The U.S. budget deficit widened to $600 billion halfway through the fiscal year, as spending growth outstripped revenue.
Receipts rose by 1.6 percent to $1.5 trillion between October and March compared with a year earlier, while outlays climbed by 4.8 percent to $2.1 trillion, the Treasury Department said in its monthly budget statement on Wednesday. Corporate income taxes fell to $78.6 billion in the first half of fiscal 2018, from $100.2 billion a year earlier.
Tax and spending measures approved by President Donald Trump are expected to push the budget deficit to $804 billion in the current fiscal year, from $665 billion in fiscal 2017, and then surpass the $1 trillion-mark by 2020. The CBO economic projections released this week were the first since the Trump administration enacted tax cuts this year that the White House says will pay for themselves by generating more economic growth, and also signed off on a $300 billion spending increase.
The non-partisan CBO warned that faster growth would be front-loaded over the next several years — rising to an estimated 3.3 percent this year — before slowing amid rising inflation and interest rates. Federal debt is expected to be almost 100 percent of gross domestic product by 2028, an “amount far greater than the debt in any year since just after World War II,” the CBO said in the report.
Higher spending on social programs for an aging population is another growing strain on the budget. In the first half of fiscal 2018, social security benefits rose by 4 percent as the number of beneficiaries and their average payment rose, according to CBO.
“Projected deficits over the 2018-2027 period have increased markedly since June 2017, when CBO issued its previous projections,” CBO Director Keith Hall said on Wednesday during a Congressional hearing in Washington. “The increase stems primarily from tax and spending legislation enacted since then.”
For March, the budget deficit widened to $208.7 billion, up from $176.2 billion the same month a year earlier, according to Treasury.