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2019 US federal budget deficit surges to nearly $1 trillion, the highest in 7 years

Federal Budget increase

AP NEWS – CBO

WASHINGTON — The federal deficit for the 2019 budget
year surged to $984.4 billion, its highest point in seven
years, and is widely expected to top the $1 trillion mark in
coming years.
The 26 percent surge from the 2018 deficit of $779 billion
that the government reported Friday (Oct. 25) reflected such
factors as revenue lost from the 2017 Trump tax cut and a
budget deal that added billions in spending for military and
domestic programs.
Forecasts by the Trump administration and the Congressional
Budget Office (CBO) project that the deficit will top
$1 trillion in the current budget year. And the CBO estimates
that the deficit will stay above $1 trillion over the
next decade.
Those projections stand in contrast to President Donald
Trump’s campaign promises that even with revenue lost initially
from his tax cuts, he would be able to eliminate the
federal budget deficit with cuts in spending and increased
growth generated by the tax cuts.
The budget showed that revenue rose 4 percent in the
2019 budget year, which ended Sept. 30, but that spending
surged at twice that rate. Spending increased for defense
programs and for the government’s big benefit programs for
the elderly, Social Security and Medicare.
Treasury Secretary Steven Mnuchin maintains that
Trump’s economic program was nevertheless working,
with unemployment at its lowest point in nearly 50 years.
Mnuchin argued that to put the budget on a sustainable
path, Congress must enact proposals “to cut wasteful and
irresponsible spending.”
So far, though, neither party has shown much interest in
reducing the soaring deficits. Trump and Republicans seem
content with the $1.5 trillion tax cut measure that Congress
passed during Trump’s first year in office. And Democrats
who are running to oppose him in next year’s election have
proposed their own expensive spending plans, including
Medicare for All.
While pledging to protect Social Security and other benefit
programs, many of the Democratic presidential candidates
have said they will roll back Trump’s tax cuts for the
wealthy and corporations to pay for their programs.
Against that backdrop, budget deficits are on track to keep
rising — thereby raising the national debt, as a percentage
of the economy, to its highest point since the end of World
War II.
The government did previously run $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.
This time, the deficits are occurring at a dramatically different
time: The unemployment rate is historically low, and
the economy is in a record 11th year of expansion.

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