U.S. budget deficit swells to $209 bln
The budget deficit of the U.S. rose to $209 billion in November, with spending at a record-high of $434 billion.
The AP’s Paul Wiseman reported the news:
The U.S. budget deficit rose by 2% last month to $209 billion, another step in a journey back toward $1 trillion-a-year budget shortfalls.
The Treasury Department reported Wednesday that the federal government took in $225 billion in tax and other revenue but spent a record $434 billion in November.
November is the second month of the government’s 2020 budget year.
In the 2019 budget year, the government ran up a deficit of $984 billion, the most in seven years.
The Congressional Budget Office is forecasting that the deficit for 2020 will hit $1 trillion and will stay above $1 trillion for the next decade. The country last ran annual $1 trillion annual deficits from 2009 through 2012 during and after the financial crisis.
The gap narrowed as the economy picked up momentum.
But the fiscal imbalance started to grow again after President Donald Trump and Congress pushed through a massive tax cut in 2017 while ramping up spending. Adding to budget pressures: The baby boom generation is retiring and beginning to collect Social Security and enroll in Medicare.
So far this budget year, the government is running a deficit of $343 billion, up 12% from a year earlier.
Robert Schroeder from MarketWatch wrote:
What happened: Spending for the month was $434 billion while the government brought in $225 billion.
Spending rose 6%, as outlays increased on Medicare, agriculture, military and other programs.
Receipts climbed by 9%, including higher collection of individual and payroll taxes and corporate taxes.
Customs duties increased by 14% for the month, as a trade conflict between the U.S. and China continues. Investors are looking next to Dec. 15, when another round of U.S. tariffs on Chinese goods is due to begin.
Big picture: For the first two months of the fiscal year, the deficit is 12% wider compared to the same period a year ago. The shortfall is expected to exceed $1 trillion each year over the coming decade, according to an August analysis by the Congressional Budget Office.
U.S. investors haven’t been scared off by the rising red ink. The Dow Jones Industrial Average DJIA, +0.11% is up about 19% in 2019, while the yield on the 10-year Treasury note has fallen to 1.81%.
Business Insider’s Gina Heeb noted:
Lawmakers typically have more tools to reduce the national debt when the economy is in a solid place. As a candidate in 2016, President Donald Trump promised to eliminate the deficit within eight years.
But it has continued to jump in the wake of recent legislation, including $1.5 trillion tax cuts that the president signed into law after his first year in office.
The GOP had initially argued that lower taxes would lift the economy enough to make up for the loss in federal revenue. But key Republicans have since walked back the long-standing claim that the 2017 package would pay for itself.
A bipartisan budget agreement reached in August lifted the debt ceiling and increased spending by about $320 billion. That would amount to a $1.7 trillion increase in projected debt levels over the next decade, the Committee for a Responsible Federal Budget estimated.