Daily Management Review

U.S. Deficit In Current Budget Year Is 40% Higher Y-O-Y


02/14/2019




U.S. Deficit In Current Budget Year Is 40% Higher Y-O-Y
The federal budget deficit of the United States government in the month of December 2018 was calculated to be at $13.5 billion. This resulted in the overall deficit for the fort three months of this budget year was 41.8 per cent more than the comparable period a year ago.
 
According to the data released by the US Treasury Department on Wednesday, compared to the budget deficit in the months of from October through December of 2017 of $225 billion, the deficit reported in the same period this in 2018 was $318.9 billion.
 
According to independent economists, the recent growth in the US economy would start to slow down as the impact of the tax cuts announced by US president Donald Trump in 2017 0- which had temporarily boosted the economy, starts to fade out. This would result in loss of revenues for the government.
 
According to reports, there has been an increase of just 0.2 per cent in the collection of tax revenues so far this budget year which is reflective of the tax cuts that were announced in 2017. On the other hand, government spending in the same period had increased by 9.2 per cent year on year.
 
The justification of the tax cuts by the Trump administration is that it would ultimately result in boosting of consumer spending and result in increased business growth which would in turn increase government revenues.  However independent economists contend that the impact of the tax cuts would not possibly lead to long term economic gains for the US economy.
 
According to predictions of the Congressional Budget Office, there would be an increase of 15.1 per cent in the overall budget deficit for the entire year and reach $897 billion. The budget deficit of the US federal government in 2017 budget year was the highest for the economy since 2012.
 
According to a statement issued by the CBO last month, over the next decade or so, the yearly budget deficits of the US government would continue to increase and would possibly reach a high of $1 trillion starting in 2022. That deficit, according to the CBP, would never drop below the $1 trillion mark till 2029 which is the last year of the forecast of the CBO.
 
In the October-December period, there was a 1 per cent year on year drop in the individual tax receipts according to data available from the new budget report. In the same period, there was a drop of 18 per cent in corporate taxes collected.
 
The tax cuts for the corporate and individuals which was announced by Trump at the end of October to December period for 2018 or the current budget year is being compared to a period a year ago when the tax cuts had not come into force.
 
For the first three months of this budget year, there was an increase of 0.2 per cent year on year in total government receipts at $771.2 while there was a 9.6 per cent year on year increase in outlays at $1.09 trillion for the same period of 2018 budget year.
 
(Source:www.pbs.org)






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