The US federal deficit soared to $310 billion to start fiscal year 2019, up 77% from the year before
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- The US federal deficit hit $310 billion in the first four months of the 2019 fiscal year, the Treasury Department reported Tuesday.
- That amount represents a 77% increase compared to the same period in fiscal year 2018.
- The increase was driven by a 2% drop in tax revenue and a 9% increase in spending.
The US federal deficit just keeps getting bigger.
According to a report from the Treasury Department released Tuesday, the budget deficit - that is the difference between what the federal government takes in and what it spends - hit $310 billion in the first four months of fiscal year 2019.
Fiscal years for the federal government run October through September, so the data reflects the shortfall from October 2018 through January 2019. Based on the data, the deficit increased by 77% compared to the same period the prior year.
The shortfall was due to a 9% increase in federal spending, while tax revenues dropped by 2%.
The statements showed recent legislative changes supported by the Trump administration helped drive a significant portion of the deficit's increase.
The Republican tax-reform law, named the Tax Cuts and Jobs Act, had a dramatic effect on the amount of money coming into the Treasury's coffers. Corporate tax revenues declined drastically, down just over 20% compared to the first four months of fiscal year 2018. The drop in personal income taxes was less drastic, falling around 5% compared to the same period last year.
The spending increase was mainly driven by the bipartisan budget agreement, signed into law by Trump last March.
Interestingly, Trump's tariff also boosted revenues to $25 billion for the first four months of the fiscal year, roughly double the amount collected last fiscal year.
The budget deficit for fiscal year 2018 hit $779 billion, the highest annual deficit since 2012, and the government issued more than $1.3 trillion in new debt during calendar year 2018. In February, the total national debt passed $22 trillion for the first time ever.
According to the Congressional Budget Office, the combination of the increased debt from the GOP tax law and the higher levels of spending will result in a deficit around $900 billion for the full 2019 fiscal year.