The U.S. government ended fiscal year 2019 with the largest budget deficit in seven years as gains in tax receipts were offset by higher spending and growing debt service payments, the Treasury department said on Friday.
It is the first time since the early 1980s that the budget gap has widened over four consecutive years. The figures reflect the second full budget year under U.S. President Donald Trump, a Republican, and come at a time when the country has an expanding tax base with moderate economic growth and an unemployment rate currently near a 50-year low.
The U.S. budget deficit widened to $984 billion, which was 4.6% of the nation’s gross domestic product. The previous fiscal year deficit was $779 billion, with a deficit-to-GDP-ratio of 3.8%. Total receipts increased by 4% to $3.5 trillion but outlays rose by 8.2% to $4.4 trillion.
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The deficit reached a peak of $1.4 trillion in 2009 as the Obama administration and Congress took emergency measures to shore up the nation’s banking system during the global financial crisis and provide stimulus to an economy in recession.
The annual budget deficit had been reduced to $585 billion by the end of former President Barack Obama’s second term in 2016 and Republicans in Congress during that time criticized Obama, a Democrat, for not reducing it further.
Since then, the budget deficit has jumped due in part to the Republican’s overhaul of the tax system, which in the short term reduced revenues, and an increase in military spending. By the end of fiscal 2019, corporate tax payments were up 5%. Customs duties, which have been boosted by the Trump administration’s levying of tariffs on China and others, were up 70% year-on-year to a record high.
