| |
US July Budget Deficit Up 20% 08/13 06:05
The U.S. budget deficit in July climbed 20% this fiscal year compared to the
last despite the U.S. taking in record income from President Donald Trump's
tariffs, according to Treasury Department data released Tuesday.
WASHINGTON (AP) -- The U.S. budget deficit in July climbed 20% this fiscal
year compared to the last despite the U.S. taking in record income from
President Donald Trump's tariffs, according to Treasury Department data
released Tuesday.
The U.S. saw a 273% increase -- or $21 billion -- in customs revenue in July
over the same period last year, the data showed.
A Treasury official who spoke on the condition of anonymity to preview the
data said overall increased spending is in part due to a mix of expenditures,
including growing interest payments on the public debt and cost-of-living
increases to Social Security payouts, among other costs. This comes as the
federal government's gross national debt creeps up to the $37 trillion mark.
Even as Trump talks about America becoming rich because of his import tax
hikes, federal spending keeps outpacing the revenues collected by the
government. That financial picture might change as companies exhaust their
pre-tariff inventories, forcing them to import more goods and generate even
more in tax revenues that could whittle away at the deficit without
meaningfully reducing it as promised.
If tariffs fail to deliver on Trump's pledge to improve the government's
balance sheet, the American public could be faced with fewer job options, more
inflationary pressures and higher interest rates on mortgages, auto loans and
credit cards. The budget deficit is the annual gap between what the U.S.
government raises in taxes and what it spends, over time feeding into the
overall national debt.
While organizations like the Committee for a Responsible Federal Budget say
that tariff income can be a stream of meaningful revenue -- estimated to
generate about $1.3 trillion over the course of President Trump's four-year
term in office; some economists like Kent Smetters of the University of
Pennsylvania's Penn Wharton Budget Model say tariffs are likely to result " in
only modest reductions in federal debt."
In June, the Congressional Budget Office estimated that President Donald
Trump's sweeping tariff plan would cut deficits by $2.8 trillion over a 10-year
period while shrinking the economy, raising the inflation rate and reducing the
purchasing power of households overall. But revenue estimates are also
difficult to predict as the president has changed his tariff rates repeatedly
and the taxes declared as part of an economic emergency are currently under
appeal in a U.S. court.
A Treasury official did not respond to an Associated Press request for
comment on when the U.S. could begin to see tariff revenue start to put a dent
in the deficit.
Treasury Secretary Scott Bessent said last month on Fox Business Network's
"Mornings with Maria" that the administration is "laser-focused on bringing
this deficit down." The Trump administration expects to make more trade deals
with other nations, including China and other major economies.
For instance, on Monday, Trump extended a trade truce with China for another
90 days, which preserves the 30% tariffs he had imposed as a condition for
negotiations. The previous deadline was set to expire at 12:01 a.m. Tuesday.
Trump posted on his Truth Social platform that he signed the executive order
for the extension, and that "all other elements of the Agreement will remain
the same." Beijing, at the same time, also announced the extension of the
tariff pause, according to the Ministry of Commerce.
|
|
