New figures from the US treasury shows government debt is up 21% from this time last year as concerns grow over levels of projected spending.
The Treasury’s figures showed a deficit of US$77 billion for July 2018 and a cumulative deficit for the fiscal year of US$684 billion.
Writing in USA Today Stan Collender, who teaches federal budgeting at the McCourt School of Public Policy at Georgetown University, said that “our nation’s finances are in deep trouble. Spending is up, revenue is down, and this will only get worse.”
— USA TODAY (@USATODAY) August 20, 2018
The deficit could deepen as the Trump administration pushes forward with big budget items such as Space Force, the new arm of the military Trump said he will soon establish. Deputy Defense Secretary Patrick Shanahan told reporters the Pentagon did not yet know how much Space Force would cost, but he expected it would be a figure in the billions.
Also in the works is the wall between US and Mexico, one of Trump’s foundational election promises. A Senate committee projected the wall could cost as much as US$70 billion to build, well up on estimates by the Department of Homeland Security suggesting the wall could be built for around US$21.5 billion.
GOP Rep. Steve Stivers, a budget hawk when Obama was president, voted for Trump's deficit-expanding tax cuts. Now, in an interview with @JohnJHarwood, he's advocating for cuts to Social Security and Medicare as a way to trim the deficit. https://t.co/z7VWXyRJGk
— Mike Calia (@Michael_Calia) August 20, 2018
Tax cuts have added to the deficit
Republican Steve Stivers has responded to the growing deficit by advocating Medicare and social services reform and saying the US needs to “try to figure out how to spend less”.
Talking to CNBC, Stivers said he did not regret the tax cuts the Republicans have implemented and that savings could come from moving people from social benefits into full employment. “It’s a twofer because not only are they getting less government assistance, they probably have a better life economically and they’re actually paying taxes.”
Earlier this year, Trump introduced the largest corporate tax cuts in US history. According to the Joint Committee on Taxation, the recent suite of tax cuts will reduce government revenues by US$135 billion in 2018 and US$290 billion next year.
The Trump administration has also passed a series of bills and lessened limits on spending, adding to the deficit.
At $716 billion, Donald Trump just approved the largest military spending bill in history. The federal deficit is projected to rise to more than $1 trillion by 2020 pic.twitter.com/vpTq3Owv97
— NowThis (@nowthisnews) August 14, 2018
The ballooning deficit is an ongoing problem
The US had previously recorded a trillion dollar deficit during the Obama administration as it grappled with the global financial crisis. But Collender has warned the looming trillion dollar deficit is different to that temporary spike in expenditure as it is “permanent and will only get worse in the years ahead.”
“The Trump deficits are the result of changes in federal spending and revenue that will continue to be in place until some president and Congress decide to reverse them, that is, to increase taxes and make cuts to popular programs,” he wrote.
The Trump administration is planning a further deficit-financed tax cut ahead of the mid-term elections in November 2018. This move, however, is given little chance of passing through parliament.