The Trump administration continues to spend America into a black hole and has already topped last year’s budget deficit with two months left in the fiscal year.
The U.S. budget deficit in July came in at $119.7 billion, according to data released by the Treasury Department. The budget deficit for fiscal 2019 now stands at $866.8 billion. That compares to a $684 billion deficit through the same period in fiscal 2018. With two months remaining in the fiscal year, the federal government has already topped the 2018 deficit, which was the largest in six years at $779 billion. The Treasury Department projects the budget deficit will come in at over $1 trillion.
The Obama administration posted three years of trillion-dollar deficits, all in the wake of the 2008 financial crisis and ensuing Great Recession. In other words, the Trump administration is running recession-like deficits even while the economy is supposedly booming.
The pundits in the mainstream media tend to focus on the Trump tax cuts as the cause for the surging deficits, but revenues are actually up. Spending is the real culprit. Uncle Sam spent $371 billion in July. That was 22.8 percent more than the government spent in July 2018, according to a CNBC report.
The Treasury brought in $251 billion in revenue. That number was up 12 percent compared to July 2018. Tax receipts are up about 3.2 percent year-to-date.
Outlays for the military and healthcare were both up significantly in July. The federal government forked out $56 billion on the military last month. That was up $7 billion from the July 2018 figure. Medicare spending rose to $56 billion from $24 billion in July 2018. Uncle Same spent $35 billion just paying interest on the current national debt last month.
To date, the federal government has spent over $3.7 trillion in fiscal 2019.
There is no end in sight to the spending. Earlier this month, Pres. Trump signed a bipartisan budget deal that will increase discretionary spending from $1.32 trillion in the current fiscal year to $1.37 trillion in fiscal 2020 and then raises it again to $1.375 trillion the year after that. The deal will allow for an increase in both domestic and military spending.
Trump has complained incessantly about the Federal Reserve. In his most recent Twitter salvo directed at the central bank, Trump tweeted, “The Fed’s high interest rate level, in comparison to other countries, is keeping the dollar high, making it more difficult for our great manufacturers like Caterpillar, Boeing, John Deere, our car companies, & others, to compete on a level playing field.”
Nevermind that 2 percent interest rates aren’t anything approaching high – even if Trump isn’t getting zero percent rates like we saw in the wake of the 2008 crash, Trump is getting all the fiscal stimulus any good Keynesian could ever ask for.
Based on the second-quarter GDP report, government spending was up 5 percent and added 0.85 percent to the overall GDP. Non-defense spending was up a whopping 15.9 percent in Q2. In a recent podcast, Peter Schiff said the last time government spending grew that much in a single quarter was 21 years ago. As Peter pointed out, we had two recessions in that timespan – including the Great Recession.
“Non-defense spending – domestic spending – rose last quarter by more than it did in any quarter during either of those recessions. Think about that. Trump keeps complaining that we’re not getting as much monetary stimulus as Obama got. But look at all the fiscal stimulus we’re getting that Obama didn’t get.”
The “great” economy Trump keeps boasting about is actually smoke and mirrors sustained by federal spending and consumers borrowing themselves into record levels of debt.
Republicans like to blame Democrats for big-spending and deficits, but the current spending spree is a bipartisan effort led by the GOP. Virtually nobody in Washington D.C. is doing anything to rein in this runaway train. It’s is quickly heading down the tracks toward a fiscal disaster.
