December 9, 2019
I’m going to bring up the deficit because nobody else does.
In October, Treasury announced a $984 billion budget deficit in fiscal year 2019, which ended in September. That’s $205 billion larger than 2018 and represents a 26 percent increase!
Nobody is really watching what’s going on. Deficits have nearly doubled under President Trump amidst solid economic growth and low unemployment, and despite Trump’s vows to eliminate the federal debt in eight years.
The main problem is spending rises no matter which party is in power. Treasury predicts the deficit will exceed $1 trillion next year and remain there for years to come.
In 2019, government receipts/income totaled $3.4 trillion, a 3.8 percent increase over 2018. So, the government made more money than last year. But federal spending rose 8.2 percent to $4.4 trillion.
There’s the $1 trillion deficit. Additionally, revenues as a share of gross domestic product (GDP) fell to 16.3 percent, while outlays rose to 20.9 percent of GDP.
Here it is in graph form, from the Treasury:
The biggest spending increases were for Medicare (up 10 percent), defense (up 8 percent), interest on the national debt (up 16 percent), and trade-talk tariffs (up 71 percent).
Could you imagine if interest rates were near the historical average of 4.78 percent? We couldn’t afford our debt.
Here’s the bottom line:
- Government spending goes up every single year, no matter who’s in office
- Government debt goes up every single year
- People think this is normal (it’s not!)
This will all blow up at some point. The only question is when.