The U.S. budget deficit for the last fiscal year, which ended in September, was $779 billion, up 16% from the previous year. That deficit was the fifth largest in modern American history – in non-inflation adjusted terms – and stood at 3.9% of GDP, up from 3.5% a year prior.
For those concerned with the ballooning budget shortfall, the new fiscal year isn’t off to a good start. Bloomberg News reported yesterday:
The U.S. recorded a $100.5 billion budget deficit in October, an increase of about 60 percent from a year earlier, as spending grew twice as fast as revenue.
The deficit widened from $63.2 billion in the same month last year, the department said in an emailed statement on Tuesday. October marks the start of the U.S. fiscal year.
As a rule, it’s best not to overreact to monthly deficit numbers, which can bounce around a bit. The fact that the deficit was $100 billion in the first month of the fiscal year, for example, does not necessarily mean that it will be $1.2 trillion when the fiscal year ends.
That said, the $100 billion deficit in October doesn’t do any favors for the Republicans who assured Americans that massive tax breaks for the wealthy will pay for themselves.
What’s more, as Democrats prepare to reclaim their majority in the House of Representatives, the monthly shortfall also serves as a fitting coda to the Tea Party era.
In 2010, Republicans rode a wave into a House majority, fueled by Tea Party activism and a focus on “fiscal responsibility.” GOP officials and candidates said at the time that they were deeply concerned about the deficit “crisis,” which would impose crippling burdens on future generations.
Eight years later, in the month before the midterm elections that would push them into minority status, House Republicans saw the deficit reach $100 billion, fueled in part by tax breaks they didn’t even try to pay for.
The “movement,” such as it was, failed.
Postscript: Every time we discuss the deficit, I feel compelled to point out again that I’m not a deficit hawk, and I firmly believe that larger deficits, under some circumstances, are absolutely worthwhile and necessary.
These are not, however, those circumstances. When the economy is in trouble, it makes sense for the United States to borrow more, invest more, cushion the blow, and help strengthen the economy.
The Trump White House and the Republican-led Congress, however, decided to approve massive tax breaks for the wealthy and big corporations when the economy was already healthy – not because they were addressing a policy need, but because they were fulfilling an ideological goal.
And now that the deficit is spiraling, those same Republicans have decided that what the nation really needs is more tax breaks – none of which will be paid for – and cuts to Medicare and Social Security.