(CN) – The federal budget deficit ballooned to $984.4 billion in the fiscal year that ended last month and is expected to surpass $1 trillion in 2020, pulled higher by Republican-backed tax cuts and a budget deal that allows more spending.
The deficit is $205 billion higher than in the previous fiscal year, the Treasury Department reported Friday afternoon, and is at the highest level since 2012.
In August, the nonpartisan Congressional Budget Office predicted that the federal deficit will average $1.2 trillion between 2020 and 2029.
The Trump administration has said that tax cuts passed in December 2017 will pay for themselves over time by boosting the economy, but the CBO report said they have cut into federal tax revenues.
The CBO also blamed the rising deficit on a budget agreement Congress passed in August, which increased caps on discretionary spending.
President Donald Trump pledged during his 2016 campaign to eliminate the federal deficit entirely by cutting spending and boosting growth through the tax cuts.
The Treasury Department report shows that revenues increased by 4% to $3.4 trillion in the 2019 fiscal year, but spending rose by 8% to about $4.4 trillion.
Treasury Secretary Steven Mnuchin tried to put a positive spin on Friday’s report by pointing out that the deficit is $16 billion less than predicted in a recent review.
“President Trump’s economic agenda is working: the nation is experiencing the lowest unemployment rate in nearly 50 years, there are more jobs to fill than there are job seekers, and Americans are experiencing sustained year-over-year wage increases,” Mnuchin said in a statement. “In order to truly put America on a sustainable financial path, we must enact proposals—like the President’s 2020 budget plan—to cut wasteful and irresponsible spending.”