Federal Deficit on Track to Exceed $1 Trillion This Year

The federal budget deficit continued to rise in the first quarter of fiscal 2019 and is on pace to top $1 trillion for the year, reports The New York Times.

Federal spending outpaced revenue by $317 billion over the first three months of the fiscal year, which began in October, the budget office reported. That was 41 percent higher than the same period a year ago, or 17 percent after factoring in payment shifts that made the fiscal 2018 first-quarter deficit appear smaller than it actually was.

A significant part of the ballooning deficit is the result of President Trump's tax cuts.

Corporate tax receipts fell by $9 billion for the quarter, or 15 percent. Individual receipts fell by $17 billion, or 4 percent. Interest costs on the debt rose by $16 billion for the quarter, or 19 percent. Interest costs for December were up 47 percent from the same month in 2017.

By cutting taxes without reducing an equivalent amount of spending, Trump merely shifted the method by which funds are sucked out of the private sector of the economy. In this case through deficit spending which results in the Treasury crowding out the private sector when it goes to the debt markets to finance the deficit. Thus making the country less productive because of fewer funds available for private sector capital expenditures.

-RW