WASHINGTON (AFP) - The US budget deficit grew to US$666 billion (S$906 billion) in just-ended fiscal year 2017, according to official data released Friday (Oct 20), after lawmakers took a step toward enacting US$1.5 trillion in tax cuts.

The deficit climbed 13.6 per cent from a year ago, or by US$80 billion, with much of the nearly US$4 trillion the US government spent last year associated with caring for the country's ageing population.

The deficit now accounts for 3.5 per cent of gross domestic product (GDP), up from 3.2 per cent in 2016.

"Growth in spending outpaced growth in tax receipts for the second year in a row as a result of historically subpar economic growth," the Treasury Department said.

But the deficit came in US$36 billion lower than forecast halfway through the fiscal year, which ended Sept 30, officials said.

"Today's budget results underscore the importance of achieving robust and sustained economic growth. Through a combination of tax reform and regulatory relief, this country can return to higher levels of GDP growth, helping to erase our fiscal deficit," said Treasury Secretary Steven Mnuchin.

"These numbers should serve as a smoke alarm for Washington, a reminder that we need to grow our economy again and get our fiscal house in order. We can do that through smart spending restraint, tax reform, and cutting red tape," added Mick Mulvaney, director of the Office of Management and Budget.

Spending grew 3.3 per cent to US$3.98 trillion while revenue fell 0.9 per cent to US$3.32 trillion, while the total federal debt rose to US$14.67 trillion.

Higher outlays for social security, Medicare (a government medical program for the elderly), and Medicaid (for the low-income and disabled Americans) as well as interest on the public debt all contributed to the rise in outlays.

Spending on the military rose one percent to US$569 billion, and 45 per cent in education to US$112 billion.

"Higher spending by the Federal Emergency Management Administration for hurricane relief and recovery also contributed to the increase," it added.

TRUMP PUSHES TAX CUTS

President Trump's administration has championed tax cuts which it says will spur economic growth, leading to future tax revenues.

The US Senate narrowly passed a 2018 federal budget Thursday that includes special instructions that allows Trump's party to pass historic tax reforms with a simple majority vote.

Fiscal conservatives worry a tax cut will add to the national debt, but the Trump administration argues that it will give businesses more money to create jobs and boost tepid economic growth, eventually turning in to higher tax receipts.

The Tax Policy Center, a Brookings Institution-Urban Institute joint venture, says the reforms will cost US$2.4 trillion in lost federal revenues during their first decade, which raises questions about how they will be financed.