Slower revenue growth and large spending will expand the US budget deficit to $590 billion in the fiscal year ending September 30, according to the Congressional Budget Office (CBO).
The deficit is expected to be $152 billion more than last year and $56 billion larger than CBO’s forecast in March and will equal 3.2 percent of the country’s economic output.
Such a budget deficit is more than the GDP of Sweden, Poland or Iran. In July, the US posted a $113 billion budget gap, bigger than the economies of Ukraine or Slovakia.
The largest deficit America has seen is $1.4 trillion in 2009, which dropped to $485 billion in 2014. US public debt will continue to grow and is projected at 77 percent of the country’s GDP by year-end.
On Wednesday, US public debt was more than $19.4 trillion, or almost $60,000 per citizen and $164,432 per taxpayer. Federal spending was approaching $4 trillion with Medicare/Medicaid, social security and the military being the largest budget items.
American revenues have grown by less than one percent in 2016 instead of the expected five percent. The reasons are mandatory spending for Social Security and Medicare, the federal retirement and healthcare programs for the elderly, CBO said.
The economy grew only one percent in the first half of the year, but the last months of the year will see a boost, according to CBO, bringing a two percent growth this year and 2.4 percent in 2017. This will add to hiring, putting pressure on inflation and interest rates.