The U.S. Treasury reported the U.S. federal deficit was $134 billion for the month of October, 34% higher than the year earlier.
Treasury estimated the fiscal 2020 deficit will top $1 trillion for the first time since 2012, surpassing fiscal 2019’s total deficit of $984 billion.
During the 2016 presidential campaign, Donald Trump pledged to wipe out the nation’s debt, but deficits have grown ever since he claimed the presidency, largely because of the massive 2017 tax cut that reduced corporate and capital gains tax rates as well as individual income tax rates. Increased defense and domestic spending also contributed to the total.
The national debt currently tops $23 trillion.
The government spent $33 billion in October servicing the debt load, approximately a quarter of the total deficit amount.
The Treasury report showed the government took in $246 billion in October but spent $380 billion, the largest amount going to Social Security ($89 billion), followed by national defense ($71 billion) and Medicare ($56 billion).
The government took in $126 billion in individual income taxes and $6.5 billion in corporate taxes last month compared with $128.8 billion in individual income taxes and $8 billion in corporate taxes in October 2019. Receipts for Unemployment insurance, retirement programs outside Social Security, estate taxes and excise taxes also were lower. The only increase was in customs duties, $7.2 billion last month, compared to $7 billion a year earlier.
The U.S. debt to gross-domestic-product ratio is 1.15%, just a few ticks below the 1.21% ratio at the end of World War II. The International Monetary Fund has warned countries against piling on debt to prevent a global economic and financial meltdown.
High federal deficits and growing debt can affect interest rates and limit the Federal Reserve’s ability to fight recession.
The U.S. fiscal year begins in October.