U.S. deficit exceptionally high for period of strong economy

WASHINGTON — The U.S. budget deficit is reaching levels that are abnormally high for a robust economy, and lawmakers from both parties are proposing ideas that would make the deficit swell even further.

The government spent $895 billion more than it brought in from taxes and o ther revenue sources during the past 11 months, the Congressional Budget Office said last week, a 33 percent increase from one year before.

Typically, the deficit shrinks during strong economic times, as the need for costly government support wanes and tax revenue rises. In 2000, the last time the unemployment rate was at its current level of 3.9 percent, the government ran a surplus, meaning tax revenue eclipsed all spending.

The dynamic is much different now.

Corporate tax receipts fell 30 percent in the past 11 months, the CBO said, precipitated by the large reduction in rates from the massive tax overhaul passed by Congress last year. Spending levels have risen sharply as a result of a bipartisan agree- ment to shed budget caps put in place to maintain fiscal discipline and pour more money into both military and domestic programs.

“It’s not just irresponsi- ble, it’s wildly irresponsi- ble,” said retired senator Kent Conrad, D-N.D., who added that lawmakers are pushing the deficit higher because of political expe- diency.

“If you are seeking elec- tive office, the hardest thing in the world is to say, ‘I’m going to raise your taxes or cut spending on popular programs,’” he said.

Among the Republicans, the loudest voices recently have come from outside Congress.

“With a booming econ- omy, full employment, a soaring stock market and record ass e t values, we should be shrinking the defi- cit, not growing it,” Mitt Romney, a Republican and Senate candidate in Utah, wrote on his campaign website. He said other conservatives have largely been “silent” on the issue since President Donald Trump took office.

Yet there are signs the borrowing binge has only begun.

Leading House Republi- cans proposed an additional $646 billion in tax cuts last week — a number that could grow to roughly $2 trillion over a decade — and a grow- ing number of prominent Democrats have proposed expanding access to government-sponsored health care, which could add trillions more.

A number of congressional Republicans have defended the tax law’s impact on the debt, saying they believe cutting taxes will ultimately lead to so much economic growth that it more than compensates for the loss in revenue.

“I think it’s a very modest investment in a dramatically better economy where, a lot of people in our country who really lost hope in finding a good-paying job, now have hope and are actively seeking those jobs,” House Ways and Means Committee Chairman Kevin Brady, R-Texas, told reporters last week. “It’s an investment that is paying off.”

The government has $21.5 trillion in debt, up from $12.8 trillion in 2010, when a fiscal commission led by Alan Simpson and Erskine Bowles sought ways to reduce the deficit.

And the cost of maintaining this debt is snowballing, driven higher not just by spending but also by rising interest rates.

The government is projected to spend $390 billion on interest payments alone next year, an amount almost equivalent to its entire $401 billion budget for Medicaid, according to the CBO.

Congressional Republicans spent much of the Obama administration decrying deficits and forcing restrictions on spending. They largely abandoned those sentiments when Trump took office.

Taken together, the tax cuts and new spending levels are expected to add more than $5 trillion to the debt over the next decade, according to the Committee for a Responsible Federal Budget, a nonpartisan organization that advocates for budget discipline.