How and When Trump Could Reduce the Deficit

Recently released data shows that the annual federal government budget deficit for the fiscal year 2019 increased to nearly $1 trillion. That’s more than 25% higher than the $779 billion deficit incurred during fiscal 2018. President Trump said during his campaign for president in 2016, that he would reduce the annual deficit. How will he do that?

First, let’s recognize the cause of the increase in the deficit. Contrary to what is being reported in the media, the tax cuts enacted in 2018 did not add one penny to the deficit. Total tax revenues were slightly higher in 2018 than in 2017. And tax revenues were higher in fiscal 2019 than in 2018. After the tax cut revenues did not decline so the tax cut did not add to the deficit.

Increased spending caused the deficit to increase.

Spending increased by $420 billion in 2019, causing an increase in the deficit. In order to reduce the deficit government spending will have to be reduced. That won’t be easy.

This year, the federal government will spend $4.5 trillion dollars. Although tax revenue will increase again this year, the deficit is likely to exceed $1 trillion because spending will increase faster than tax revenue. Spending has to be cut if the deficit is to be reduced or eliminated.