Fiscal Malfeasance: US National Debt Increased $1.2 Trillion in FY2019
The US national debt increased by $1.2 trillion in fiscal 2019, which ended Sept. 30. This follows on the heels of a $1.27 trillion increase in the national debt in fiscal 2018.
The gross national debt currently comes in at a staggering $22.7 trillion and climbing.
To put this into perspective, when President Trump took office in January 2017, the debt stood at $19.95 trillion. Last February, the national debt topped $22 trillion. That represented a $2.06 trillion increase in the debt in just over two years. The borrowing pace continues to accelerate, with the Treasury set to borrow over three-quarters of a trillion more in just six months. (If you’re wondering how the debt can grow by a larger number than the annual deficit, economist Mark Brandly explains here.)
According to analysis by WolfStreet, the national debt increased by 5.6% in fiscal 2019. The debt now amounts to 106.5% of current-dollar GDP, up from 105.4% at the end of FY2018. Or to put it another way, the economy as measured by nominal GDP over the past four quarters grew by $830 billion. The gross national debt grew by $1.2 trillion.
The federal government is spending itself into oblivion. The fiscal year budget deficit surged passed $1 trillion in August. Spending deficits necessarily mean more government borrowing and we’re seeing that in these debt numbers. Uncle Sam’s outstanding public debt grew by $450 billion in August alone.
The GOP had complete control of the Federal government in fiscal 2018, but we can’t lay all the blame on Trump and the Republicans. Spending is a bipartisan sport. The debt ceiling put a crimp on federal government borrowing earlier in the year until the bipartisan budget deal reached in July suspended the borrowing limit for two years.
That budget deal will increase discretionary spending from $1.32 trillion in the current fiscal year to $1.37 trillion in fiscal 2020 and then raises it again to $1.375 trillion the year after that. The deal will allow for an increase in both domestic and military spending. So, the spending train keeps right on rolling.
The pundits in the mainstream media tend to focus on the Trump tax cuts as the cause for the surging deficits and growing national debt, but revenues are actually up. Spending is the real culprit. For the fiscal year (beginning Oct. 1), the Trump administration has spent $4.16 trillion. That’s up 7% over last year. Uncle Sam had already spent more this year than it did in the totality of FY 2018 with several months left to go.
This continues a long-term trend of ever-escalating government spending. It has gone up during every presidential administration since 1940.
The last time we saw trillion-dollar deficits was during the Great Recession. As WolfStreet noted, the US economy isn’t currently in a recession.
“The thing to remember here is that this isn’t the Great Recession or the Financial Crisis, when over 10 million people lost their jobs and credit froze up and companies went bankrupt and tax revenues plunged while outlays soared to pay for unemployment insurance and the like. This isn’t even the Collapse of Everything, but the longest expansion of the economy in US history.”
Although tax receipts are up, they are growing more slowly than the economy. This is the impact of the tax cut. WolfStreet noted that in effect Americans are buying this economic expansion with borrowed money. Imagine what these debt numbers are going to look like when the recession hits.
With tax receipts growing more slowly than the economy, and outlays soaring 7%, it’s hard to have a recession, when you think about it. You’re buying the continued expansion, but you’re paying a very high price for that extra stretch, because someday, that expansion will end, and then what remains is the debt. And that debt will then really blow out because, as they always do during a recession, receipts will plunge and outlays will spiral higher.”