The US budget deficit skyrocketed to a record $207.8 billion in May

deficitA &quotclock" representing increasing federal debt is projected on Capitol Hill in Washington, Wednesday, July 12, 2017, as Republican members of the House Financial Services Committee question Federal Reserve Chair Janet Yellen.AP Photo/Jacquelyn Martin

  • The US budget deficit ballooned to a record high in the month of May, as federal spending continued to outpace income despite a solid economy.
  • The gap between the amount the government takes in and spends rose nearly 42% last month.
  • In the first eight months of the fiscal year, the deficit increased about 39% to $738.6 billion.

The US budget deficit ballooned to a record high in the month of May, as federal spending continued to outpace income despite a solid economy.

The gap between the amount the government takes in and spends came in at $207.8 billion last month, the Treasury Department said Wednesday, nearly 42% higher than a year earlier. The increase happened in part because of June 1 falling on a Saturday, a non-business day, meaning some benefit payments were made earlier than usual.

Lawmakers typically try to reduce the deficit when the economy is strong, but recent legislation has taken it in the opposite direction. In the first eight months of the fiscal year, the deficit increased about 39% from a year earlier to $738.6 billion.

Tariff receipts were up sharply in May, rising 80% from a year earlier. President Donald Trump has imposed duties on several of the US's largest trading partners in a bid to pressure concessions on policies seen as unfair. But evidence shows that tariffs act as a tax on businesses and consumers at home.

The sweeping tax-cut package that took effect last year is expected to cost $1.9 trillion over the next decade as it constrains government receipts. Republicans vowed the package would pay for itself through higher growth, but evidence suggests otherwise.

Meanwhile, federal spending has jumped more than 9% since the fiscal year began in October. The nonpartisan Congressional Budget Office expects the annual deficit to come in at around $1 trillion by 2022 and remain above that level for at least seven years.

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