Federal deficit increases by 17% with lower taxes on government revenue: NPR

Updated at 13:27. AND

The federal deficit climbed to $ 779 billion during the fiscal year just ended – a tide of remarkable red ink for a country that is not plunged into recession or war .

The government is expected to borrow more than $ 1 trillion over the next year, partly to offset tax revenues that have been reduced by tax cuts granted by the state government.

Corporate tax recovery decreased by 31% in the year ended September 30, despite strong corporate earnings. Not surprisingly, legislators have lowered the corporate tax rate from 35% to 21%.

Income tax withheld by individuals increased by 1%. Overall tax revenues have remained stable. As a share of the economy, tax revenues fell to 16.5 percent of GDP, compared with 17.2 percent the year before.

"The president is very aware of the realities presented by our national debt," said White House Budget Director Mick Mulvaney.

He emphasized that accelerating economic growth would help fill the gap, although there is no evidence that growth is in government coffers.

The White House also claimed that public spending was the cause of the gaping gap, even though spending had only gone up by 3% over the fiscal year and spending in proportion to the economy had actually declined.

"This fiscal situation is a brutal warning to Congress of the dire consequences of irresponsible and unnecessary spending," Mulvaney said in a statement.

Senate Republican leader Mitch McConnell, R-Ky., Described the growing deficit as "very disturbing". He argued that the problem was not about tax cuts or increased military spending, but rather the three major benefit programs: Social Security, Medicare and Medicaid.

"There has been bipartisan reluctance to tackle rights changes because of the popularity of these programs," McConnell said in an interview with Bloomberg. "I hope that at some point we will be serious about it – we have not gone yet."

McConnell's comments provoked a quick reprimand from the main Democrat in the Senate, Chuck Schumer, D-N.Y., Who blamed the growing deficit on "Republican tax cuts for the wealthy".

"Suggest now to remove the middle class programs earned such as Medicare, Social Security and Medicaid, as the only financially responsible solution to solving the debt problem, is nothing less than the Gas lighting, "said Schumer.

The Treasury Department's end-of-year report was broadly in line with White House and congressional forecasts. Although White House economic adviser Larry Kudlow falsely claimed in June that the deficit was shrinking, the upward trend in red ink prices was widely anticipated.

"As one could expect, the recent tax cuts and spending increases, all of which are on the national credit card, further compound the problem," said Maya MacGuineas, Chair of the Committee. for a responsible federal budget.

Growing deficits, combined with rising interest rates, will put increasing pressure on other government spending priorities. MacGuineas notes that interest payments have increased 24% over the past 12 months, reaching $ 325 billion.

"Those elected to Congress this year will face difficult and difficult choices to reduce debt and protect our country's social insolvency programs," MacGuineas said. "This is no longer a problem for the future."

The deficit generally increases during a recession – when tax revenues decline and demand for food stamps and other forms of government assistance increase – and then decline during good times

The current peak of the deficit in a period of strong economic growth and low unemployment is a break with this historical pattern.

The last time unemployment was so low – in 1969 – the federal government had a small surplus.

After peaking at close to 10% of GDP in 2009, the deficit declined as a share of the economy until 2015. It has since increased, reaching 3.9% of GDP over the past year. past year.