Washington: After falling for several years, the US budget deficit jumped nearly 34 per cent in fiscal 2016, the Treasury Department announced Friday, but the shortfall was still smaller than originally planned.
The Obama administration’s budget for the year to September 30 came in with a $587 billion (Dh2.16 trillion) deficit, out of $3.85 trillion spent during the year.
A deficit of $28 billion more was forecast in President Barack Obama’s fiscal 2017 budget earlier this year, but lower spending than expected by a number of government departments limited the rise in the gap.
The deficit was far below the trillion-dollar shortfalls of 2009-2013 when government spending soared on efforts to rescue the finance and auto sectors in the economic crash while tax receipts sank.
Even if the 2016 deficit came in under forecasts, slower-than-expected economic growth over the past year meant that the ratio of debt to gross economic product — which measures the weight of debt on the economy — jumped to 3.2 per cent from 2.5 per cent in the 2015 fiscal year.
US Treasury Secretary Jacob Lew said in a statement that the deficit would have been smaller if business tax cuts instituted by Congress in late 2015 had been counterbalanced by measures to boost government income.
“The Obama administration’s agenda has spurred durable economic growth and the longest streak of job growth on record, while sharply reducing the deficit to a sustainable level,” he said.