One year ago, the CBO forecasted that the Fiscal 2017 US deficit (for the year ended September 30), would be in the mid-$500 billion range. It was not meant to be, however, and on Friday the Treasury reported that with outlays of $341 billion in the last month of the fiscal year, offset by $349 billion in receipts, the full year deficit grew to a nice, round and very memorable $666 billion in fiscal 2017, up $80 billion or 14% from fiscal 2016. The government ran an $8 billion surplus in September, much smaller than the $33 billion surplus in September 2016. Receipts fell 2% while outlays grew 5% last month compared with the same period a year earlier.
For the full year, federal tax receipts reached a record high $3.315 trillion, thanks to slightly faster growth, according to a Treasury official quoted by the WSJ. But government outlays also hit a record high last year at nearly $4 trillion ($3.981 trillion to be precise), 3% higher than they were in the previous fiscal year, thanks to increased spending on Social Security, Medicare, and Medicaid, as well as higher interest payments on the public debt. And that’s with interest rates that were near all time lows. We can’t wait until the $20+ trillion in Federal debt starts really hitting the bottom budget line as the Fed starts pushing rates higher.
As a percentage of gross domestic product, the deficit totaled 3.5%, up from 3.2% in fiscal year 2016. The good news is that after contracting for 4 consecutive months in early 2017, federal government receipts have once again started grown on a Y/Y basis.
“Today’s budget results underscore the importance of achieving robust and sustained economic growth,” Treasury Secretary Steven Mnuchin said in a statement accompanying the report. “Through a combination of tax reform and regulatory relief, this country can return to higher levels of GDP growth, helping to erase our fiscal deficit.” It remains unclear how incurring another $1.5 trillion in debt in a time of rising rates to provide debt relief mostly to the wealthy is synonymous with erasing the fiscal deficit.
