U.S. Budget Deficit Increases for the Fourth Year in a Row: The National Debt Continues a Two-Decade Trend of Astronomical Growth
The U.S. budget deficit for Fiscal Year (FY) 2019, which ended September 30, was nearly $1 trillion. The deficit is the difference between revenues taken in by the federal government and federal government spending. This continues a four-year trend of deficit growth.
Congress has three ways of addressing the deficit, they can raise taxes, print money, or borrow money. In July, the Treasury indicated that it would borrow approximately $1 billion in FY 2020, the second year in a row in which they borrowed at that scale. Borrowing for FY 2019 hit $984 billion.
Continued increased borrowing to cover the deficit is adding to an already astronomical national debt. The current gross national debt stands at $22.927 trillion. The Gross Domestic Product (GDP) of the United States is $21.566 trillion. The national debt exceeds GDP by a ratio of 106 percent and growing. To provide a sense of the explosive growth in the national debt since 2001, consider the following:
● 2001 At the outset of the administration of George W. Bush the national debt stood at $5.807 trillion and a ratio of debt-to-GDP of 55 percent.
● 2009 By the end of the Bush Presidency the national debt more than doubled to $11.91 trillion. By the end of that year, during the first year of the Obama Administration it exceeded $12 trillion. The ratio of debt-to-GDP
● 2014 For the first time since the Second World War and its immediate aftermath, the national debt exceeded U.S. GDP by a ratio of 101 percent. The debt was $17.827 trillion.
● 2016 The national debt advanced further beyond GDP with a total debt of $19.573 trillion and a debt-to-GDP ratio of 104 percent.
● 2019 The national debt for FY 2019 (ended September 30), the national debt stood at $22.776 trillion and a ratio of debt-to-GDP of 106 percent.
● Treasury projections call for a 106 percent debt-to-GDP ratios of 106 percent for 2020 and 2021, respectively.
Between the years 2001 and 2009, the United States government managed to more than double the national debt. That means that Congress and the Bush Administration borrowed more money in eight years than the United States had borrowed between the founding of our republic (1789) and the year 2001.
Lest we appear to blame one party, it is important to note that during the eight years of the Obama Administration, the national debt rose to $19.573 trillion; and with our current national debt being roughly $22.776 trillion in the third year of the Trump Administration,, with a debt-to-GDP ratio of 106 percent, the national debt has more than tripled since 2001. With budget deficits forecasted for the foreseeable future this situation has a good chance of only worsening.
Why is this a problem? Interest payments on the debt are currently $382 million per year,. By 2029, they are projected to nearly triple to $921 million. Increased interest costs will crowd out investments in infrastructure, health care, education and other key priorities. Interest costs at this level will also endanger entitlements like Social Security and Medicare. It will also curb economic growth and suppress wage growth.
Real and concerted action must be taken in the near future to address this worsening concern. Bipartisanship and true patriotism will be necessary to make difficult choices. It is time that Washington learns to live within its means, our financial future depends on it.