The 2019 federal deficit neared $1 trillion for the first time in seven years.
In fact, Treasury Department data for the year shows the U.S. government spent $4.4 trillion while bringing in $3.5 trillion – which left that $984 billion gap.
“This is the first time in our history that we are seeing a boom in the economy at the same time deficits are rapidly rising. It’s alarming,” Marc Goldwein, a senior policy director of the Committee for a Responsible Budget said, as quoted by The Washington Post.
After all, it’s unusual for the government to run up such a large deficit, especially when we’re seeing strong economic growth. Typically, spending on unemployment and other programs will contract in times of growth, as tax revenues grow.
GDP is still at a healthy 2% clip.
The job market is humming along nicely with 3.5% unemployment (full employment). Wages are beginning to tick higher, bringing in higher income taxes, too.
So, what exactly went wrong?
With an aging population, we saw increases in mandatory programs such as Social Security, Medicare, and Medicaid. At the same time we also saw spending increases for Department of Defense, the Department of Education, and the Department of Veterans Affairs.
Going forward, the Trump Administration and the Congressional Budget Office (CBO) estimate the deficit will top $1 trillion in the current fiscal year.
In addition, the CBO says the deficit will remain above $1 trillion over the next decade.
The last time the U.S. saw $1 trillion annual deficits was from 2009 to 2012, as the Obama Administration sought to get the 2008 financial crisis under control.