The federal deficit rose to $984 billion in fiscal year 2019, the Congressional Budget Office estimated on Monday, an increase of $205 billion.
The deficit was 4.7% of gross domestic product, the largest since 2012 and larger for the fourth year in a row. The annual shortfall is also roughly 50% larger than when President Trump took office.
The federal budget deficit is big by historical standards, and federal debt is expected to rise significantly in the years ahead, to the largest size relative to the economy since World War II. Economic growth is also expected to slow slightly in the years ahead.
Federal Reserve Chairman Jerome Powell and other mainstream economists have said the government’s fiscal course is not sustainable.
Yet there are fewer and fewer calls for legislation in Congress by Democrats or Republicans to attempt to reduce the federal budget deficit. Fiscal hawks have acknowledged that their calls for deficit reduction are going ignored.
Monday’s estimates showed that the federal government’s revenue went up by 4%, 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.
Looking at the spending of agencies within the federal government, the highest increases in spending were at the Department of Defense, the Department of Education, and the Department of Veteran Affairs. The agencies with the largest decreases in spending were the Department of Housing and Urban Development and the Department of Homeland Security.
The CBO is a nonpartisan agency that performs budgetary and economic analyses to support the Congressional budget process.