The US federal government’s budget deficit in May rose to a record US$207.8-billion, 41.5 per cent higher than a year ago. Most of that increase reflected the impact of calendar quirks that shifted US$55-billion in June benefit payments into May.
The US Treasury Department said Wednesday that the increase in the May deficit from an imbalance of US$146.8-billion in May 2018 reflected the fact that because June 1 fell on a Saturday, benefit payments for June were paid out in May.
Through the first eight months of this budget year, the budget deficit totals US$738.6-billion, an increase of 38.8 per cent over the same period last year. For the full year, it is expected to climb sharply, with the Trump administration forecasting it will top US$1-trillion from US$779-million last year.
The US Congressional Budget Office is forecasting a slightly lower deficit of US$896-billion for this year, but that would still be up 15 per cent from the 2018 deficit.
The Trump administration is forecasting that the deficits will top US$1-trillion for four years before starting to decline. The CBO is forecasting that the deficits will top US$1-trillion beginning in 2022 and will remain above US$1-trillion annually through 2029.
The big increase in deficits is coming after President Donald Trump’s pushed a US$1.5-trillion tax cut through the US Congress in 2017. Congress then approved sharp increases in spending for the military and domestic programs beginning in 2018.
Spending so far this year totals US$3.01-trillion, up 9.3 per cent from the same period in 2018, while government receipts total US$2.27-trillion, an increase of 2.3 per cent.
Interest on the US$22-trillion national debt is one of the fastest growing parts of the budget with net interest payments totalling US$268.3-billion, up 15.6 per cent from a year ago. That reflects the fact that interest rates have risen and there is now more debt to finance.
Tariff payments to the U.S. Treasury so far this year total US$46-billion, up 80 per cent from a year ago. That reflects the higher tariffs Trump has imposed on China and other nations as part of his effort to strike better trade deals.
On May 10, Trump boosted the tariff on US$200-billion of Chinese goods from 10 to 25 per cent after talks between the two nations on a trade deal sought by Trump broke off.
Trump has said if an agreement is not reached he is prepared to expand the penalty tariffs to another US$300-billion in Chinese products.
Trump and Chinese President Xi Jinping are scheduled to meet at a Group of 20 economic summit at the end of this month with hopes the two nations can make progress on restarting the talks then.