The federal deficit rose to $984 billion in fiscal year 2019, an increase of $205 billion, the Congressional Budget Office (CBO) estimated on Monday, Oct. 7.
Relative to the size of the economy, the deficit—at an estimated 4.7% of gross domestic product (GDP)—was the highest since 2012, and this year was the fourth consecutive year in which the deficit increased as a percentage of GDP.
The estimates showed that the federal government’s revenue went up by 4%, to $3.46 trillion, in the 2019 fiscal year. The increase was attributed to more money coming in from individual income and payroll taxes, corporate taxes, and other sources such as customs duties revenue from Trump’s tariffs on imported goods from China.
Spending, however, went up by more: 8%, to $4.45 trillion. The higher spending was mostly due to increases in spending on mandatory programs such as Social Security, Medicare, and Medicaid.
Looking at the spending of agencies within the federal government, the highest increases in spending were at the Department of Defense, the Department of Education, and the Department of Veteran Affairs. The agencies with the largest decreases in spending were the Department of Housing and Urban Development and the Department of Homeland Security.
The CBO is a nonpartisan agency that performs budgetary and economic analyses to support the congressional budget process.
CBO has warned that the nation’s debt is on an unsustainable path. Higher levels of debt increase borrowing costs, make it harder for the government to battle economic downturns, and increase the share of future spending devoted to paying off interest costs.
Since President Trump took office, the GOP passed a massive tax cut package that reduced revenues, while Democrats and Republicans agreed to increase spending year after year.
Budget watchers note that the main drivers of the deficit, however, come from automatic spending programs such as Social Security, Medicare, and Medicaid.