The Treasury Department released the latest data on the budget for Fiscal Year 2019. Most of the focus was on the deficit figure, which rose to $984 billion (WaPo [1]).
The U.S. government’s budget deficit ballooned to nearly $1 trillion in 2019, the Treasury Department announced Friday, as America’s fiscal imbalance widened for a fourth consecutive year despite a sustained run of economic growth. The deficit grew $205 billion, or 26 percent, in the past year.
The country’s worsening fiscal picture runs in sharp contrast to President Trump’s campaign promise to eliminate the federal debt within eight years [2]. The deficit is up nearly 50 percent in the Trump era. Since taking office, Trump has endorsed big spending increases and steered most Republicans to abandon the deficit obsession they held during the Obama administration.
Give the WaPo authors (Heather Long and Jeff Stein) some credit. They don’t reach for the usual crutch (the 2017 tax cut) until the sixth paragraph. As can be seen in the revenue and spending breakout (many thanks to Evan Ryser [3] for compiling the data), income tax receipts rose about 5 percent in FY2019 after being flat in FY2018 (the tax reductions having eliminated the revenue growth expected from economic growth that year).
Overall revenues went up 4 percent, but that couldn’t keep up with the 8 percent increase in spending …
… which was a problem for both parties.
My old party (the Republicans) will be pleased to see revenues gaining again – it makes it easier for them to rail against higher spending. Unfortunately for them, the major drivers of the spending hikes were areas where Trump insists spending reductions are anathema – Medicare, Social Security, and Defense (in that order). Just behind Medicare was Interest on the existing (and rising) debt. Those four categories alone accounted for over 2/3 of the FY2019 spending increase – and so long as Trump leads the Republican Party, none of its elected officials will address them.
As for my new(-ish) party (the Democrats), the top two categories are also sacrosanct to their voters. Democratic candidates looking to address deficits will need to address either entitlement reform or tax increases. The latter will put off voters (and rightly so). As for the former, well, entitlement reform never really had a political moment (despite the efforts of a few to bring it up) but it certainly isn’t having one now.
In other words, while some in both parties will still try to talk a good game about our fiscal imbalance, far fewer will be prepared to walk the walk.