The White House projects that the federal deficit will surpass $1 trillion this year, the only time in the nation’s history the deficit has exceeded that level, excluding the four-year period following the Great Recession.
“The 2019 deficit has been revised to a projected $1.0 trillion,” the White House Office of Management and Budget (OMB) wrote in its midyear review.
Republicans cast aside projections that their 2017 tax reform law would add $1.9 trillion to the deficit over a decade. Larry Kudlow, the top White House economic adviser, claimed just last week that the tax cuts were on track to pay for themselves.
Spending has also shot up as a result of bipartisan budget deals, in which Republicans sought massive increases in defense expenditures and Democrats sought equal increases on domestic priorities such as health care and education.
Leaders of the Democratic-controlled House and Republican-controlled Senate and the White House are again in discussions to increase spending ahead of fiscal 2020, which begins Oct. 1, and a looming deadline to raise the debt ceiling.
Budget hawks noted with dismay that the rising deficit was taking place at a time of strong economic growth, when economists say fiscal policy should be more restrained.
“The midsession review is just the latest reminder of the dangerous fiscal path that we’re on — and it drives home the point that we are missing a valuable opportunity to start managing our debt during a time of growth and high employment,” said Michael A. Peterson, CEO of the fiscally conservative Peter G. Peterson Foundation.
The OMB projection is actually $91 billion lower than its previous estimate, largely because of technical provisions and somewhat lower than expected mandatory and interest spending.