WASHINGTON – The federal government recorded a small budget surplus in June, but the deficit so far this budget year is still running 26.7 per cent higher than a year ago.
The Treasury Department said Wednesday that the government ran a $6.3 billion surplus in June, a month that is often a surplus month because of quarterly tax payments from individuals and businesses. The surplus in June 2015 was an even larger $50.5 billion.
For the first nine months of this budget year that began Oct. 1, the deficit totals $400.8 billion, wider than a deficit of $316.4 billion for the same period last year. The Congressional Budget Office is forecasting that this year’s deficit will end up at $534 billion, almost 22 per cent higher than the 2015 deficit.
So far this year, government revenue is up a modest 0.9 per cent to $2.47 trillion, while government outlays are up 3.8 per cent to $2.87 trillion.
Last year’s lower deficit stemmed from spectrum auction sales by the Federal Communications Commission, which raised $30 billion. The spectrum auctions this year raised a smaller $8 billion for the government.
Last year’s deficit declined to $439 billion, representing a significant improvement from the first four years of the Obama administration when the deficits topped $1 trillion annually. Those deficits reflected the impact of a deep recession on government tax revenues and various efforts by the government to jump-start economic growth and stabilize the nation’s banking system.
The CBO projects that the deficits will keep growing over the next decade and will once again top $1 trillion annually beginning in 2022. Much of that increase will reflect higher costs for Social Security and Medicare as millions of baby boomers retire.
An analysis of the budget plans of the GOP and Democratic presidential candidates performed earlier this month by the Committee for a Responsible Federal Budget estimates that Donald Trump’s tax and budget program would increase the national debt by $10 trillion or more over the coming decade. The group’s analysis says much of that increase in the cumulative deficits over the next 10 years would occur because of the size of the presumptive Republican nominee’s proposed tax cuts.
The group said that the plans of Democrat Hillary Clinton would increase the cumulative deficits over the next decade by about $250 billion. The lower deficit estimate for Clinton reflects in part the fact that she would use tax increases to pay for her proposals such as making the Affordable Care Act more generous.
Trump’s tax plans include lowering the top income tax bracket from 39.6 per cent to 25 per cent and reducing the top corporate tax rate from 35 per cent to 15 per cent. The Committee for a Responsible Federal Budget estimates that Trump’s plans would add $9 trillion-plus to cumulative deficits over the decade. Clinton would increase taxes by $1.25 trillion over the same period, chiefly through a 4 per cent surtax on top earners and a limit on deductions taken by the wealthy.