Earlier this month, the Treasury Department announced that the US federal budget deficit climbed to $779 billion in fiscal year 2018, which ended Sep. 30, 2018. That's a nearly 17% spike from 2017, when the deficit was $666 billion, and roughly on par with the deficit in fiscal year 2012, when the US was still recovering from the 2008 financial crisis. Analysts within and without the Trump administration expect that $101 billion will be added in 2019, swelling the deficit to more than $1 trillion.
The Trump administration attributes the deficit rise to increased spending both on defense and on domestic initiatives. Outside analysts, however, say that Trump tax cuts - particularly those benefiting corporations with a reduction in the top rate from 35% to 21% - led to a sharp decline in revenue. While personal income tax collections were up, corporate taxes have fallen by a third. Revenues were down to 16.5% from 17.2% in 2017. According to figures released by the Treasury Department, revenue is now a full percentage point lower than the average over the last 40 years.
When crafting Trump's tax policies, Republicans argued that the corporate and individual tax cuts would make up for the loss in tax revenue through faster economic growth. Indeed, Treasury Secretary Steve Mnuchin said in April of 2017 that the cuts would yield such unprecedented growth that in effect they would "pay for themselves." This hasn't proved to be the case, as many analysts, including the Congressional Joint Committee on Taxation, expected.
Revenue was lower despite Trump's tariffs, which added $41.3 billion in 2018 - an increase of about 20% from last year. Trump has promised to use the revenue from these tariffs on steel, aluminum, and Chinese products to pay down the national debt. However, it's unclear if revenue from tariffs will ever make up the difference of what was lost through the tax policy, particularly since manufacturers and consumers may simply turn to products from other countries that are not subject to tariffs.
While the debate over whether federal deficits matter has yet to be settled, some consider the rise to be worrisome. Further, because Republicans (including Trump, who promised to eliminate the national debt in two presidential terms) have traditionally taken the position that the federal deficit should be reduced, some see the growth of the debt under their watch as hypocritical. Still, because the cuts only went into effect in January of 2018, it has not yet been a year since they were enacted, and thus their full impact has yet to be measured.