How did the budget deficit move in 2019?
*In New York Times, by Jim Tankersley, January 13, 2020
“Budget Deficit Topped $1 Trillion in 2019
The budget gap widened despite a growing economy, hitting its highest level since 2012. The federal budget deficit surpassed $1 trillion in 2019, the Treasury Department reported on Monday, as tax cuts and spending increases continued to force heavy government borrowing amid a record-long economic expansion.
The deficit grew by 17 percent from 2018 to 2019, the Treasury data shows. That was a slowdown from the 28 percent growth in 2018, the first year President Trump’s signature tax cuts were in full effect. Last year’s deficit would have been even larger if not for a series of interest-rate cuts undertaken in 2019 by the Federal Reserve, which helped to push the cost of new government debt down. It was the first calendar year since 2012 that the deficit topped $1 trillion. Deficits swelled after the 2008 financial crisis, as lawmakers cut taxes and increased spending in an effort to revive growth. The gap had narrowed through 2015 under a budget agreement between President Barack Obama and Republicans in Congress, which reined in federal spending.
The widening deficit under Mr. Trump shows the degree to which economic growth on his watch has been helped by fiscal stimulus — increased borrowing by the government that injects more money into the consumer economy. That combination is unusual for a growing economy with low unemployment. In recent periods in the United States, sustained economic expansions have brought deficits down. A wave of retirements by baby boomers has begun to put pressure on the deficit by helping to drive up annual spending on Social Security and Medicare. But Mr. Trump has increased that pressure by signing both a $1.5 trillion tax-cut package in late 2017, which reduced federal tax revenue, and a series of bipartisan congressional agreements to increase spending on the military and on nondefense domestic programs like education.
Total federal receipts rose by 5 percent in 2019, after falling slightly in 2018 after the tax cuts. It was the fastest rate of growth for tax receipts since 2015, but still well below several years of receipts growth recorded under Mr. Obama. Spending grew by 7.5 percent in 2019, the fastest rate since 2009. Mr. Trump promised to balance the budget and constrain federal spending as a candidate in the 2016 presidential election, and at one point he said he could pay off the entire federal debt in eight years. He and other Republicans have long criticized Democrats, particularly Mr. Obama, for spending too much and running up the deficit.”
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