in October, so we now have data for three quarters of fiscal 2018.
The Congressional Budget Office’s latest projection, which I’ve included in the chart, is that the full fiscal-year deficit will add up to $793 billion, or 3.9 percent of gross domestic product. That’s a little bit lower than the $805 billion it forecast in April, but the change is only a technical one, reflecting updated estimates of health insurance revenue and subsidies under the Affordable Care Act and spending under the appropriations bill signed into law in March. The CBO is still projecting that the deficit will keep rising to $973 billion (4.6 percent of projected GDP) in fiscal 2019 and just over $1 trillion (also 4.6 percent of GDP) in fiscal 2020.