The world’s largest economy is bound to have a wide budget deficit. According to the latest report of the US Department of the Treasury, the budget shortfall reached almost $666 billion in the fiscal year of 2017 that ended on October 1. This sum is really impressive and surprising to both ordinary citizens and policymakers.
Treasury Secretary Steven Mnuchin and Mick Mulvaney, the director of the Office of Management and Budget, have already called this situation the first alarm bell. “These numbers should serve as a smoke alarm for Washington, a reminder that we need to grow our economy again and get our fiscal house in order," Mr. Mulvaney said. Experts connect a sharp rise in fiscal deficit with weak tax returns. This problem can be solved with the help of spending cuts, tax reforms and anti-bureaucracy measures. However, the tax reform that Donald Trump promised to implement during his pre-election campaign has not been carried out yet precisely because of red tape. Moreover, the US Congress adopts resolutions that widen the budget deficit instead of narrowing it. Particularly, it approved the budget resolution that can lead to a decrease in tax revenue by $1.5 trillion.
The Republicans say that alleviation of taxes will help to get this money back into the budget as the economic growth is expected to gather momentum. Despite a gaping hole in the US budget, the fiscal revenue came in at $3.31 trillion rising from the previous level of $3.27 trillion.
