By Denny Gulino
WASHINGTON (MaceNews) – The U.S. government’s fiscal year has begun with the deficit remaining virtually unchanged compared to a year earlier, at $110 billion – at least after adjusting for some special factors – and not yet showing the widening that most analysts say is inevitable later this year on into the years ahead.
Without those adjustments, primarily $48 billion in benefits that were shoved into September 2017 by the calendar making October 2017’s deficit abnormally narrow at $63 billion, this October’s government red ink was $100.491 billion. Compared to October 2017 that was 59% larger. But actually this October was just about identical to last year, $110 billion versus last year’s $111 billion when comparing apples to apples, Treasury said Tuesday.
The annual deficit for the fiscal year ended in September was $779 billion and the Congressional Budget Office projects this fiscal year will see another $981 billion added to the national debt. After that it gets worse, with likely trillion dollar annual deficits as economic growth slows and the tax cuts cut into government revenue at the same time entitlement spending continues to expand and debt service payments grow larger as interest rates climb.
For this latest October adjusted receipts were $243 billion and government outlays were $353 billion, a mismatch embedded in the nation’s budget mechanism. Analysts universally agree such a wide gap between revenues and outlays is not sustainable. It’s anyone’s guess when markets begin to anticipate the dire budget problems as deficits grow as a proportion of GDP.
While the divided government brought about by the midterm elections was widely hailed as a near guarantee of welcome gridlock in the markets, that view will someday change unless the basic mechanism of debt generation isn’t altered – structural change perhaps less likely any time soon because of continuous gridlock.
The next U.S. budget deadline is Dec. 7, by which time Congress must approve seven appropriations bills or extend the deadline. Otherwise there will be a partial government shutdown. Five other appropriations bills have been passed and signed by the president.