WASHINGTON – The federal budget deficit exceeded $ 1 billion in 2019, the Treasury Department reported Monday, as tax cuts and spending increases continued to force large government loans amid record economic expansion.
The deficit increased by 17 percent from 2018 to 2019, according to Treasury data. That was a slowdown in 28 percent growth in 2018, the first year that President Trump’s characteristic tax cuts came into effect. Last year’s deficit would have been even greater had it not been for a series of interest rate cuts undertaken in 2019 by the Federal Reserve, which helped reduce the cost of the new government debt.
It was the first calendar year since 2012 that the deficit exceeded $ 1 billion. The deficits increased after the financial crisis of 2008, as legislators cut taxes and increased spending in an effort to revive growth. The gap had narrowed until 2015 under a budget agreement between President Barack Obama and Republicans in Congress, which reduced federal spending.
Trump’s growing deficit shows the degree to which the fiscal stimulus has helped economic growth under his supervision: an increase in government loans that inject more money into the consumer economy. That combination is unusual for a growing economy with low unemployment. In recent periods in the United States, sustained economic expansions have reduced deficits.
A wave of baby boomers’ retirement has begun to push the deficit by helping to increase annual spending on Social Security and Medicare. But Trump increased that pressure by signing a $ 1.5 billion tax reduction package at the end of 2017, which reduced federal tax revenues, and a series of bipartisan congressional agreements to increase spending on the military and non-defensive domestic programs. Like education
Total federal revenues increased 5 percent in 2019, after falling slightly in 2018 after tax cuts. It was the fastest growth rate for tax revenue since 2015, but it is still well below several years of revenue growth recorded under Mr. Obama.
Spending grew 7.5 percent in 2019, the fastest rate since 2009.
Trump promised to balance the budget and restrict federal spending as a candidate in the 2016 presidential election, and at one point he said he could pay all federal debt in eight years. He and other Republicans have long criticized Democrats, particularly Mr. Obama, for spending too much and increasing the deficit.
By pushing for tax cuts, Trump and his allies promised they would generate enough growth to “pay themselves” through economic growth that generated additional tax revenues.
Treasury Department data released on Monday shows how far Trump has lived up to each of those promises. Tax revenue remains hundreds of billions of dollars below where the Congressional Budget Office predicted it would be before the tax reduction package was signed, while spending is accelerating at approximately the same rate as projections. of 2017.
In the three years that Trump has been president, federal revenues have increased by an average of 2.6 percent per year. Spending has increased 5.7 percent per year, and the deficit has grown 20.8 percent per year.
Under Mr. Obama, revenues grew significantly faster, at an average of 3.9 percent per year. Spending grew at less than half of the average annual rate than what Mr. Trump has had. The deficit has grown almost four times faster, on average, with Trump than with Obama. Trump has already added more to the national debt than Obama in his second term: $ 2.6 billion, compared to Obama’s $ 2.1 billion.