Debt would likely worsen in the coming years with the Trump administration expecting the deficit to top US$1 trillion in 2019, almost matching the US$1.1 trillion imbalance from 2012. But the Trump administration initially promised that the tax cuts would pay for themselves through stronger growth - and there is no sign so far of that happening. That would be the first time the deficit exceeds $1 trillion since 2012, when the American economy was still recovering from the Great Recession.
"Going forward the President's economic policies that have stimulated strong economic growth, combined with proposals to cut wasteful spending, will lead America toward a sustainable financial path", Mnuchin said.
The deficit is equivalent to 3.9 per cent of GDP, up from 3.5 per cent in the 2017 fiscal year, according to the report. Borrowing has increased over the past year, partially to make up for slower growth in tax revenues because of the tax cuts, while military spending has also risen.
The 2018 budget deficit was lower than the 34 percent that the Trump administration had been predicted in August.
Ahead of next month's hard-fought mid-term elections, in which control of the House of Representatives hangs in the balance, Republicans have largely avoided campaigning on the tax cuts.
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"From my perspective, the biggest reason we've got the deficit increase from $779 billion in 2018 to what's projected to be $1.1 trillion in 2019 is the tax law that we just passed", Collender said on Thursday during an interview with FOX Business' Liz Claman.
The non-partisan Committee for a Responsible Budget said on Monday that America's financial imbalances were "no longer a problem for the future".
The Treasury said the annual deficit rose partly because corporate tax collections dropped by $76 billion after Congress approved cuts in tax rates for both businesses and individuals that were supported by President Donald Trump.
In all, government spending rose by $127 billion previous year, while tax collections increased by $14 billion. The largest spending increases came from interest on the debt ($65 billion) and the Social Security Administration ($39 billion).
Military spending rose United States dollars 32 billion while education spending dropped USD 48 billion, a 43 per cent reduction.