The 2019 Fiscal Year for the Federal Budget ends at the end of this month, but we’ve already crossed the threshold into the land of budget deficits over $1 trillion per year for the first time since the end of the Great Recession:
The US budget deficit widened to $1.067 trillion for the first 11 months of the fiscal year, an increase of 19% over this time last year, the Treasury Department reported Thursday.
The current shortfall exceeds the full-year deficit for fiscal 2018, which was $898 billion.
President Donald Trump, who promised during the 2016 campaign to eliminate the federal debt, has instead overseen a dramatic increase in deficits.
The White House’s Office of Management and Budget has predicted that the deficit will exceed $1 trillion for the entire fiscal year, which ends on September 30. On Monday, the nonpartisan Congressional Budget Office said the federal deficit had surpassed $1 trillion in the first 11 months of fiscal 2019, according to its budget review.
The last time the gap was that big was in 2012, in the aftermath of the financial crisis.
A number of factors are driving the US deficit increase, including the $1.5 trillion tax cuts signed into law by Trump in 2017 along with a massive spending package passed by Congress.
The deficit is expected to swell to $960 billion in fiscal 2019, according to the CBO’s latest report, and average $1.2 trillion in each of the next 10 years. The CBO raised its forecast for this year’s deficit by $63 billion after Trump signed into law a bipartisan two-year budget deal over the summer.
In August, Congress agreed to a deal that would raise spending by an additional $320 billion over the next two years and suspended the debt ceiling through mid-2021.
None of this is surprising to anyone who has been paying attention.
We’ve seen deficits at $1 trillion before, of course. In the early years of the Obama Administration the Federal Budget Deficit exceeded that amount for two years in a row, a circumstance that happened due in part to both the contraction in federal revenues that occurred in the wake of the Great Recession and the increased spending reflected in part by the recovery package that the Obama Administration passed shortly after taking office. Along with the Democratic push for health care reform, those deficits became a campaign issue for Republicans and their victories in the 2010 midterms led to several showdowns with Democrats and, eventually, the passage of the Budget Control Act of 2011 that actually managed to put some breaks on spending that, along with increased revenues due to the economy recovery, reduced deficits steadily for most of the remainder of former President Obama’s time in office.
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. Ordinarily, that should lead the Congress and the President to be more sensitive about taking action that increases the deficit and debt. Instead, we have the exact opposite.
When the final budget deal was put forward in mid-February of last year, for example, it included massive spending increases in almost every budget category and busted through the controls that had been put in place during the Obama Administration. 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 lecturing Washington 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, is the same Republican Party that has preached the gospel of fiscal responsibility for years while at the same time ignoring those ideas when it has political power. The supposed Republican fidelity to fiscal responsibility and its 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, 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 Houses and members of Congress 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 in 2000 and 2016. In the wake of both elections, though, everything changed.
As a result, here we are back in the land of trillion-dollar deficits that are likely to continue for years to come unless revenues increase and spending decreases. Regardless of who’s in power in Washington after November 2020, that quite simply isn’t going to happen.
Thanks, Trump. Thanks, Republicans. This is all your doing.
