During his three years in office, President Donald Trump has moved aggressively to cut taxes and government regulations, but so far he has been unable or unwilling to rein in the federal budget deficit, which was $984 billion in fiscal year 2019, according to a new report by the Congressional Budget Office (CBO).
The CBO’s estimate was based on data from the Daily Treasury Statements issued by the Department of the Treasury.
Relative to the size of the economy, the CBO says the deficit — at around 4.7% of gross domestic product (GDP) — was the highest since 2012, and 2019 was the fourth consecutive year in which the deficit increased as a percentage of GDP.
The estimated deficit is $205 billion more than the shortfall recorded in fiscal year 2018, the CBO states.
However, the agency stated, that year’s outlays were affected by a shift in the timing of certain payments. Because Oct. 1, 2017, fell on a weekend, $44 billion in outlays was shifted to September of fiscal year 2017. Had that not happened, the 2019 deficit would have been $162 billion larger than the 2018 amount, rather than $205 billion larger, the CBO states.
Excluding that effect, revenues were 4% higher and outlays were 7% higher in 2019 than they were in 2018, CBO estimates.
With the news, many conservatives said both parties must be held accountable for the numbers.
“Democrats and Republicans must be held responsible for the outrageous deficit reported today by the CBO,” Jason Pye, FreedomWorks vice president of legislative affairs, said. “Fiscal sanity has all but escaped Washington, as evidenced by this year’s cap-busting budget deal. This unsustainable situation is only going to get worse.”
Pye said the deficit had grown to a nearly insurmountable figure under Congress’s watch in spite of record revenues.
“If the federal government is to one day get its fiscal house in order, Congress needs to take a hard look at cutting spending, which means considering real reforms to mandatory spending programs, the primary drivers of the deficit,” he said.
Indeed the numbers were being fueled by Social Security, Medicare, and Medicaid.
The deficit of $984 billion is about $24 billion larger than the shortfall that CBO projected in its August 2019 report, the agency said. While revenues exceeded the projection by $11 billion, outlays exceeded the projection by $35 billion, according to CBO’s estimates.
Over in the U.S. Senate, Sen, Rand Paul (R-KY), the chairman of the Federal Spending Oversight and Emergency Management (FSO) Subcommittee for the Homeland Security and Governmental Affairs Committee (HSGAC), attempted to force the Senate to confront what he calls its fiscal recklessness by securing a vote on his amendment to cut discretionary spending levels by 2%, which would still make available over $1.2 trillion in base discretionary spending.
In a speech on the Senate floor, Paul described how most groups he talks to across the political spectrum understand the need to cut federal spending.
“Even the groups receiving it are willing to cut 1 or 2 percent,” Paul said. “But you know who’s not? The Senate. The Congress. They won’t cut anything.”
In his speech, Paul highlighted how he thinks runaway government spending is to blame for massive deficits, as federal revenue is actually up.
“My amendment won’t pass because people are afraid that the public won’t like them if they don’t give them more money,” he said. “I’m afraid we’ll destroy the country if we keep running more deficits.”
A majority of senators indeed voted against Paul’s amendment. Paul has also introduced a Pennies Plan budget in April, which simply states that for every on-budget dollar the federal government spent in fiscal year 2019, it spend two pennies fewer a year (a cut of two percent per year) for the next five years.
Paul says the plan would balance the federal government’s budget without touching Social Security, while providing legislators with full flexibility to make the best decisions on where to save taxpayer funds.
Total receipts rise by 4% in 2019
In the CBO report, as Paul noted, receipts rose to $3,462 billion in fiscal year 2019, CBO estimated. The agency says individual income and payroll (social insurance) taxes together rose by $107 billion (or 4%).
“Amounts withheld from workers’ paychecks rose by $78 billion (or 3%),” the report stated. “That change largely reflects increases in wages and salaries that were partly offset by a decline in the share of income withheld for taxes.”
The Internal Revenue Service issued new withholding tables in January 2018 to reflect changes made by the 2017 tax act. All employers were required to begin using the new tables by Feb. 15, 2018. Those new withholding rates were in effect this entire fiscal year, but for only seven and a half months of the same period last year.
As such, non-withheld payments of income and payroll taxes rose by $10 billion (or 1%); income tax refunds were down by $23 billion (or 9%), further boosting net receipts; and unemployment insurance receipts (one kind of payroll tax) declined by $4 billion (or 9%).
Corporate income taxes increased by $25 billion (or 12%). Those receipts reflect activity in both 2018 and 2019, the report stated. Revenues from other sources increased by $1 billion (or less than 1%), the result of several largely offsetting changes.
Richard Moore is the author of the forthcoming “Storyfinding: From the Journey to the Story” and can be reached at richardmoorebooks.com.