The U.S. budget deficit increased $140 billion to $741.1 billion for the first nine months of the fiscal year, an increase of 23.1% over the same period last year, according to the Treasury Department.
The Trump administration is projecting the deficit will top $1 trillion for the full fiscal year, up from $779 billion last year. The Congressional Budget Office projects a deficit of $896 billion.
The deficit surge is from a variety of factors including President Donald Trump’s $1.5 trillion tax cut that he pushed through Congress in 2017 and billions of dollars in extra spending Congress approved in 2018.
Receipts increased 2.7% to $2.61 trillion for the October to June period, while spending increased 6.6% to $3.36 trillion.
The full budget year ends September 30.
The rising deficit did not seem to impact financial markets. The yield on the 10-year Treasury fell to 2.12%, down from a high of 3.23% in November.
Month over month, the June budget deficit fell to $8 billion, down nearly 90% from the same month a year ago, though the decrease was largely due to shifts in the timing of federal payments and of receipts.
Without the shifts in timing, the June deficit would have been $55 billion, up from $30 billion in June 2018.
On Tuesday, the Congressional Budget Office said in a report the federal debt could increase from 78% of GDP in 2019 to 92% percent in 2029. It could hit 144% of GDP in 2049, the highest level ever.
“The prospect of such large deficits over many years, and the high rising debt that would result, pose substantial risks for the nation and presents policymakers with significant challenges,” the CBO said.
But the CBO report said deficits are expected to rise more slowly than previously forecast due to lower interest rates and a decrease in disaster spending.
Trump, during the 2016 presidential campaign, said he would pay off the national debt in about eight years. Last month, White House economic adviser Larry Kudlow said of the increasing spread, “It doesn’t bother me right now.”
Photo: Bill Clark/CQ Roll Call