President Donald Trump likes to boast that he’s breaking records with the latest low unemployment figures. Here’s another record for his administration: The 2018 federal deficit hit the highest level of the last six years.
The deficit jumped 17 percent (or by $113 billion) to $779 billion at the end of Trump’s first fiscal year, according to final figures released Monday by the Treasury Department. That’s mostly due to the massive corporate tax cut that slashed rates from 35 percent to 21 percent for top incomes, choking revenue for spending, which climbed 3 percent. Much of that was a hike in defense spending and money to pay interest on the climbing federal debt, CNN reported.
The U.S. government’s $523 billion in interest payments to service its debt in 2018 — the highest ever — was more than the entire economic output of Belgium this year, Bloomberg reported.
Corporate tax collections in the U.S. fell 22 percent, or $76 billion, in the fiscal year, which ended Sept. 30.
The total federal debt — which combines annual deficits — was 78 percent of the nation’s entire gross domestic product in June. It hasn’t been that large a percentage since World War II.
Trump promised the tax cuts would pay for themselves by boosting business, which would produce more taxes. But that hasn’t yet happened. The Trump administration estimates that the deficit will increase to $1.09 trillion in the next fiscal year.
The federal government usually increases spending — and deficits — to boost a faltering economy — such as during the 2008 recession triggered by the subprime mortgage and banking crisis. But the economy was already in a strong recovery when Trump moved into the White House, and he still boosted the deficit.
“By cutting taxes in 2017 when the economy was already quite strong, Congress and the administration not only missed a golden opportunity to begin to address the fiscal problem, they actually made the problem worse,” William Gale, a senior fellow at the Brookings Institution, told CBS News.
The GOP had traditionally been the party that battled for a balanced federal budget.