The federal deficit rose to $984 billion in fiscal year 2019, the Treasury Department estimated on Friday, an increase of $205 billion, or 26%, from 2018 levels.
Relative to the economy, the deficit is the largest since 2012, when the deficit was $1.1 trillion, and larger for the fourth year in a row. The last time it increased four years in a row was between 1980 and 1983. The annual shortfall is also roughly 50% larger than when President Trump took office.
Friday’s estimates showed that the federal government’s revenue went up by 3.9%, to $3.46 trillion, in the 2019 fiscal year. The increase was attributable to more money coming in from individual income and payroll taxes, corporate taxes, and other sources such as customs duties revenue from Trump’s tariffs on imported goods from China.
Spending, however, went up by more: 8%, to $4.45 trillion. The higher spending was mostly due to increases in spending on mandatory programs such as Social Security, Medicare, and Medicaid.
The federal budget deficit is big by historical standards, and federal debt is expected to rise significantly in the coming years, heading toward the largest size relative to the economy since World War II.
Mainstream economists, including Federal Reserve Chairman Jerome Powell, say the government’s fiscal course is not sustainable.
Nevertheless, there are fewer and fewer calls for legislation in Congress by Democrats or Republicans to attempt to reduce the budget deficit. Fiscal hawks have acknowledged that their calls for deficit reduction are going ignored.
“With all of the important investments we need to make in our future, we find ourselves in a situation where interest costs are the fastest growing program in the federal budget. That’s not where we want growth,” said Michael Peterson, CEO of the Peter G. Peterson Foundation, a nonprofit organization that advocates lower deficits.
The Peterson Foundation also estimated that the federal government this year will spend more on interest than children, and soon will spend nearly as much on interest as on national defense. The net interest on the debt is projected to total nearly $6 trillion over the next decade.
