The federal budget deficit rose dramatically in fiscal year 2018 to the highest level recorded in six years, despite Republicans’ insistence that their tax-reform package would spur sufficient economic growth to offset any loss of revenue.
The deficit rose by $113 billion to $779 billion, a 17 percent increase over fiscal year 2017, the Treasury Department announced Monday. Federal revenue, meanwhile, increased just $14 billion over the same period following a substantial reduction in corporate and individual income taxes, implemented earlier this year as part of the Republican-led tax reform.
Federal outlays increased by 3.2 percent ($127 billion) last year as lawmakers allocated greater resources to the military, Medicaid, Social Security, and disaster recovery. Social Security outlays in particular increased by $39 billion (4 percent), while interest on the public debt rose to $65 billion in 2018, a 14 percent increase over the previous year. The government paid $523 billion in total interest this year, according to the Treasury Department.
Mick Mulvaney, the director of the Office of Management and Budget, maintained that greater economic growth prompted by the GOP-passed tax cut would partially offset the ballooning deficit, but stipulated that spending must be reduced if the issue is to truly be addressed.
“America’s booming economy will create increased government revenues,” Mulvaney said in a statement. “But this fiscal picture is a blunt warning to Congress of the dire consequences of irresponsible and unnecessary spending. . . . Going forward, President Trump and this Administration will continue to work with Congress to make the difficult choices needed to bring fiscal restraint, which, when matched with increasing revenue, will reduce our deficit.”
The newly revised deficit numbers come in the thick of the 2018 midterm campaign, in which many Democrats have begun citing Republicans’ abdication of fiscal responsibility in their appeal to voters.