The U.S. federal budget deficit hit $984 billion — the highest in seven years, the Treasury Department announced Friday. It’s an unprecedented amount during a growing economy, leaving little room to maneuver if the economy stumbles, experts warn.
Leaders are “ignoring trillions of dollars in shortfalls for Social Security, Medicare and other programs that many millions of Americans rely upon” amid an unsustainable sea of red ink, charged Republican Mitch Daniels, former Indiana governor and co-chair of the nonprofit, nonpartisan Committee for a Responsible Federal Budget.
“We are at a turning point ― without action now to phase in reforms over the coming years, Americans will face a much different future than the one that was promised,” Daniels said.
President Donald Trump vowed during his campaign to eliminate the deficit in eight years. But instead, his massive corporate tax cut and unchecked spending has boosted the deficit 50% while he has been in office to nearly $1 trillion. It grew $205 billion, or 26%, in the last year.
The government spent close to $380 billion in interest payments alone on its debt last year, nearly equal to its contribution to Medicaid, according to The Washington Post.
Republicans have traditionally pressed for balanced budgets. The GOP-dominated House in 2011 even pushed to pass a constitutional amendment mandating a balanced budget, the Post noted. But GOP lawmakers have dropped their opposition to an exploding deficit now that it’s being driven by a Republican president.
Treasury Secretary Steven Mnuchin’s response to the figures was to demand lawmakers “cut wasteful and irresponsible spending.” But Trump has increased military spending (from about $550 billion annually to more than $700 billion in 2019) and enacted $28 billion in new subsidies to farmers to mitigate the effects of his trade war with China — while slashing the corporate tax rate 40%.
Deficits traditionally run high when the economy is faltering, not when it’s growing.
An overwhelming deficit during a long span of economic growth “shows just how reckless our leaders have become,” charged Democrat Leon Panetta, former CIA and Office of Management and Budget director under Barack Obama, and co-chair of the CRFB.
“This is exactly the time when deficits should be contracting, not expanding,” Panetta added. Instead, leaders “continue to binge on debt-fueled tax cuts and spending hikes.”
The Congressional Budget Office projects that the deficit could reach $1 trillion within this fiscal year, which began Oct. 1.