WASHINGTON – The federal government last month recorded the biggest monthly budget deficit since February, and the deficit so far this budget year is running 10 per cent higher than a year ago.
The Treasury Department said Wednesday that the deficit came in at $112.8 billion in July, highest since February’s $192.6 billion but down from $149.2 billion in July 2015. For the first 10 months of the budget year, which ends Oct. 1, the deficit was $513.7 billion, up from $465.5 billion a year earlier.
The government runs a deficit when it spends more than it collects in taxes and other revenue.
So far this budget year, government revenues are flat from a year earlier but spending is up 2 per cent. Spending rose on interest payments and Medicaid, a health care program for the poor. Revenue from corporate taxes is down 12 per cent so far this year, reflecting a drop in business profits.
The Congressional Budget Office predicts the 2016 deficit will total $590 billion, up from last year’s budget gap of $439 billion, largely because of lower-than-expected revenues.
Accumulating budget deficits add to the federal debt, now nearly $19.4 trillion. That figure includes $5.4 trillion the government owes itself, mostly from borrowing from Social Security.
The Center for a Responsible Budget estimates that Hillary Clinton’s budget plans— including an expansion of the Affordable Care Act — would add $250 billion to the debt over a decade.
It is recalculating its assessment of Donald Trump’s tax and spending plans after the Republican presidential nominee offered a revamped economic plan this week. Trump’s earlier plan would have added $11.5 trillion to the debt over a decade, largely through massive tax cuts. The new plan, which scaled back the tax cuts, would add “significantly less” to the debt — though Trump’s plan to reduce business taxes alone would swell the debt by $2.55 trillion over 10 years, the group says.