Trump Deficit Growing: $625 Billion FYTD – $80B Higher YoY

The flag is at half mast for the plight of the fading middle class and the millennials who will inherit the debt and the global warming crisis.

The federal budget deficit was $625 billion for the first five months of fiscal year 2020, CBO estimates. This is $80 billion more than the deficit recorded during the same period last year. Revenues and outlays alike were higher through February of this year—by 7% and 9%, respectively—than during the first five months of fiscal year 2019. The era of Trillion Dollar Deficits is now firmly in place with no end in sight. The open question is how much COVID-19, aka corona virus, will depress the world economy.

Outlays during the first five months of this year were raised slightly by shifts in the timing of certain payments that otherwise would have been due on March 1, which fell on a weekend. Those shifts increased outlays through February by $52 billion. CBO claims that without them, the outlay increase would have been 6% and the deficit for the first five months of 2020 would have been $572 billion, roughly $28 billion larger, rather than $80 billion larger, than the amount for the same period last year. This of course will all even out during the balance of the fiscal year.

Net interest on the public debt rose by $5 billion (or 17%), mostly because of a different rate of inflation. To account for inflation, the Treasury Department adjusts the principal of its inflation-protected securities each month by using the change in the consumer price index for all urban consumers (not seasonally adjusted) that was recorded two months earlier. Because that index (CPI-U NSA) decreased in December 2019, the adjustment reduced interest outlays by $1 billion in February 2020. That reduction was larger in February 2019—$4 billion—because the CPI-U NSA decreased by a larger amount in December 2018. The 7% increase in the amount of debt held by the public also contributed to higher interest costs.