US deficit spending reached $668 billion in fiscal 2017

US deficit spending reached $668 billion in fiscal 2017
© Getty Images

The federal government's deficit spending was $668 billion in fiscal 2017, an $82 billion increase over the previous year, according to the Congressional Budget Office.

The deficit rose to 3.5 percent of the nation's gross domestic product for the fiscal year, up from 3.2 percent of GDP a year earlier.

Typically, deficits that are higher than economic growth add to a country's overall debt burden, which can lead to higher borrowing costs and, in extreme cases, an inability to pay debts. 

U.S. debt surpassed $20 trillion for the first time in September.

ADVERTISEMENT
The deficit has become a major sticking point in the debate over a Republican tax-reform plan, with some, such as Sen. Bob CorkerRobert (Bob) Phillips CorkerTax Foundation: Senate reform bill would cost 6B GOP senators raise concerns over tax plan Dem House candidate apologizes for saying it 'shouldn't take brain cancer' for McCain to show courage MORE (R-Tenn.), raising concern that the U.S. would have to borrow vast sums to finance a tax cut.

According to CBO, deficit spending in 2017 was about $25 billion less than anticipated as a result of unexpectedly scaled-back spending.

Overall federal revenues were up 1 percent, driven by increased wages and salaries. Revenue growth was held back by declines in corporate income tax payments and nonwithheld payments of income and payroll taxes. Analysts have speculated that such revenues were declining because some taxpayers were deferring certain payments in hopes that a successful tax-reform plan would lower their rate.

Federal spending rose $130 billion in fiscal 2017, largely driven by a handful of agencies. Spending for Social Security rose $29 billion, and Medicare spending increased $22 billion. 

Upward revisions for cost estimates of loan subsidies and guarantees drove increased outlays of $35 billion at the Department of eEucation and $31 billion at the Department of Housing and Urban Development. Similar downward revisions helped reduce Department of Agriculture spending by $10 billion.

Spending on interest payments for the debt increased by $28 billion.