The US budget deficit continued to swell in July as government spending rose nearly twice as fast as income, despite a solid economy.
According to estimates from the nonpartisan Committee for a Republic Budget, the gap between federal expenditures and receipts grew 27 percent from a year earlier to $867 billion last month, the Treasury Department said in a report out today, August 13. In the first ten months of the fiscal year, the deficit jumped above its total for all of 2018.
Policymakers have a greater opportunity to reduce the deficit when the economy is solid, but recent legislation has taken it in the opposite direction.
President Trump signed into law this month a two-year agreement that would lift the debt ceiling and increase spending by about approximately $320 billion.
The nonpartisan Committee report showed that the deficit could amount to a $1.7 trillion increase in projected debt levels over the next decade.
That move drew opposition from budget hawks in the White House and on Capitol Hill. In the Senate, the bill passed with more votes from Democrats than Republicans. The president continued to urge support for the agreement in recent months even after a group of conservative lawmakers sent him a letter of opposition.
“You should veto this bill because it is fiscally irresponsible it continues spending hundreds of billions more than what we take in a year and does not put our nation on a path towards a balanced budget,” they wrote in the letter last month..
This all comes against a backdrop of lower government receipts, with tax-cut legislation that took effect last year poised to cost about $1.9 trillion over the next decade. While Republicans initially vowed the package would pay for itself through higher growth, a leading architect of the bill has since walked back that claim.