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USA ends fiscal 2017 with $666 billion budget deficit

The federal deficit in fiscal year 2017 grew by $80 billion to $666 billion, its highest level since 2013.

It represented a 13.6 percent year-on rise.

The deficit now accounts for 3.5 per cent of gross domestic product (GDP), up from 3.2 per cent in 2016.

What happened: Higher outlays for Social Security, Medicare, and Medicaid, as well as interest on the public debt, contributed to the boost in spending for the year, the Treasury Department said.

The budget shortfall rose to $666 billion in the fiscal year that ended on September 30, up $80 billion, or 14%, from fiscal year 2016.

"Today's budget results underscore the importance of achieving robust and sustained economic growth". But government outlays also hit a record high last year at almost $4 trillion, 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.

Federal spending grew twice as fast as revenue, accounting for the massive jump in red ink.

Spending on the military rose one percent to US$569 billion, and 45 per cent in education to US$112 billion.

The Tax Policy Center, a Brookings Institution-Urban Institute joint venture, says the reforms will cost US$2.4 trillion in lost federal revenues during their first decade, which raises questions about how they will be financed.

News of the deficit's expansion came just after the Senate passed a budget that would open the door for a tax reform package adding $1.5 trillion to the deficit. The national debt, meanwhile, has exceeded $20 trillion.

President Donald Trump and his GOP allies on Capitol Hill hope the tax measure will spark a burst of economic growth and pay big political dividends for the party.



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