The White House has revised the fiscal year 2019 budget deficit to a projected $1 trillion, the highest since 2012, Office of Management and Budget (OMB) said in its recently released Mid-Session Review.
Without reform, trillion-dollar deficits will continue throughout the budget window, and will drive debt to more than $33 trillion by 2029, Xinhua news agency reported on Tuesday citing the OMB report as saying.
“The trend of growing deficits can be reversed only through concerted efforts of spending restraint and restoring government to the proper size,” it said.
The expanding deficit partially resulted from a 10-year $1.5 trillion tax cut rolled out in late 2017, which substantially reduced corporate and individual income tax rates, it said.
Spending has also soared as a result of increases in defence expenditures, demanded by the Republicans, and increases on health care and education, among others, sought by the Democrats, it added.
Based on the budget proposal for fiscal year 2020 that President Donald Trump sent to Congress in March, over $2.9 trillion will be cut in spending, the report said, noting that deficits will fall from 4.7 per cent of the GDP in 2020 to 0.6 per cent of GDP in 2029.
The revised 2019 deficit is $91 billion lower than the $1.1 trillion deficit projected in March, largely the result of “technical revisions”, it said.
The Treasury Department said on July 11 that the US federal budget deficit reached $747 billion in the first nine months of the fiscal year 2019, up by 23 per cent from the previous year.
The next day, the Department urged Congress to raise the federal debt ceiling before lawmakers leave for the August recess, warning that it will exhaust its cash in early September, near the end of this fiscal year.