Economic Report: Federal budget deficit increases 79% in July

Economic Report: Federal budget deficit increases 79% in July

The federal budget deficit is up 21% for the fiscal year to date, according to the Treasury Department.

The numbers: The federal government ran a monthly budget deficit of $77 billion in July, up 79% over the same month a year ago. For the first 10 months of fiscal 2018, the shortfall totals $684 billion, according to the Treasury Department. That’s an increase of 21% compared to the same period in 2017.

What happened: Receipts fell 3% compared to last July, with the government getting less money from both corporations and individuals in the wake of the new tax law. Corporate revenues were down 34% as companies enjoyed a reduced 21% tax rate. And individuals continued to send fewer tax dollars to the Treasury, after lower withholding from paychecks took effect in February. President Donald Trump signed the law in December.

Spending, meanwhile, jumped by 10% in July as the government shelled out more for programs across the board. Interest payments on the public debt jumped by 41% in the month.

Big picture: Congressional budget analysts predict the deficit for the full year will be about 19% bigger than last year’s shortfall, the result of both the Republican tax law and spending boosts approved by lawmakers earlier this year. The Congressional Budget Office predicts trillion-dollar deficits will return in 2020.

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