Federal Budget Deficit Swelled to Nearly $1 Trillion in 2019

WASHINGTON — The United States federal budget deficit jumped 26 percent in the 2019 fiscal year to $984 billion, reaching its highest level in seven years as the government was forced to borrow more money to pay for President Trump’s tax and spending policies, official figures showed on Friday.

The deficit has now swelled nearly 50 percent since Mr. Trump took office and it is projected to top $1 trillion in 2020. It did not hit $1 trillion in fiscal 2019, which ended Sept. 30, but that was largely the result of Mr. Trump’s tariffs on trading partners like China, which brought in more than $70 billion in revenue.

The grim fiscal scorecard shows how far the Republican Party, under Mr. Trump, has strayed from conservative orthodoxy, which long prioritized less spending and lower deficits. After years of railing against federal spending while President Barack Obama was in office, Republicans have largely followed the president’s lead in cutting budget deals with Democrats that have increased overall government spending.

Annual budget deficits have now increased for four consecutive years, the first such run since the early 1980s. That is a sharp rebuke to Mr. Trump, who promised as a presidential candidate to eliminate deficits within eight years by cutting spending and expanding the economy.

Instead, he has allowed deficits to balloon by enacting sweeping tax cuts and increasing government spending. The rising levels of red ink have come despite a period of sustained economic growth, when budget deficits typically fall as households earn more money, corporations make higher profits and fewer people use safety net programs like unemployment benefits and food stamps. The United States entered its longest expansion on record in July and the jobless rate is at a 50-year low, yet the deficit has continued to widen.

That could be bad news for Mr. Trump, who is heading into a re-election as slowing global growth and festering trade tensions weigh on the United States economy and as stimulus from his $1.5 trillion tax cut fades.

“The current levels of debt are unprecedented in peacetime during a growing economy, and the consequences of this irresponsible spending are unknown,” said G. William Hoagland, senior vice president at the Bipartisan Policy Center.

The deficit is growing in large part because tax receipts are falling, as Mr. Trump’s 2017 tax cuts continue to siphon revenue from the Treasury. The numbers reflect the fact that Mr. Trump’s most significant legislative achievement is not paying for itself, as Republicans have said it would. In fact, tax revenue for the last two years has fallen more than $400 billion short of what the Congressional Budget Office projected in June 2017, six months before the tax law was passed.

In the year through September, the pace of government spending has grown twice as fast as that of tax revenue, with higher outlays on Medicare, Social Security and military spending.

“The biggest factor was the tax cuts, which gave a short-term sugar high but now are just contributing to a larger deficit,” said Robert L. Bixby, executive director of the Concord Coalition, which promotes fiscal responsibility. “We don’t have an economy that’s going to grow its way out of this problem.”

The deficit, which is the gap between what the government takes in through taxes and other sources of revenue and what it spends, now sits at 4.6 percent of gross domestic product, up from 3.8 percent of G.D.P. in 2018. Tax revenue accounts for just 16.3 percent of the total economy.

Treasury Secretary Steven Mnuchin said in a statement on Friday that the president’s economic agenda was working, pointing to the historically low jobless rate, and called on lawmakers to help the administration cut spending.

“In order to truly put America on a sustainable financial path, we must enact proposals — like the president’s 2020 budget plan — to cut wasteful and irresponsible spending,” Mr. Mnuchin said.

Fears of trillion-dollar deficits could renew the desire of Republicans in Congress to propose cuts to social programs, like food stamps, Social Security and other safety net benefits. Republicans have long pointed to swelling deficits as a reason to pursue their long-held vision of smaller government, including undoing many of the programs ushered in during the New Deal and Great Society to help the most disadvantaged Americans.

But Republican lawmakers were largely mum on Friday and some of the most vocal fiscal hawks have left Congress. Senator Mike Enzi, a retiring Republican from Wyoming who leads the budget committee, called the country’s fiscal path unsustainable and said spending must come down.

“While the federal government’s revenue continues to grow, spending is growing twice as fast,” Mr. Enzi said in a statement. “We simply cannot afford to continue ignoring the fiscal challenges our nation faces.”

Republicans, who have shut down the government in their quest to cut spending, have enabled the increases that are exacerbating the deficit.

In August, the Senate gave final approval to a two-year budget deal that raised federal spending by hundreds of billions of dollars and allowed the government to keep borrowing money. Twenty-eight Republicans joined with Democrats to send the bill to Mr. Trump’s desk.

Former fiscal hawks such as Mick Mulvaney, Mr. Trump’s acting chief of staff, quietly lamented that agreement as a fact of life in a divided government.

But the mounting red ink has raised a new round of alarm bells from deficit watchdog groups, whose warnings have long gone unheeded in Washington.

The annual budget shortfall is the highest since 2012, when the unemployment rate was twice as high, topping 7 percent, and the economy was emerging from the worst financial crisis since the Great Depression. By 2029, the national debt is projected to reach its highest level as a share of the economy since the immediate aftermath of World War II.

“Our nation’s leaders are in debt denial, running up red ink all while ignoring trillions of dollars in shortfalls for Social Security, Medicare, and other programs that many millions of Americans rely upon,” said Mitch Daniels, co-chairman of the Center for a Responsible Federal Budget. “We are at a turning point — without action now to phase in reforms over the coming years, Americans will face a much different future than the one that was promised.”

With the deficit growing, it remains unclear how Mr. Trump and the Democrats will address the issue during the election. Democratic candidates such as Senators Elizabeth Warren and Bernie Sanders have introduced broad expansions of social safety net programs and have proposed paying for them with big tax increases on the rich.

During the 2016 campaign, Mr. Trump said that he would eliminate the national debt, which he blamed on Mr. Obama, within eight years. The budget cuts that the president has proposed in his budget plans have been rejected by Congress and Mr. Trump has done little to push them aggressively.

In a July interview with C-Span, Mr. Trump said that if he is re-elected, he would make cutting costs a priority in his second term.

But Mr. Trump has also flirted with the idea of additional tax cuts, such as reducing payroll taxes or taxes on capital gains.

On Friday, before the deficit figures were released, Mr. Trump remained focused on recent increases in the stock market and the low jobless rate.

“The economy is booming,” he said.

— Emily Cochrane contributed reporting.