CBO Predicts Persistently Large US Federal Deficit in Next Decade

11 April, 2018, 12:44 | Author: Roderick Gutierrez
  • Trump tax cuts forecast to send US deficit to $1 trillion in 2020

In late March, President Trump signed a $1.3 trillion spending plan to fund the government through September. In a decade, the red ink is expected to reach $1.5 trillion.

The longer we wait, the more painful the solutions will be. The tax bill, he asserted, would end up adding to government revenue.

The agency notes that its projections, especially those for economic growth, however, are "more uncertain than usual this year because they incorporate estimates of the economic effects of the recent changes in fiscal policy", which are themselves uncertain.

Democrats seized on the report to blast the GOP tax law and portray Republicans as fiscally irresponsible. "I'm not going to do it again".

"We've had a big tax cut and a big spending increase, and they're showing up here", said Benjamin Page, a senior fellow at the Tax Policy Center, a nonpartisan think tank. But many say it is virtually certain to fail.

Administration officials took a similar tack. On Monday the Congressional Budget Office said the bill was partially responsible for a large increase in the deficit.

"Our view is lower tax rates, particularly business, create invective to invest and work", he explained. Pompeo gets nomination hearing MORE (R-Tenn.) said that spending was not given enough attention in the conversation.

The deficits are expected to drive the national debt from $21 trillion now up to $33 trillion within 10 years. The deficit is how much Washington's spending exceeds its revenues.

The deficit would permanently breach the $1 trillion mark in 2020 unless Congress reins it back, the CBO said. It is now set to rise above $1 trillion. That deal paved the way for Congress to move a1.3 trillion paying bill. But the CBO expects growth to slow to 2.4 percent in 2019. That is when some of the new tax cuts are slated to expire, which would stabilize deficits at that level.

The CBO has become a punching bag for Republicans, who say the office is underestimating the economic benefits of lower taxes. CBO now estimates the 2018 deficit will be $242 billion higher than it had estimated last June, before the tax cuts.

Democrats accused Republicans of agitating for just that outcome, saying the tax cuts were created to starve the government of money to pave the way for those cuts.

Budget experts and historians disagree.

In the CBO's projections, budget deficits increase as a percentage of GDP from 4.2% this year to 5.1% in 2022 - a percentage that has been topped in only five of the years since 1946, four of them following the 2007-2009 recession. Those errors were overestimates. CBO is required to calculate the effects of the laws as written. Its report fell roughly in the middle. This is true, of course, but there key differences between the years 2008-2012 and today.



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