WASHINGTON (NYTIMES) - The federal budget deficit continued to rise in the first quarter of fiscal 2019 and is on pace to top US$1 trillion (S$1.36 trillion) for the year, as President Donald Trump's signature tax cuts continue to reduce corporate tax revenue, data released on Tuesday (Jan 8) showed.
The monthly numbers from the Congressional Budget Office also showed an increase in spending on federal debt as rising interest rates drive up the cost of the government's borrowing.
The widening deficit comes despite a booming economy and a low unemployment rate that would typically help fill the government's coffers.
Federal spending outpaced revenue by US$317 billion over the first three months of the fiscal year, which began in October, the budget office reported. That was 41 per cent higher than the same period a year ago, or 17 per cent after factoring in payment shifts that made the fiscal 2018 first-quarter deficit appear smaller than it actually was.
The report did show one area of increasing revenue - from Mr Trump's sweeping tariffs. Revenue from levies on imported steel, aluminum and Chinese goods were up US$8 billion from the same quarter a year ago, an 83 per cent increase.
That increase, however, is nowhere close to the levels needed to support Mr Trump's frequent claims that his tariffs will help pay down the national debt.
This fiscal year is the first to fully incorporate the reduced tax rates that Mr Trump signed into law in late 2017, including cuts for individuals and closely held businesses and steep reductions for corporations.
It continued a trend from the final three quarters of 2018, after the tax cuts took effect: falling tax receipts, at a time of relatively strong economic growth - a combination that shows the tax cuts are achieving nothing close to the administration's promise that they would pay for themselves.
Corporate tax receipts fell by US$9 billion for the quarter, or 15 per cent. Individual receipts fell by US$17 billion, or 4 per cent. Interest costs on the debt rose by US$16 billion for the quarter, or 19 per cent. Interest costs for December were up 47 per cent from the same month in 2017.
"It is entirely predictable and utterly depressing," said Ms Maya MacGuineas, the president of the Committee for a Responsible Federal Budget, which advocates deficit reduction.
"At a time when we should be working to keep the strong economy going and bring our debt down, our lawmakers seem unwilling to pay for anything and they just keep adding to the debt. All signs point that it will continue to get worse before it gets better."
Mr Karl Smith, a senior fellow at the Niskanen Centre, a think tank in Washington, welcomed the numbers as a sign that American fiscal policy is continuing to boost growth and encourage investment, as the economy encounters challenges including Mr Trump's trade war with China.
"The US is facing headwinds from a global slowdown," Mr Smith said, "and needs both the stimulus of high deficits and an incentive to keep corporations expanding through what's likely to be a rough patch of uncertainty, if not outright global recession."
Some of that uncertainty stems from the ongoing partial shutdown of the federal government, which show no signs of ending.
Among other disruptions, the shutdown has slowed the release of the Treasury Department's own monthly deficit estimates. They were scheduled to be released later this week. But a note on the department's website says that release will now be determined when the shutdown ends.
