The US Treasury Department announced Friday that the federal budget deficit had grown to $984 billion in fiscal year 2019, which ended on September 30, with the shortfall up $205 billion from the $779 billion deficit a year earlier.
The 2019 deficit is the largest since 2012, and was blamed on factors ranging from higher spending on defence, to social security and health care, and growing payments on the government’s ballooning debt, as well as lower revenues thanks to the Trump tax cuts. 2019 saw the government bring in $3.5 trillion in revenues, while spending $4.4 trillion on programmes and debt payments.
The Congressional Budget Office projects that the deficit will continue to climb, surpassing $1 trillion in 2020, and stay above $1 trillion over the coming decade.
The US has run deficits for much of its post-WWII history, with the budget shortfalls expanding above the 4-5 percent of GDP mark during much of the Reagan period as lawmakers passed tax cuts while Washington simultaneously ramped up arms spending. Deficit spending continued until the late 1990s and early 2000s, when the government ran a surplus between 0.8 and 2.3 percent. The government returned to deficit spending during the presidency of George W. Bush, who introduced more tax cuts and increased defence spending to fund the wars in Afghanistan and Iraq. The deficit hit a peak of $1.4 trillion (or 9.8 percent of GDP) in 2009 under President Obama in the wake of the financial crisis, dropping to a $585 billion deficit in 2016.
In 2016, Donald Trump ran on a promise to slash deficits and eliminate the national debt over eight years by creating jobs, reforming the tax code and renegotiating bad trade deals with countries like China in America’s favour. However, the national debt has continued to grow under Trump, increasing by over $2 trillion and hitting $22 trillion+ by early 2019.
US economic policy on deficits and debts has been criticised by economists around the world, with some observers suggesting that the US dollar’s reigning status as the world’s currency allows Washington to engage in economic behaviour that no other country could afford without suffering hyperinflation and currency collapse.