Larry Kudlow, President Donald Trump's top economic advisor, said Friday that "the deficit" is "coming down, and it’s coming down rapidly," appearing to contradict both the Treasury Department's official figures and government estimates about the trajectory of U.S. budget deficits.
Kudlow made the claim during an interview on the Fox Business Network while touting the effects of the tax reform law signed late last year.
"As the economy gears up, more people working, better jobs and careers, those revenues come rolling in and the deficit, which is the other criticism, is coming down, and it’s coming down rapidly," Kudlow said. "Growth solves a lot of problems.”
But data from the Congressional Budget Office, a nonpartisan government agency, tells a different story. The CBO said on June 7 that the federal deficit was $530 billion so far in the 2018 fiscal year — $97 billion more than it was at this point last year.
And in its latest 10-year budget outlook report in April, the CBO projected that the federal budget will rise "substantially, boosting federal debt to nearly 100 percent of GDP by 2028." The office also lowered projected revenues and raised projected outlays compared with the previous report in June 2017.
"That’s just nonsense. Clearly the projections show substantial increases" in deficit outlays, said Scott Brown, chief economist at Raymond James.
Neither Kudlow nor the White House responded to CNBC's requests for comment.
Kudlow, who was a CNBC commentator before joining Trump's team to succeed Gary Cohn, may have been referring to the leap in revenues between March and April, when the Treasury reported a budget surplus of more than $214 billion.
To be sure, this is the time of year when the Treasury’s monthly balance of revenues and expenses is expected to improve dramatically, thanks to the annual surge of income tax payments due April 15. Those revenues are up compared with recent years, in part because of the continuing, long-term trend in employment gains that began well before Trump took office.
But monthly deficits in February and March were also deeper than in previous years. And after April's revenue boon, the balance swung back to a deeper deficit in May than in the last two years. The budget — authorized by Congress and signed by Trump — requires the Treasury to spend more through the rest of the year than it takes in.
That shortfall, the budget deficit, will continue to be covered by increased federal borrowing.