Year-to-date US budget deficit tops $1tn
The US federal government’s budget deficit reached $1tn so far in 2019, according to Treasury data released on Thursday, a consequence of a bipartisan budget deal that lifted spending caps.The milestone was passed with a month still to go in the current fiscal year, which ends on September 30, although the deficit is likely to drop back down to $960bn for the full fiscal year, according to the Congressional Budget Office, a non-partisan agency that analyses fiscal policy.September, when businesses and the self-employed pay quarterly taxes, tends to produce a surplus. The budget deficit was $779bn in the 2018 fiscal year. The national debt is “on an unsustainable path by any measure”, according to Patrick Newton, spokesman for the Committee for a Responsible Federal Budget, an advocacy group.Concern about the deficit has dropped down the political agenda, however. After the Trump administration pushed through tax cuts at the end of 2017, Republicans cut a deal with Democrats in August to raise both social and military spending.The CBO updated its 10-year forecasts in August, including an estimate for the total deficit that would be accrued over that period, which it raised to $12.2tn from $11.4tn in its previous forecast in April. The CBO added $1.7tn in deficits as a result of the Bipartisan Budget Act of 2019, which lifted the caps on spending that had been put in place as a compromise between congressional Republicans and the Obama administration in 2013. The new estimate also added $300bn over 10 years for disaster relief and border security. But with interest rates dropping on both corporate and sovereign debt all over the world, the US government is also paying less interest on its debt. Traditional economic theory suggests that as government debt rises, investors will demand higher interest payments. But with returns on 10-year Treasury bills around 1.8 per cent on Thursday — roughly where they were the week Donald Trump was elected president — markets have not provided a sense of urgency on the deficit, to either party.