The Treasury Department’s latest numbers show that tax revenue fell and spending grew in the first four months of the fiscal year, producing a 77 percent increase in the federal deficit compared with the prior year, The Washington Post reported on Tuesday.
During the same period in the previous year, the deficit was $176 billion. That number jumped to $310 billion this year, the Treasury said.
The Post noted that the situation sets up both the White House and Congress for a challenge as they head into a number of upcoming budget battles.
Though Republicans talked the talk of fiscal responsibility during the Obama administration, pushing hard to reduce the gap between tax revenue and spending, they are not walking the walk under President Donald Trump, who “has largely pushed for an agenda of tax cuts and spending increases that had grown the deficit markedly.”
October 2018 through January 2019 saw tax revenue decline by $19 billion, according to the Treasury, which also noted a steep 25 percent drop in corporate tax payments in the fiscal year’s first four months.
Corporations came out big winners with the Republican tax cut law in 2017, seeing their tax rate slashed from 35 percent to 21 percent, the Post noted.
That lost tax revenue has combined with spending increases to cause the widening gap, with the largest increases coming by way of a 12 boost in military spending and a 16 percent increase for Medicare.
Overall, the Congressional Budget Office projects the deficit will be close to $900 billion for the year, according to the Post.
There continues to be no sign that the tax cuts will pay for themselves any time soon, as the White House had promised prior to the law’s passage, despite a pickup in economic growth in 2018. To date, that “growth has not come close to the levels needed to offset the $1.5 trillion in tax reductions that were part of the legislation,” the Post said.