In a quiet announcement last week, the Treasury Department put the government on track to borrow nearly $1 trillion for the 2018 fiscal year — the highest amount borrowed in six years.
Last year, the federal government borrowed $519 billion, while documents released on Wednesday show that the U.S. Treasury expects to borrow $955 billion this year, the Washington Post reported. While the Treasury only gave a justification because of the "fiscal outlook," the Congressional Budget Office provided further insight and indicated that the reason for an increase in U.S. borrowing is because of the newly passed GOP tax plan.
The Post elaborated:
The White House got a taste of just how problematic this debt situation could get this week. Investors are concerned about all the additional borrowing and the likelihood of higher inflation, which is why the interest rates on U.S. government bonds hit the highest level since 2014. That, in turn, partly drove the worst weekly sell-off in the stock market in two years.
The belief in Washington and on Wall Street has long been that the U.S. government could just keep issuing debt because people around the world are eager to buy up this safe-haven asset. But there may be a limit to how much the market wants, especially if inflation starts rising and investors prefer to ditch bonds for higher-returning stocks.
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The Committee for a Responsible Federal Budget predicts the U.S. deficit will hit $1 trillion by 2019 and stay there for a while. The latest borrowing figure — $955 billion — released this week was determined from a survey of bond market participants, who tend to be even faster to react to the changing policy landscape and change their forecasts.
On the campaign trail, President Donald Trump promised he would handle the nation's debt, even though Trump's own budget director, Mick Mulvaney, acknowledged that Trump's campaign promise to eliminate $20 trillion in four years is simply not possible for the "king of debt."
In the past, Trump bashed his predecessor several times in recent years for the growing national debt. But the president was beyond desperate for a legislative win, and Congressional Republicans helped deliver that by passing the new tax law, which disproportionately harms working-class families. The bill also requires a hike of the debt limit in order to keep the government open and funded properly.
Even as Trump touted the tax plan in his State of the Union address last week, he failed to mention the debt, or how the plan adds $1 trillion to the debt over the course of the next decade. Trump's Treasury is projected to borrow $1 trillion in 2019, and $1.1 trillion in 2020, the Post reported.
Maybe Trump should have heeded some of his own advice.
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