The Treasury Department announced last week that the federal budget deficit rose to $666 billion for fiscal year 2017 — an increase of around $80 billion from the previous year. In 2017, the amount of revenue the federal government collected totaled $3.3 trillion, while the amount it spent totaled nearly $4 trillion.

Fiscal year 2017 marks the second year in a row that the deficit has risen. For the six years before that, the deficit generally fell — from $1.4 trillion in 2009 to $438 billion in 2015 — as economic conditions improved and some legislative changes were implemented. However, slow revenue growth and rising outlays driven by spending for the elderly, health care, and interest — as well as by quirks in the timing of certain payments — drove the deficit upward in 2016. CBO estimates that deficits will once again eclipse $1 trillion annually by 2022, assuming that current law remains the same. Other observers have projected that milestone could occur as early as 2020 if tax cuts are enacted and spending on disaster relief continues to grow.
The reappearance of rising deficits highlights the need to put our long-term fiscal trajectory on a sustainable path. It also reinforces the point that as lawmakers consider a new framework for the tax code, they should ensure that tax reform is fiscally responsible. The loopholes, deductions and preferential rates in the current tax code are ripe for reform. And doing so will help remove distortions in decision-making that could have positive economic effects in the future.
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Further Reading
United States Is Borrowing at a Higher Rate than the Global Average, Warns IMF
New IMF reports serve as a warning to all countries that global fiscal and economic conditions are veering into dangerous territory.
News from the Quarterly Treasury Refunding Statement
As borrowing has risen, the Treasury has generally been increasing the proportion of bills (maturity of one year or less) in its portfolio of marketable securities.
Moody’s Downgrade of U.S. Credit Rating Highlights Risks of Rising National Debt
For the first time ever, all three major credit ratings agencies have downgraded U.S. credit below their top rating.