The US deficit climbed to $ 779 billion. Why?

This week, the US Treasury Department released the country's monthly bank statement, revealing a $ 779 billion deficit – an unprecedented six-year high and an increase of nearly 17% from $ 666 billion in 2017 According to Stan Collender, one of the leading experts on federal spending, the Trump administration may be responsible.

"From my point of view, the tax law that we have just adopted was the main reason for the increase in the deficit, which went from $ 779 billion in 2018 to an estimated $ 1.1 trillion. dollars in 2019, "said Collender during an interview with FOX Business Liz Claman.

In December, President Trump enacted a major tax reform (the largest ever since President Ronald Reagan has always held the Oval Office) that has permanently lowered the corporate tax rate from 35% to 21%.

That alone cost the federal government about $ 200 billion in revenue, said Collender, who worked with the House and Senate Budget Committees and eventually created a blog, "The Budget Guy."

Although the economy remains strong, Mr. Collender warned that it was unlikely to offset the permanent changes in spending.

In the second quarter of 2018, the US economy grew 4.2%, its highest rate since the third quarter of 2014, according to the Bureau of Economic Analysis. GDP Now, an updated tracking tool monitored by the Federal Reserve Bank of Atlanta, currently estimates a growth of 4% in the third quarter.

"We would compare temporary upkicks in the economy that generate revenue – if that happens – with permanent changes in spending and taxes that will drive up the deficit," he noted.

To cope with a $ 21.6 trillion ($ 523 trillion in interest) deficit and national debt crisis, Trump announced an initiative to cut spending by 5% departments of his cabinet.

Part of Trump's solution – dubbed the "Nickel Plane" – requires every Cabinet department to sabotage "government" by cutting the budget by 5% by the year 2020. Congress has already approved a bill on September defense spending, so the cuts will not apply to the army. Mr. Collender warned, however, that these spending cuts would not really solve the big problem, which includes mandatory spending programs like Social Security and Medicare.

"Congress and the President do not seem willing to cut spending in other places – or anywhere else. And in the meantime, we have accumulated a huge debt and interest that represents the fastest growing portion of the budget, "he said." Yes, the president has asked his cabinet to reduce by 5% the expenditure, but that represents only 25% of the budget. "