DEFICIT HITS

In forecasts, gap will top $1 trillion, stay that way

$134.5 billion in October.

WASHINGTON — The federal government, which ended the 2019 budget year with its largest annual deficit in seven years, began the new budget year with a deficit in October that was 33.8% bigger than a year ago as spending hit a record.

The Treasury Department said Wednesday that the budget deficit last month totaled $134.5 billion, up from a shortfall in October 2018 of $100.5 billion. The government ran up a deficit of $984.4 billion for the 2019 budget year that ended Sept. 30, a figure 26% larger than for fiscal 2018.

The Congressional Budget Office is forecasting that the deficit for 2020 will hit $1 trillion and will remain over $1 trillion for the next decade. The country has not experienced $1 trillion annual deficits since 2009 through 2012 following the 2008 financial crisis.

The projections of trilliondollar deficits are in contrast to President Donald Trump’s campaign promises in 2016 that even with his proposed tax cuts he would be able to eliminate future deficits with cuts in spending and growth in revenue from a stronger economy.

The government ran $1 trillion annual deficits from 2009 through 2012 when the Obama administration was spending heavily to combat the effects of the 2008 financial crisis and the worst recession since the 1930s.

While the previous period of surging deficits spawned a political backlash that helped put Republicans back in power in the House, the current surge in deficits has not sparked a similar uproar. Republicans are considering another round of tax cuts and Democrats running for president are putting forth big new spending proposals such as Medicare for All.

Accumulating deficits add to the overall federal debt, which totaled more than $22.33 trillion as of Tuesday. That figure includes more than $6 trillion the government owes itself, including about $2.9 trillion borrowed from the Social Security Trust Fund, according to Treasury Department reports.

The federal government’s budget year runs from Oct. 1 through Sept. 30. For October, the big jump in the deficit reflected a 7.8% rise in spending from a year ago that pushed outlays for the month of October to a record $380 billion.

Revenue in October fell 2.8% to $245.2 billion compared to the same month a year ago. One revenue category that showed a big increase was tariffs on imports, which totaled nearly $8 billion, up 39% from the same month a year ago when $5.6 billion was collected.

The Trump administration imposed a new round of tariffs on China in September after negotiation between the two nations failed to reach a trade agreement to address

American concern about protection of intellectual property and other issues.

Negotiation with China is ongoing, and Trump said Tuesday that the two countries were close to a partial agreement that would roll back some of the tariffs the two sides have imposed. But the president said, “If we don’t make a deal, we will substantially raise those tariffs.”

Arkansas Democrat-Gazette