Federal deficit totaled $1.02 trillion over the 12 months that ended in December
WASHINGTON—The U.S. budget gap continued to widen in 2019, but not as much as the previous year when Republican tax cuts reduced revenue and a bipartisan budget deal boosted government spending.
The federal deficit totaled $1.02 trillion over the 12 months that ended in December, according to data the U.S. Treasury released Monday. That marked the first calendar year the deficit has exceeded $1 trillion since 2012, when the U.S. was still experiencing anemic economic growth after the recession.
December was also the third month in a row that the U.S.’s year-over-year deficit topped $1 trillion.
The deficit grew 17.1% in 2019, compared with a 28.2% increase in 2018.
The smaller increase in the deficit was due in large part to a rebound in corporate tax revenue, which shrank more than expected in the wake of the tax cuts. Total receipts grew 5% in 2019, compared with a 0.4% decline the previous year. The government collected $3.5 trillion over the past 12 months, up from $3.3 trillion in 2018.
Federal spending, however, continued to outpace tax revenues: Outlays rose 7.5% to $4.5 trillion last year, compared with a 4.4% boost in 2018 that brought total federal spending to $4.2 trillion.
Over the past 12 months, deficits as a share of the U.S. economy totaled 4.7%, compared with 4.2% the previous 12 months.
A strong economy typically leads to narrower deficits, as rising household income and corporate profits help boost tax collections, while spending on safety-net programs such as unemployment insurance tends to decline. Instead, U.S. deficits have been rising in recent years, prompting the Treasury to issue more debt.
The government said it expected to borrow more than $1 trillion for the second year in a row in 2019.
Higher federal spending on the military and health care pushed up outlays last year, while a stronger economy and rising wages helped bolster individual and corporate tax receipts, along with higher customs duties, or tariffs, imposed by the Trump administration. Those trends have continued into the current fiscal year, which began Oct. 1.
The budget gap widened 12% to $357 billion in the first three months of fiscal 2020, the Treasury said Monday in its monthly report on spending and tax collection. Outlays rose 7% to $1.2 trillion, while federal receipts were up 5% to $807 billion.
More broadly, annual deficits are projected to more than double as a share of the economy over the coming decades, as a wave of retiring baby boomers pushes up federal spending on retirement and health-care benefits.
Wall Street Journal - By Kate Davidson Updated Jan. 13, 2020 4:01 pm ET