By Siobhan Hughes and Richard Rubin 

WASHINGTON -- President Trump on Wednesday asked his cabinet members to find ways to cut their department budgets by 5% next year, targeting government spending after an official tally showed Republicans' tax cuts drove the federal budget deficit to its widest level in six years.

"Get rid of the fat. Get rid of the waste," Mr. Trump said in a cabinet meeting. "It'll have a huge impact."

In his comments ahead of a cabinet meeting, Mr. Trump didn't address the impact of the tax cuts he signed on the deficit. He also didn't touch on spending for entitlement programs, such as Social Security, that other Republicans have eyed for reductions but that he campaigned on protecting.

Mr. Trump told reporters he had agreed to the two-year budget deal setting discretionary defense spending at $700 billion in fiscal 2018 and $716 billion in fiscal 2019 because the military had been "depleted." But he said that Democrats had forced him to increase domestic spending as a condition of such bumps in military spending.

"I call it waste money -- things that I never would have approved, but we had to do that in order to get the votes because we don't have enough Republican votes to do this without them," Mr. Trump complained. Mr. Trump only reluctantly signed the spending bill after threatening to veto it.

Earlier this week, the Treasury Department reported that the federal government's budget deficit grew to $779 billion in the year ended Sept. 30, up 17% from the prior year. It was the largest deficit since 2012 and came as a result of last year's sweeping tax cut, which helped reduce tax revenues as a share of gross domestic product to 16.5% from 17.2%.

Corporate tax receipts fell by 31%, a result of the top corporate rate being cut to 21% from 35% as part of the tax plan. Individual tax receipts were about flat in dollar terms.

On the other side of the ledger, spending increased 3% in dollar terms, amid higher interest payments and national defense outlays. As a percentage of GDP, spending declined to 20.3% from 20.7% a year earlier.

In calling for budget cuts next year, Mr. Trump became the latest Republican to focus on spending rather than the decline in tax revenue. Earlier this week, Senate Majority Leader Mitch McConnell (R., Ky.) responded to the growing deficit by blaming entitlement programs like Medicare, Social Security and Medicaid, which account for roughly two-thirds of government spending. The budgets for those programs aren't set annually and instead depend on recipients' eligibility for benefits.

"There's been a bipartisan reluctance to tackle entitlement changes because of the popularity of those programs," Mr. McConnell told Bloomberg News. "Hopefully at some point here we'll get serious about this. We haven't been yet."

Mr. McConnell was signaling his desire to reduce the future cost of entitlement programs and also his reluctance to do so unless Democrats share in the political cost of doing so.

During last year's tax debate, Democrats warned that Republicans would use the deficits created by the tax cut to press for cuts in safety-net programs. Many have spent the past two days saying "I told you so" and folding that into their midterm campaigns.

" Sen. Mitch McConnell, President Trump, and their fellow Republicans blew a $2 trillion hole in the federal deficit to fund a tax cut for the rich," said Sen. Charles Schumer (D., N.Y.). "To now suggest cutting earned middle-class programs like Medicare, Social Security, and Medicaid as the only fiscally responsible solution to solve the debt problem is nothing short of gaslighting."

--Rebecca Ballhaus contributed to this article.

Write to Siobhan Hughes at siobhan.hughes@wsj.com and Richard Rubin at richard.rubin@wsj.com

(END) Dow Jones Newswires

October 17, 2018 16:44 ET (20:44 GMT)

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