Spending On Interest Hits All Time High As Budget Deficit Soars To $684 Billion

The US' spending problem is starting to become a major issue.

According to the latest Monthly Treasury Statement, in June, the US collected $225BN in tax receipts - consisting of $110BN in individual income tax, $91BN in social security and payroll tax, $4BN in corporate tax and $20BN in other taxes and duties- a drop of 2.9% from the $232BN collected last July and a reversal from the recent increasing trend...

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... and in July, the 12-month trailing receipt total was barely higher compared to a year ago, up just 0.4% Y/Y after rising as much as 3.1% at the end of 2017. 

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Meanwhile, Federal spending rose, up 9.9% from $275BN last July to $302BN last month.

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... where the money was spent on social security ($83BN), defense ($49BN), Medicare ($24BN), Interest on Debt ($35BN), and Other ($111BN). 

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This resulted in a July budget deficit of $77 billion, in line with expectations, and a signification deterioration from the $43 billion recorded in July of 2017.

The July deficit brought the cumulative 2018F budget deficit to over $684BN during the first 10 months of the fiscal year, up 28% over the past year.

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This is the highest 12-month cumulative deficit since May 2013; as a reminder, the deficit is expected to increase further amid the tax and spending measures, and rise above $1 trillion as soon as next year.

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Most Wall Street firms forecast a deficit for fiscal 2018 of about $850 billion, at which point things get... much worse. As we showed In a recent report, CBO has also significantly raised its deficit projection over the 2018-2028 period. 

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But while out of control government spending is clearly a concern, an even bigger problem is what happens to not only the US debt, which recently hit $21.3 trillion but to the interest on that debt, in a time of rising interest rates.

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