Deficit soars in Trump era, reaching $984 billion this year
The U.S. government’s budget deficit ballooned to nearly $1 trillion in 2019, the Treasury Department announced Friday, as the United States’ fiscal imbalance widened for a fourth consecutive year despite a sustained run of economic growth. The deficit grew $205 billion, or 26 percent, in the past year.
The country’s worsening fiscal picture runs in sharp contrast to President Donald Trump’s campaign promise to eliminate the federal debt within eight years. The deficit is up nearly 50 percent in the Trump era. Since taking office, Trump has endorsed big spending increases and steered most Republicans to abandon the deficit obsession they held during the Obama administration.
In 2011, the GOP-controlled House of Representatives pushed to pass a constitutional amendment that would require balanced budgets. And the Obama administration created a deficit commission looking for ways to slow the growth of government debt. But those efforts have fallen away, and budget experts believe the country will see trillion-dollar annual deficits far into the future.
The gap between spending and revenue, referred to as the deficit, grew to $984 billion in the fiscal year that ended Sept. 30, the highest dollar amount since 2012.
The government spent $4.4 trillion on numerous programs and services and brought in $3.5 trillion through taxes and other revenue.
Trump administration officials did not defend the marked deficit increase, but they cast blame on Congress for not doing more to reduce expenditures. Treasury Secretary Steven Mnuchin called on lawmakers “to cut wasteful and irresponsible spending.”
But neither Trump nor Congress has done much to cut spending in recent years, with Trump repeatedly backing away from his own budget proposals. Trump has also demanded new spending on the military and for a border wall. He has recently told aides he will focus on cutting spending if he is elected to a second term next year.
It is unusual for the government to run such a large budget deficit during a period of economic growth, because spending on unemployment and other benefits tends to contract and tax revenue often grows. But the White House and Congress have contributed to the deficit’s surge by enacting large spending increases and passing the 2017 tax cut law. The budget deficit was $665 billion in 2017.
U.S. debt is considered one of the safest investments in the world and interest rates remain low, which is why the government has been able to borrow money at cheap rates to finance the large annual deficits. But the costs are adding up. The government spent about $380 billion in interest payments on its debt last year, almost as much as the entire federal government contribution to Medicaid.
Budget experts have also warned that a lack of focus on the deficit could make it much harder for the U.S. government to respond to the next economic crisis, because policymakers will have less flexibility to enact new spending programs if they are devoting hundreds of billions of dollars to interest payments on the debt.
“This is the first time in our history that we are seeing a boom in the economy at the same time deficits are rapidly rising. It’s alarming,” said Marc Goldwein, senior policy director of the Committee for a Responsible Federal Budget, which supports reducing the deficit.