WASHINGTON (Sept. 13, 2019) – The Trump administration continues to spend money at an insane rate and is running up budget deficits reminiscent of the Obama era.
With one month left to go, the federal budget deficit for fiscal year 2019 eclipsed $1 trillion in August, according to Treasury Department data released Thursday.
The budget shortfall for the month of August came in at $200.3 billion. Last month, Uncle Sam spent $428.3 billion and took in $228 billion in revenue.
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.
For the fiscal year (beginning Oct. 1), the Trump administration has spent $4.16 trillion. That’s up 7 percent over last year. Uncle Sam has already spent more this year than it did for the totality of FY 2018.
Revenue for 2019 is up about 3 percent with a big boost coming from Trump’s tariffs on Chinese imports.
The 2019 budget deficit now stands at about $1.07 trillion. That’s a 19 percent increase in the budget gap since Oct. 1. The last time the federal government ran a $1 trillion-plus deficit was in 2012 as the U.S. economy struggled to come out of the Great Recession. The Obama administration ran four consecutive trillion-plus dollar deficits between 2009 and 2012. Budget deficits tend to run higher during recessions. The fact that the federal government is running these kinds of deficits during what is supposed to be a “great economy” should raise eyebrows.
Officials say the budget shortfall could narrow slightly next month and the fiscal year deficit may end up below that $1 trillion mark. The federal government generally runs a surplus in October due to a revenue boost from the influx of quarterly estimated tax payments. The CBO projects that the 2019 fiscal year deficit will come in at $960 billion. That compares with the 2018 deficit, which was the largest in six years at $779 billion.
Even if the deficit does ultimately come in under $1 trillion, it won’t absolve the Trump administration of fiscal malfeasance.
There is no end in sight to the spending. Last 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 called the Fed “boneheads” and said they needed to push rates to zero or even negative. 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.
This is the real story.
Trump claims he’s created the best economy in the history of America, but economic stimulus at levels we would normally see during a recession have juiced the economy. 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.