The federal government ran a $779 billion deficit in the fiscal year that ended Sept. 30, the largest budget shortfall in six years, the White House reported Monday.
The official deficit tally for fiscal 2018 marked a $113 billion increase from the previous year and accounted for 3.9 percent of gross domestic product, an increase of 0.4 percentage points. The report confirms the third consecutive fiscal year of rising deficits despite a strong economy.
The fiscal 2018 deficit was the largest since fiscal 2012, when it topped $1 trillion. The Congressional Budget Office has projected a return to trillion-dollar deficits by fiscal 2020, spurred mostly by the rising cost of entitlement programs and increasing interest payments on the debt.
“America’s booming economy will create increased government revenues — an important step toward long-term fiscal sustainability,” White House budget director Mick Mulvaney said in a statement. “But this fiscal picture is a blunt warning to Congress of the dire consequences of irresponsible and unnecessary spending.”
The Treasury’s official tally was in line with an estimate last week from the CBO, which pegged the deficit at $782 billion. The Trump administration in July had forecast a fiscal 2018 deficit of $890 billion.
The annual deficit reached a peak of $1.4 trillion in fiscal 2009, at the height of the Great Recession. It gradually declined during most of the Obama administration, reaching a low of $438.5 billion by the end of fiscal 2015.
Since then, it has reversed course, rising steadily for the past three years. It grew to $584.7 billion in fiscal 2016 and $665.8 billion in fiscal 2017.
But beginning in the next decade, the CBO projects, trillion-dollar deficits will become routine. An aging population and rising health care costs are expected to send costs soaring for Medicare, Medicaid, Social Security and other entitlement programs.
The CBO in April projected a $1 trillion deficit in fiscal 2020, rising to $1.5 trillion in fiscal 2028. And that was before Congress passed tax cuts projected to increase deficits by nearly $1.9 trillion over the coming decade, even after accounting for additional economic growth.