The federal budget deficit rose to $779 billion for fiscal year 2018, the Treasury Department reported Monday, the largest government shortfall since 2012.

Higher spending drove the increase in the annual deficit, with total government spending reaching $4.1 trillion, up from just under $4 trillion the year before.

Deficits have risen and are set to rise further in the years ahead as the Republican-led Congress, together with President Trump, has cut taxes and increased spending.

Monday's report casts doubt on the administration's repeated claims that the $1.5 trillion tax cut would pay for itself through faster economic growth, although Treasury Secretary Steven Mnuchin and other members of the Trump administration defended the figures.

“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,” the Treasury secretary said in a statement.

The Trump administration’s budget chief, Mick Mulvaney, also defended the administration’s position that higher taxes revenues due to increased economic growth would shrink deficits in the long run.

“America’s booming economy will create increased government revenues – an important step toward long-term fiscal sustainability,” said Mulvaney, who oversees the Office of Management and Budget, in a statement. “The President is very much aware of the realities presented by our national debt.”

Democrats hammered last year’s tax law for its likely increase to the national debt, and some in Congress have proposed undoing portions of the tax cuts, especially those aimed at corporations and higher-income taxpayers.

“The bitter reality of the Republicans’ tax scam dishonesty is laid bare by the Trump Administration’s own report,” House Minority Leader Nancy Pelosi said Monday in a statement. “Republicans passed a tax scam for the rich that is adding $2 trillion to the deficit in order to give massive tax breaks to Big Pharma, big banks, big corporations shipping jobs overseas and the wealthiest 1 percent.”

The nonpartisan Congressional Budget Office estimates that the government's finances will worsen in the years ahead. It projects that the annual deficit will rise to $981 billion next year, or about 4.6 percent of Gross Domestic Product, and then eclipse the $1 trillion mark the year after that.

Meanwhile, under current law, the federal debt is expected to grow from about 76 percent of GDP today to 96 percent of GDP in 10 years.

The deficit is the difference between revenues and spending in one year, whereas the debt represents accumulated deficits.