CBO projects deficit to hit $1T by 2019

Trump tax cuts forecast to send US deficit to $1 trillion in 2020

Total deficit spending will increase by $11.7 trillion over the next 10 years, including an additional $1.58 trillion because of changes like the GOP tax law and the omnibus spending bill, according to a new report released by the Congressional Budget Office.

Nevertheless, the tax and spending laws that are projected to increase the deficit and debt also are responsible for faster economic growth than CBO estimated previous year.

Jeff Stein, The Washington Post •.

The increase stems primarily from tax and spending legislation enacted since then-especially Public Law 115-97 (originally called the Tax Cuts and Jobs Act and called the 2017 tax act in this report), the Bipartisan Budget Act of 2018 (P.L. 115-123), and the Consolidated Appropriations Act, 2018 (P.L. 115-141). The projected deficit for fiscal 2018 is $242 billion larger than the shortfall the agency projected back in June.

Despite the increased debt burden, the CBO predicts the real GDP will rise to 3.3. percent in 2018 with the average growth over the next decade to be at 1.9 percent.

The analysis "confirms that major damage was done" by the new tax law and the spending bill, said Michael Peterson, head of the non-partisan Peter G. Peterson Foundation. That is when some of the new tax cuts are slated to expire, which would stabilize deficits at that level. After 2019, economic growth is projected to slow, eventually matching CBO's estimate of the economy's maximum sustainable rate of growth...

Members of both parties further added to the deficit in March when they increased military and domestic spending by almost $300 billion over the next two years.




That budget gap - the amount by which the USA government spending exceeds revenue - is then forecast to remain above $1 trillion through 2027.

Offsetting the rise in revenue, however, is a projected increase in outlays.

The budget deficit, a condition where expenditures exceed revenues, has been on a roller coaster in recent years because of the Great Recession and the subsequent recovery.

Within a few years, we might be wishing for the return of merely trillion-dollar deficits. "Those are just the facts", said Marc Goldwein, senior policy director at the fiscally conservative Committee for a Responsible Federal Budget. On the Senate floor, Minority Leader Chuck Schumer (D-N.Y.) said the report is "a reminder of how unserious the current Republican Party is about deficits". It is hard to imagine any cuts to Social Security, Medicare or other public programs, even though they make up a good portion of the budget - That would be a "political non-starter". Expirations for individual tax rates at the end of 2025 will slow economic growth as well.

"Anyone who argues this course can continue is living with blinders", said Campaign to Fix the Debt Co-chairmen Judd Gregg, a former GOP senator, and Ed Rendell, a former Democratic governor.

He also warned against the Republicans' push for a balanced budget amendment to the Constitution, saying it would tie policymakers' hands during economic downturns, preventing them from injecting any spending stimulus. But such a measure has little chance of passing and the effort will largely be about political messaging.

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