Federal Budget Deficit Near $750 Billion For First Three-Fourths Of Fiscal Year
The Federal Budget Deficit passed the $700 Billion mark with three months still to go in the Fiscal Year.
The Treasury Department is reporting that the budget deficit hit $747 billion for the first nine months of the Fiscal Year that ends on September 30th, putting us on track for a total deficit that nears, and possible exceeds $1 trillion:
The U.S. budget deficit widened by 23% to $747.1 billion in the first nine months of the fiscal year, as rising spending eclipsed a small bump in revenue from the Trump administration’s tariffs.
Federal expenditures increased to $3.36 trillion in the period from October to June, up 6.6% from a year earlier, the Treasury Department said on Thursday. Revenue rose by 2.7% to $2.61 trillion.
Collections from customs almost doubled to $50.5 billion from a year earlier. President Donald Trump’s administration last year imposed tariffs on everything from Chinese goods to steel and aluminum imports. Still, custom duties comprise only a small share of total receipts.
America’s budget deficit is widening as a result of Trump’s tax cuts, which are expected to add about $1.5 trillion to the national debt over a decade, and higher spending approved by Congress. The gap will exceed 4% of gross domestic product this year, and stay above that level through at least 2029, the Congressional Budget Office forecasts.
The shortfalls have some fiscally conservative groups and politicians worrying about future repayment, particularly as economic growth is expected to cool. The U.S. has a legal cap on its national debt, and may hit it as early as September — creating a default risk, unless lawmakers can agree to raise the debt ceiling.
U.S. outlays have been growing as a wave of baby boomers retire, weighing on mandatory spending for programs like Medicare and Social Security. Department of Defense spending on military programs has also been rising, increasing by 8.5% in the nine-month period.
For the month of June, the budget deficit was $8.48 billion, compared with $74.9 billion a year earlier. The CBO has said that shifts in the timing of payments decreased outlays in June this year and increased them in June 2018.
This chart demonstrates the extent to which the Budget Deficit exploded under full Republican control of the Executive and Legislative Branches:
If the Budget Deficit keeps up the pace it has been on in the first nine months of the Fiscal Year, it will reach at least $996 Billion by the time that year expires on September 30th. More likely than not, though, the pace of the growth of the deficit will probably pick up steam in the coming three months and we’ll end up with a return to the trillion-dollar budget deficits we last saw in the first years of the Obama Administration.
We’ve been on this course ever since Republicans took control of the Executive and Legislative Branches after the 2016 election. Among the consequences of that power was the passage in December of 2017 of a tax “reform” package that is projected to add roughly $1.5 trillion to the national debt over the course of the next decade. This was quickly followed by the passage of a budget by a Republican Congres and White House that made clear that we were headed for a return of the era of trillion-dollar budget deficits.
The deficit reached similar levels during the Obama Administration, which led Republicans to issue their usual calls of fiscal irresponsibility. The difference between then and now, though, is that those Obama Era deficits were primarily the result of the fact that we were still dealing with the impact of the Great Recession and that the recovery which began in 2009 was still very much in its infancy.
This time, the record-setting deficits that we are likely to see for the foreseeable future are coming at a time when the economy continues to boom during what has become one of the longest economic recoveries in history, and that they come at a time when financial markets are becoming increasingly sensitive to higher levels of debt and interest rates. When the final budget deal was put forward in mid-February of last year, it included massive spending increases in almost every budget category and busted through the controls that had been put in place by the Budget Control Act of 2011, a controversial bill passed during one of the many fiscal showdowns between former President Obama and Congress that occurred after Republicans captured the House in 2010. As The New York Times noted at the time, this effectively means that Republicans have learned to love the deficits and debt they once claimed to abhor. This is the same Republican Party, which had spent the Obama years railing about spending and deficits. In the Trump Era. that same party has become the party of deficits and debt. By April of last year, the Congressional Budget Office had officially forecast that we’d be seeing trillion dollars deficits by the end of Fiscal Year 2019 and just a few months later, the national debt crossed a new benchmark and was north of $21 trillion.
The word hypocrisy comes to mind here This, after all, the same Republcan Party that has preached the gospel of fiscal responsibility for years, the truth is that it’s entirely consistent with how the GOP has acted so many times in the past that it’s easy to lose count. For the most part, the supposed Republican fidelity to fiscal responsibility and their concern about rising Federal Budget Deficits and the National Debt is something that has proven to be little more than a political slogan that was largely based on who controlled the White House. When former Presidents Bill Clinton and Barack Obama were in power, for example, Republicans argued that out of control spending and deficits were destined to drive up interest rates, cause the national debt to explode, and increase interest rates. They used these issues as political cudgels against the Democratic White House during both Administrations and, of course, as a way to appeal to voters and supporters. Riding this wave, the GOP was able to take control of both Congress and, eventually, the White House, but then things suddenly changed.
During the Administration of George W. Bush, for example, Republicans managed to preside over massive increases in spending that were quite plainly fiscally irresponsible. On the domestic side of the equation, they introduced a massive new trillion-dollar entitlement in the form of Medicare Part D without finding a way to pay for it. Similarly, they introduced education policy legislation such as the No Child Left Behind program that led to increases in Federal spending, again without any provisions about how it was going to be paid for in the future. Under President Bush’s leadership, they authorized and fought two wars, only of which was actually justified and necessary, that imposed serious financial burdens on the Federal Government both while the war was being fought and well into the future. On top of all that, they cut taxes. While that is not a bad thing in and of itself, and I’m certainly not going to argue against the lower tax burden that I and most other Americans had during the Bush years, from the perspective of fiscal responsibility it’s an utterly insane strategy.
This was especially true with respect to the Iraq and Afghanistan Wars. In the past, we had traditionally found ways to finance wars via what usually ended up being a combination of higher taxes and short-term debt in the form of war bonds and other means of financing. No such effort was made to do this during the Bush years even though it’s likely that the White House could have made a convincing political argument that we needed to find a way to pay for the war that was necessitated by the September 11th attacks. Instead, President Bush chose to basically let the political capital he had gained in the wake of the attacks go to waste and the Republican Party in Congress took the position of Alfred E. Neuman and adopted a “What, me worry?” when it came to fiscal responsibility. When Republicans regaining control of the White House in 2016, all those proclivities returned.
Congratulations Republicans, this is what you voted for.