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The Department of the Treasury in Washington. The U.S. federal budget deficit jumped 26 percent in fiscal 2019 to $984-billon, reaching the highest level in seven years.Justin T. Gellerson/The New York Times News Service

The U.S. government ended fiscal year 2019 with the largest budget deficit in seven years as gains in tax receipts were offset by higher spending and growing debt service payments, the Treasury Department said on Friday.

The figures reflect the second full budget year under U.S. President Donald Trump, a Republican, and come at a time when the country has an expanding tax base with strong economic growth and an unemployment rate currently near a 50-year low.

The budget deficit widened to US$984-billion, which was 4.6 per cent of the nation’s gross domestic product. The previous fiscal year deficit was US$779-billion, with a deficit-to-GDP-ratio of 3.8 per cent. Total receipts increased by 4 per cent but outlays rose by 8.2 per cent.

The deficit reached a peak of US$1.4-trillion in 2009 as the Obama administration and Congress took emergency measures to shore up the nation’s banking system during the global financial crisis and provide stimulus to an economy in recession.

The annual budget deficit had been reduced to US$585-billion by the end of former president Barack Obama’s second term in 2016 and Republicans in Congress during that time criticized Obama, a Democrat, for not reducing it further.

Since then, the budget deficit has jumped due in part to the Republican’s overhaul of the tax system, which in the short term sharply reduced corporate tax income revenues, and an increase in military spending. By the end of fiscal 2019, corporate tax payments were up 5 per cent. Customs duties, which have been affected by the Trump administration’s trade war with China and others, were up 70 per cent year-on-year.

There was higher spending on defence, health care and social security programs. The United States has an aging population and economists have warned that the cost of mandatory spending on social security and medicare as well as federal retirement programs for the elderly will be fiscally unsustainable.

Earlier this yea, Congress passed a two-year budget deal backed by Mr. Trump that would increase federal spending on defence and other domestic programs.

Some of the widening of the deficit came from more spending on interest payments on the national debt. Borrowing has increased over the past year.

For September, the U.S. government recorded a US$83-billion surplus, a 31-per-cent drop from the same month last year.

When accounting for calendar adjustments, the surplus last month was US$17-billion compared with an adjusted surplus of US$51-billion the previous year. For the fiscal year, the adjusted deficit was US$1-trillion.

Outlays were US$291-billion in September, up 30 per cent from the same month a year earlier while receipts totalled US$374-billion, an increase of 9 per cent from the year-ago month.

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