The federal budget deficit widened in fiscal year 2017 to the sixth highest deficit on record as government spending growth outpaced growth in tax collections for the second year in a row, the Treasury Department said Thursday.
The budget shortfall rose to $666 billion in the fiscal year that ended on Sept. 30, up $80 billion, or 14%, from fiscal year 2016. That tracks with an estimate from the Congressional Budget Office, which had predicted a $668 billion deficit for the last fiscal year.
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Federal tax receipts reached a record high in fiscal year 2017, at $3.3 billion, thanks to slightly faster growth, according to a senior Treasury official. But government outlays also hit a record high last year at nearly $4 billion, 3% higher than they were in the previous fiscal year, thanks to increased spending on Social Security, Medicare and Medicaid, as well as higher interest payments on the public debt.
As a percentage of gross domestic product, the deficit totaled 3.5%, up from 3.2% in fiscal year 2016.
"Today's budget results underscore the importance of achieving robust and sustained economic growth," Treasury Secretary Steven Mnuchin said in a statement accompanying the report. "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."
Mick Mulvaney, the White House budget director, said the figures "should serve as a smoke alarm for Washington" and a reminder to "get our fiscal hour in order."
But deficit hawks, including some in Congress, have warned that a GOP plan to rewrite the tax code could make the country's fiscal situation worse if it adds to the deficit. The Senate approved a budget resolution Thursday that would allow Congress to pass a tax cut that lowers federal revenues by $1.5 trillion over the next 10 years.
Declining government revenues and long-term costs associated with an aging population, including higher Social Security and Medicare spending, are expected to continue pushing up deficits over the coming decades.
Treasury said Friday the government ran an $8 billion surplus in September, much smaller than the $33 billion surplus in September 2016. Receipts fell 2% while outlays grew 5% last month compared with the same period a year earlier.
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(END) Dow Jones Newswires
October 20, 2017 14:25 ET (18:25 GMT)