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Federal Budget Deficit Swelled to Nearly $1 Trillion in 2019
The Treasury Department said the deficit, which came in at $984 billion, will top $1 trillion in 2020.
The United States federal budget deficit jumped 26 percent in the 2019 fiscal year to $984 billion, reaching the highest level in seven years, as the government was forced to borrow more money to pay for President Trump’s tax and spending policies, official figures showed on Friday.
The deficit is projected to top $1 trillion in 2020 as a slowdown in global economic growth and festering trade tensions weigh on the United States economy. The deficit came in just under the $1 trillion wire last year, but that was largely the result of Mr. Trump’s tariffs, which brought in more than $70 billion in revenue.
The grim fiscal scorecard shows how far the Republican Party, under Mr. Trump, has strayed from conservative orthodoxy, which long prioritized less spending and lower deficits. It is also a damning rebuke of Mr. Trump, who promised as a presidential candidate to eliminate deficits by cutting spending and expanding the economy.
Instead, he has allowed them to swell nearly 50 percent under his watch by enacting sweeping tax cuts and increasing government spending.
After years of railing against federal spending while President Barack Obama was in office, Republicans have supported Mr. Trump’s bid to reinvest in the military and have largely followed his lead in cutting budget deals with Democrats that have increased overall spending.
The increasing levels of red ink are notable in part because they come at a moment of sustained economic growth, when budget deficits typically fall, not rise. The United States entered its longest expansion on record in July, yet the deficit has continued to balloon.
That could be bad news for Mr. Trump, who is heading into a re-election as economic growth begins to slow both in the United States and abroad.
“America remains on the fast track to trillion-dollar deficits, rising rapidly as far as the eye can see,” Michael A. Peterson, chief executive of the Peter G. Peterson Foundation, said. “With all of the important investments we need to make in our future, we find ourselves in a situation where interest costs are the fastest growing program in the federal budget.”
The deficit is growing in large part because tax receipts are falling, as Mr. Trump’s 2017 tax cuts continue to siphon revenue from the Treasury. The numbers reflect the fact that Mr. Trump’s most significant legislative achievement is not paying for itself, as Republicans have said it would. In fact, tax revenue for the last two years has fallen more than $400 billion short of what the Congressional Budget Office projected in June 2017, six months before the tax law was passed.
Treasury Secretary Steven Mnuchin said in a statement on Friday that the president’s economic agenda was working, pointing to the historically low jobless rate, and called on lawmakers to help the administration cut spending.
“In order to truly put America on a sustainable financial path, we must enact proposals — like the president’s 2020 budget plan — to cut wasteful and irresponsible spending,” Mr. Mnuchin said.
But there appears to be no sign that Congress will look to enact those proposals any time soon.
In August, the Senate gave final approval to a two-year budget deal that raised federal spending by hundreds of billions of dollars and allowed the government to keep borrowing money. Republicans had previously shut down the government in their quest to cut spending, but 28 G.O.P. senators joined with Democrats to send the bill to Mr. Trump’s desk.
Former fiscal hawks such as Mick Mulvaney, Mr. Trump’s acting chief of staff, quietly lamented that agreement as a fact of life in a divided government.
The annual budget shortfall is the highest since 2012, when the unemployment rate was twice as high, topping 7 percent, and the economy was emerging from the worst financial crisis since the Great Depression. By 2029, the national debt will reach its highest level as a share of the economy since the immediate aftermath of World War II.
“The current levels of debt are unprecedented in peacetime during a growing economy, and the consequences of this irresponsible spending are unknown,” said G. William Hoagland, senior vice president at the Bipartisan Policy Center.
Annual budget deficits have now increased for four consecutive years, the first such run since the early 1980s.
In the year through September, the pace of government spending has grown twice as fast as that of tax revenue, with higher outlays on Medicare, Social Security and military spending.
The mounting red ink has raised a new round of alarm bells from deficit watchdog groups, whose warnings have long gone unheeded in Washington.
“Our nation’s leaders are in debt denial, running up red ink all while ignoring trillions of dollars in shortfalls for Social Security, Medicare, and other programs that many millions of Americans rely upon," said Mitch Daniels, co-chairman of the Center for a Responsible Federal Budget. “We are at a turning point — without action now to phase in reforms over the coming years, Americans will face a much different future than the one that was promised.”
The deficit, which is the gap between what the government takes in through taxes and other sources of revenue and what it spends, now sits at 4.6 percent of gross domestic product. That is up from 3.8 percent of G.D.P. in 2018.
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