Debt and Deficits

The Federal Budget Deficit in June Was Bigger Than the Entire Federal Budget Deficit for 2018

Remember when $1 trillion annual deficits were worryingly large? Last month’s budget gap was $864 billion.

|

In January 2019, the Congressional Budget Office (CBO) published one of its recurring looks at America's likely budget and economic trajectory over the coming decade. These reports are useful for showing not just the current state of the fisc, but where nonpartisan government analysts think it will go and what might occur as a result. They offer both an of-the-moment snapshot and a rough sense of what to expect.

What the CBO said at the time was that the country's debt and deficits were on a risky, perhaps even dangerous, track.

The annual budget deficit—the gap between government spending and tax revenues—would run about $900 billion in 2019, and it would push beyond $1 trillion every year starting in 2022. Debt as a percentage of the country's total economy would rise steadily, reaching 93 percent of GDP by 2029, the highest level since the years directly following World War II.

Automatic spending on major entitlements would keep government spending high and make reductions difficult. Interest payments on the nation's rising debt would become one of the country's largest spending categories. The persistently high levels of debt and deficits, meanwhile, would serve as a drag on economic growth. Overall debt levels were on track to reach the highest levels in the nation's history. 

All of this was reason to worry. "Such high and rising debt would have significant negative consequences, both for the economy and for the federal budget," the report warned, with reduced national productivity and total wages plus an increased likelihood of a fiscal crisis. In an emergency scenario, policymakers might be more constrained from responding in the most effective way. Debt and deficits were a modest burden on the economy in good times. And the higher they ran, the more economic risk accumulated. 

Again, this was the outlook in 2019, when the unemployment rate was below five percent, when the deficit was projected to run about $900 billion over a 12-month span, when daily viral death tolls and case-count heat maps weren't posted on major news sites like especially grisly weather reports.

In June of this year, the federal deficit was $864 billion.

That's more than the entire annual budget deficits of 2017 ($665 billion) or 2018 ($779 billion), more than any year during the George W. Bush administration or Barack Obama's second term. In June of 2019, the federal budget deficit was $8 billion, which almost seems like a typo now. 

The reason, of course, is the federal response to the coronavirus, especially the CARES Act and various other spending bills designed to prop up the economy, which the CBO now projects won't recover for more than a decade. 

The most recent 10-year outlook warns that unemployment will remain above 10 percent for the rest of this year and remain elevated until past 2030. Economic growth is expected to be sluggish—probably $17 trillion less than the pre-COVID track we were on. 

As the last 18 months have shown, all of this could rapidly change. But the United States is in uncharted waters in terms of both public finances and their effect on the economy. And no one really knows where we'll go from here.

Advertisement

NEXT: Sluggishness of Police Reform Feeds Frustration

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. We have a consensus in the political and pundit class that you can solve any economic problem by throwing public money at it and there is no cost to doing that indefinitely. Until that changes, likely by an economic disaster (and they still will accept this only kicking and screaming), this will accelerate.

    1. Out of curiosity, when that disaster happens, will the rightwing Trumpers behave hysterically and ruin everything like they are doing in the current crisis?

      1. “Ruin everything”. You mean like closing the economy while allowing the mob to burn down our cities, riot, murder and mayhem? Oh wait, that was all Democrats, you mendacious twit.

        1. I think by ‘ruin everything’ he means ignore the lockdowns while not supporting the elimination of the Nuclear Family.

          1. I earned $5000 ultimate month by using operating online only for 5 to 8 hours on my computer and this was so smooth that i personally couldn’t accept as true with before working on this website.HTf if you too need to earn this sort of huge cash then come and be part of us. do this internet-website online..

            ===============►Home Profit System

        2. I mean like treating hygiene precautions during a pandemic as an excuse to inflict massive amounts of death and suffering on other Americans for some psychological reason I don’t begin to understand. Does a quarter of the country really need a fat orange daddy that bad? This is a terrible time to lose your damn minds.

          1. So it is all Trump supporters “treating hygiene precautions during a pandemic ” I don’t even know what you are trying to say. Most of My friends who were Trump Supporters had masks on from the beginning. They like life. The country was shut down based on all the best Medico’s advice, and now we see none really agree on anything and that the only time we get reports from doctors and nurses is when they are exhausted crying in ER’s. If we ever going to float the currency wouldn’t now would be the time. The Trump supporters were the Tea Party and honest Repubs fed up with the moral majority who was out in force when Deficits and debt were rolling Trillions. Those people picked Trump not the other way around. He was chosen because the left had wrenched control on every civilization foundation and was beating the rest of America over the head with it and no one was fighting or fought long. This is the only time when Business should not be allowed to fail as we can have a recovery if we move fast. The bailing of banks, useless wars, and tax cuts while funding wars were all horrible choices but that 23 trillion was not because of Trump’s bad ideas. No those ideas came long before trump.

        3. Here in locked down mask-enforced Texas I sure am feeling the power of those democrats.

          Republicans are just as bad. They care just as little for freedoms and for the future of the country.

          1. If you wear a mask and have the virus the moisture particles are 95 to 99 percent captured so you don’t spread it to others. Medicos only agree on that. Wearing a mask might not protect you at all but don’t spread it, and literally that is the best the Medico’s have to tell us. Let’s do it and open up the country.

        4. I think he means the total fuckup by the administration in the area of handling the pandemic, grossly delayed response and denial, fucked up testing, banning private sector testing, surgeon general telling people to avoid masks, etc.

          It might not have been Trump personally, but the buck stops with him. That does not deny that many states overreacted, but their overreaction does not mean the Trump administration was blameless.

          In a libertarian society, government has one job, and it fucked it up.

          1. “……government has one job……..”

            To take care of everyone?

            Pathetic. Grow up and be an individual.

      2. Please state exactly when and how “rightwing Trumpers” have “behaved hysterically” and ruined everything? Impossible to rebut an opinion ( a very partisan, ignorant one at that). As for the post EVERY member of CON-gress that was present voted for the “stimulus package”. That was every Democrat (that includes both left-wing and hysterical Democrats) and almost every Republican. A few Republicans did not as they were in quarantine. Now Trump did sign the bill, but understand seeing all House Reps and Senators voted for it, a veto would have been useless.
        I am sure you are just another troll that cannot back up a single thing you have posted with actual examples.

        1. Trump is failing at managing this crisis in the worst way I can possibly imagine failure. He couldn’t do a worse job if he were acting maliciously. Just today he’s playing his cowardly game of trying to fire the country’s most trusted point man on coronavirus, for the sole reason that he doesn’t lie in service of Trump’s PR. What a cunt.

          And the sad part of it is he’s so stupid he can’t even figure out that doubling down on his hysterical anti-reality conspiracy theory horseshit is only making his poll numbers worse.

          He came to my home state to hold a rally for which he specifically instructed his followers to disregard hygiene precautions in order to send some kind of political message. That message turned out only to be “Look how much extra virus and death I can cause!”

          Next president please.

          1. Trump is failing at managing this crisis in the worst way I can possibly imagine failure.

            Bullshit, you “2.2 million dead” mother fucker.

            1. Where did this 2.2 million dead figure come from?

              1. Probably from one line (projected US deaths – unmitigated – with RO of 2.4) in a spreadsheet from one report (#12 on this page) from Imperial College London

                The right-wing Trumpbot crowd has latched on to that number. Prob because of some deliberate media misinterpretation of that report by Fox or Breitbart or Limbaugh or whatever media they watch. They can’t read so they haven’t read the report itself to try to figure out how it was calcd and/or what it means – and the number itself means they don’t have to keep learning about the virus.

                Just remember one number – and it becomes a permanent bogey for everyone who disagrees with them/Trump that this virus can simply be ignored because ‘it’s just the flu’.

                1. 2.2 million in the US, not accounting for the potential negative effects of health systems being overwhelmed on
                  mortality
                  .

                  Fox or Breitbart or Limbaugh didn’t have to misrepresent it. Unless you’re going to argue that the R0 is/was 2.4, the study was full of shit and misrepresenting reality from the get-go.

                  Also, it’s interesting that I didn’t have to name the source or how I got to it. It would seem that you’re a better Trumpbot than I could ever hope to aspire to being.

                  1. I’ve been accused here of selling that number for months now.

                    And guess what – you just misrepresented that number. As usual. Based on the other thread (re cancer and lightning and peds), you clearly don’t understand what you talk about. I’d say read the report. For COMPREHENSION. Like 80k in a different scenario – or 600k in another – or 1.1 million in another. But that is clearly of no interest to you. You already have an agenda and that is what is important to you

              2. Plenty of places to find the figure. Are you willfully this stupid or does it come naturally?

      3. Will tony still be obsessed with hypothetical future “trumpers” for the rest of his life? Seems like a safe bet.

        Haha.

    2. yeah, everyone celebrates when Congress borrows money on their behalf to give them.

  2. I don’t have my hands on the levers.

  3. Who says Trump isn’t the Great White Libertarian Hope? Here he is burning it all down as fast as he can! Anarchotopia is just around the corner!!!

    1. Trump isn’t burning down shit, it’s BLM, Antifa, and other fellow travelers of the Marxist-Democrat Party.

      1. What about bankrupting the nation? Congress pulled trillions of dollars out magic money out of their asses, and Trump gleefully signed that bill. Both are to blame, but Trump especially because the pen was in his hands.

        Trump: “We can’t be bankrupt! We still have checks in the checkbook!”

  4. Good thing Pelosi has the house of ‘representatives’ working on their enumerated constitutional duty to originate spending bills instead of political pandering, huh?

    1. There are no brakes on this thing anymore, but there are people like Pelosi who want push the gas pedal down harder than the ludicrous amount it already is.

      1. The Republicans might not be brakes, but they want to push the spending gas pedal only 1/3 of the way, not all the way to the floor.

        1. Whoa! Whoa! Whoa! Two Gs of acceleration is way too fast! We Republicans are fiscal conservatives and want to limit our acceleration to only thirty two feet per second per second…

          1. There’s an old saying in the motorsport racing community, “When in doubt, gas it!”

        2. They may want that, but they’ve never delivered that. How much do they have to fail before you stop taking them at their word?

          1. I thought it was 9.9 meters per second per second.

            1. Close enough for Federal Government paperwork.

        3. Is a crash that kills you at 80 mph any different from a crash that kills you at 100 mph? I mean you are still dead.

  5. I have no idea what the fudge CBO is talking about. Everyone knows the government can print as much money as needed. AOC told me so.

    1. And it’ll work too. See, the Weimar Republic was printing cash like crazy, but they were printing the Dutchmark, not the US dollar, and Zimbabwe was printing the Zimbabwe dollar, instead of the US dollar. Rookie mistake.

      1. Deutschmark btw not Dutchmark which implicates the Netherlands. It’s probably a spell check error.

  6. Anyone remember how the Republicans always accused Democrats of wanting to starve the poor whenever the latter proposed cutting the rate of growth (nevermind actual spending reductions) on entitlement programs?

    Good times, they were.

  7. Dammit. When will Obama stop screwing things up with that gummint spending?!?!

    1. you and Tony pretending it’s (R) v. (D) is cute.

  8. Meh, everyone know’s a trillion is just walkin around money… I’ll start getting annoyed when they get into the gazzilions. Everyone knows the only way to bring the rich down is to make their wealth worthless…

  9. “The Federal Budget Deficit in June Was Bigger Than the Entire Federal Budget Deficit for 2018.”

    Well how else are you going to bankrupt America?
    Sheesh!

  10. This is hardly surprising. We have eleventy billion people out of work (see Trump Supporter Gavin Newsom thread) and now the feds are bailing everyone out.

  11. Oh no another fake accounting of fake money not backed by anything but faith in a despotic Congress and Treasury.

    1. The money is backed by the full faith and credit of Nancy Pelosi.

    2. the money has value because people can use it to pay their taxes to avoid going to jail

    3. As opposed to trading shiny metal?

  12. Don’t worry, my Q1 and Q2 estimated taxes I just sent in will cover most of it.

    1. I owed on my 2019 tax return and just paid that… so you and I apparently have this covered.

  13. no one really knows where we’ll go from here.

    But everyone really knows our best times are ahead.

  14. If Obama had been POTUS and asked a GOP House for the same $3 trillion Trump Welfare and Virus Bill of 2020 he would have been laughed at and Teabaggers would be circling around their reps in town halls.

    THIS, Peanuts, is why we need a GOP House and Dem POTUS because the only time Republicans care about spending is WHEN THERE IS A FUCKING DEMOCRAT IN THE WHITE HOUSE.

  15. My Pavlovian response:

    1. Read article about U.S. debt or Federal Reserve policies.
    2. Buy more Bitcoin.

    1. It’s worked so far.

  16. Well, to be fair, it feels like this has gone on for years.

  17. Google effectively work and google pays me consistently and consistently only $5K to $8K for accomplishing on the web telecommute. I am a universty understudy and I work n my low maintenance only 2 to 3 hours every day effectively from home. Presently every one can procure additional money for doing on the web home framework and make a decent life by simply open this site and adhere to guidelines on this page… …Heres what I do……ReadMore.

  18. Google easily work and google pays me every hour and every week just $5K to $8K for doing online work from home. I am a universty student and I work n my part time just 2 to 3 hours a day easily from home. Now every one can earn extra cash for doing online home system and make a good life by just open this website and follow instructions on this page… CLICK HERE.

  19. I basically earn Easily at home 10,000$ par month .just do work few hours . last 3 year i was free but now i am happy with this website so i advise you…………ReadMore.

  20. The issue is not so much as spending during a pandemic, it is with all the spending since WWII until now along with unfunded liabilities for entitlements that were not financially sound from the day they were signed into law. Article is complaining about 864 billion vs. debt and unfunded liabilities that are over $110 trillion.

  21. And yet, as I said on the other debt thread a few days ago, the jokers and clowns of Reasons still expect us to believe that bringing in many millions more illiterate, unskilled sad sacks from the third world is going to somehow miraculously fix the problem, despite the fact that any damn fool can see this “strategy” clearly isn’t working.

    Also, Reason of course conveniently neglects to mention that as we speak, Nancy “Jokerface” Pelosi and the House democrats are pushing for another 3 trillion dollar “emergency” welfare package to try to stave off the effects of the depression their scummy friends in the media, cities, and states unnecessarily created.

  22. King Rat Trumpy is irrefutably demonstrated to be the biggest spending, biggest borrowing, and biggest government POTUS to ever disgrace that oft disgraced office.

    Only a congenital idiot would have expected the lifelong, corrupt, Democrat crony and serial bankrupt to suddenly improve.

    Trading DC swamp rats for NYC sewer rats has gotten us only even more septic rats.

    1. Trading DC swamp rats for NYC sewer rats has gotten us only even more septic rats.

      But fewer wars. So far.

  23. Nowhere in this article does it mention the budget-busting Trump tax cuts for rich people and corporations. What a joke.

  24. The Federal Budget deficit is a minor issue compared to the Federal Debt. First of all the Federal Government has its own special accounting rules. Second of all the debt is huge beyond human comprehension. And last but not least the Federal Reserve Bank is keeping interest rates well below inflation to reduce the debt service which is still too high to measure for a day. we can only know what it was a few minutes ago, because it is going up so fast. There will come the time when the USA dollar will crash! That will be the greatest leveling of all of us into poverty that has ever happened. Bush should have let it crash in 2008, when the recovery would have been billions and not tens of trillions. There is no politician out there who can enforce or will enforce fiscal responsibility to get this country out of debt. Individuals who have been through bankruptcy know it is tough to go through. The warnings fall upon deaf ears. And it will be the end of this country.

  25. “The Venezuelafication of American Politics

    The heavy price we will pay for Trump’s presidency is that his deficiencies will leave the government, along with the political system and our civic culture, degraded. ”

    https://www.nationalreview.com/the-tuesday/price-trump-presidency-government-political-system-civic-culture-degraded/

    Trump is acting as a litmus test for principles. If you turn orange when exposed, you haven’t any.

  26. I know the Democrats waited for Trumps statement so they can rally the opposite but did the Libertarians also wait for Trump’s plan before they decided what political mode they were going to take?

  27. Shhh, better stop making noise about all this “too much stimulus” nonsense until all those *choosing* to remain unemployed for the big increase in income can finish sucking that shriveled teet into the last possible claim week. (If you don’t hush, the blackshirts will come out to your house and chant “UNFAIR!” with their commenorative Alinski-edition bullhorns.

Please to post comments