WASHINGTON – The federal government racked up a $76.9 billion deficit in July, with increased government spending and tax cuts keeping the country on track to record its biggest annual deficit in six years.
The Treasury Department reported Friday that in the first 10 months of this budget year, the deficit totaled $684 billion, up 20.8 percent from the same period last year.
Revenues are up only 1 percent this year, the increase held back by a big drop in corporate tax payments. Spending is up 4.4 percent, reflecting a big boost Congress approved earlier this year for domestic and military programs and the rising costs of financing the debt.
The Trump administration last month sharply revised upward its deficit estimates, projecting annual deficits will once again top $1 trillion next year.
For the current budget year, which ends Sept. 30, the administration is now projecting a deficit of $890 billion. That would be up 33.7 percent from last year’s deficit of $665.8 billion.
The administration’s July estimates project that the deficit will top $1 trillion in 2019, climbing to $1.1 trillion that year, and remaining above $1 trillion for three years.
The only other period when the federal government ran deficits above $1 trillion was for four years from 2009 through 2011. That’s when the Obama administration was using tax cuts and increased spending, along with support for the banking system, to combat the 2008 financial crisis and Great Recession, the worst economic downturn since the Great Depression of the 1930s.
President Donald Trump succeeded in getting Congress in December to pass a tax cut of $1.5 trillion over the next decade, fulfilling a longtime Republican goal of cutting the corporate tax rate. It reduced the rate from 35 to 21 percent although most corporations had used various methods to reduce the actual rate they paid under the previous law to below the 35 percent figure.
Friday’s monthly budget report showed that over the past 10 months, corporate taxes are down 20 percent – $55 billion – from the same period a year ago.
The December tax legislation also cut individual taxes although Democrats have said most of that benefit will be seen by the wealthiest taxpayers. So far this year, individual tax receipts are up 2 percent as a result of more people working as unemployment continues to fall.
Through the first 10 months of this year, revenues have totaled $2.77 trillion while spending has totaled $3.45 trillion, both record amounts for the first 10 months of a budget year.
The increases in spending for the 10-month period included $36 billion more for Social Security and $26 billion more for Medicare, the government’s two biggest benefit programs, reflecting rising costs as the baby boomer generation retires. Defense spending was up $27 billion.
Interest on the national debt was up $50 billion. Half that amount went to the higher payments Treasury is making on securities that guard against increases in inflation, and the other half reflecting rising interest rates and a growing amount of debt that must be financed.
The $76.9 billion deficit for the month of July compared to a deficit of $42.9 billion in July 2017. The government has run a deficit in July in 62 of the past 64 years.