The U.S. federal government closed the 2018 fiscal year $779 billion in the red as tax cuts hit revenues and the government paid more to service a growing national debt, according to Treasury Department data released on Monday.
The deficit for the fiscal year – or the 12 months through September – was the largest since 2012.
The data also showed a $119 billion budget surplus in September, which was larger than expected and a record for the month. A senior Treasury official said the monthly surplus was smaller when adjusted for calendar shifts.
Economists generally view the corporate and individual tax cuts passed by the Trump administration late last year and an increase in government spending agreed in early February as likely to balloon the nation’s deficit.
The deficit in the 12 months through September was $113 billion – or 17 percent – bigger than in the same period a year earlier. Adjusting for calendar effects, the gap was even larger, the Treasury official said.
Much of the widening of the deficit came from more spending on interest payments on the national debt. Borrowing has increased over the last year, partially to make up for slower growth in tax revenues due to the tax cuts.
Also fueling debt servicing costs, the U.S. Federal Reserve has been slowly raising interest rates since 2015 in a bid to keep inflation under control.
President Donald Trump has criticized the Fed, saying on Oct. 10 that the U.S. central bank had “gone crazy.” Another factor in the widening of the deficit was an increase in spending on the military.
With the calendar adjustments, the trade surplus in September was $59 billion compared with a $56 billion surplus the year earlier, the Treasury official said. The gap for the fiscal year was $827 billion versus an adjusted $658 billion in fiscal 2017.
Reporting by Jason Lange; Editing by Andrea Ricci
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