February US deficit at record $234 billion
The US monthly budget deficit was at a record high in February.
The US Treasury department reported that the nation’s budget deficit increased 39% in February to $234 billion. That deficit is the largest monthly deficit in the history of the US.
Why is the US budget deficit so high?
The US national monthly deficit is a record, just as the trade deficit is also at an all-time high. The US deficit grew because of increased spending on transportation and agriculture programs from the 2018 budget. Spending totaled $401 billion, jumping from $371 billion in 2018. The government collected $167 billion in revenue.
Two major factors contributed to the deficit, according to economic experts. The corporate tax cuts passed in 2017 was projected to reduce revenue by $1.5 trillion, but be contrasted by economic growth. The tax reduction for corporations led to less corporate taxes collected and economic growth hasn’t been enough to make up for the deficit. The deficit also increased after a growth in defense spending that Congress approved in 2018.
The Treasury Department also noted that the US individual tax season also impacted the nation’s deficit, as the US government collected $15 billion less in tax revenue.
‘February has been a deficit month 53 times out of 65 fiscal years as February is the first full month of the annual individual tax filing season and generally contains elevated individual tax refund levels, while also not containing a major corporate or individual tax due date,’ stated the Treasury Department.
Trump Administration’s response
The Trump Administration has touted a strong economy despite rising deficits. Treasury Secretary, Steve Mnuchin, said that a growing gross domestic product (GDP) will change the trajectory of the nation’s deficit.
‘An extra one percent of GDP growth per year means trillions of dollars of additional economic activity and more revenue to the government,’ said Mnuchin.
Even though the Trump Administration said that more revenue will be added to the US economy, the White House predicted that the deficit will remain over $1 trillion for the next fiscal year.
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