The U.S. budget deficit widened to just under $1 trillion in fiscal 2019 — the highest level in seven years — reflecting reduced tax revenue and increased spending on defense and entitlement programs.
The Treasury Department said on Friday that the deficit rose 26% to $984 billion, which was 4.6% of the nation’s gross domestic product. The fiscal 2018 shortfall was $779 billion, with a deficit-to-GDP-ratio of 3.8%.
Total receipts increased by 4% to $3.5 trillion but outlays rose by 8.2% to $4.4 trillion.
Revenue from the Trump administration’s tariffs helped keep the deficit shy of $1 trillion but it is expected to top that figure in 2020 amid headwinds such as a slowdown in global economic growth and festering trade tensions.
The deficit reached a peak of $1.4 trillion in 2009. It has now widened over four consecutive years for the first time since the early 1980s even though the U.S. entered its longest economic expansion on record in July.
“The current levels of debt are unprecedented in peacetime during a growing economy, and the consequences of this irresponsible spending are unknown,” said G. William Hoagland, senior vice president at the Bipartisan Policy Center.
According to The New York Times, the “grim fiscal scorecard” shows how far the Republican Party has strayed from conservative orthodoxy and is also “a damning rebuke of Mr. Trump, who promised as a presidential candidate to eliminate deficits by cutting spending and expanding the economy.”
“Instead, he has allowed them to swell under his watch by enacting sweeping tax cuts and increasing government spending,” the Times added.
In the year through September, the pace of government spending grew twice as fast as the growth in tax revenue, with higher outlays on Medicare, Social Security, and military spending. Tax revenue for the past two years has fallen more than $400 billion short of what the Congressional Budget Office projected in June 2017, six months before the Trump tax reform was passed.
“Our nation’s leaders are in debt denial,” said Mitch Daniels, co-chairman of the Center for a Responsible Federal Budget.