Tax cuts, spending forecast to raise US deficit to $1T

Katrina Barker
April 11, 2018

The Congressional Budget Office on Monday said it expects the USA budget deficit to reach $804 billion this year and to exceed $1 trillion in 2020.

The new CBO projection is the first since President Donald Trump signed a tax cut that is expected to cost the government almost $1.9 trillion over 11 years, then signed legislation to significantly boost military and domestic spending over the next two years. Real growth in gross domestic product, which past year was projected to be 2 percent in 2018, will now reach 3.3 percent. The administration had promised the cuts would pay for themselves. The AP points out the report estimates that the GOP tax bill will add $1.8 trillion to the deficit over the coming decade, even after the "positive benefits on the economy are factored in".

It said that while the measures will temporarily boost the United States economy, they will exacerbate its long-term debt.

"The CBO, God bless 'em, had a very lowball economic growth estimate", Kudlow said on CNN. Regardless of where you land on the political spectrum, taxpayers should agree that CBO's numbers are alarming and politicians' insatiable appetite for massive deficit spending must be restrained.

As a result, CBO now projects a cumulative deficit of $11.7 trillion for the ten-year period through 2027, about $1.6 trillion larger than the June 2017 forecast.

There were $1 trillion deficit spending years most recently under President Barack Obama, primarily due to the economic downturn during the Great Recession, but deficit spending had been decreasing in recent years. He also asserted the media did not properly cover the deficit implications of the bipartisan 2018 spending bill that passed in March. Debt held by the public, which has doubled in the past 10 years as a percentage of gross domestic product (GDP), approaches 100 percent of GDP by 2028 in CBO's projections.

Democrats seized on the report to blast the GOP tax law and portray Republicans as fiscally irresponsible. The deficit will average 4.9 percent of GDP over the 2019-2028 period, exceeding average economic growth over the same period by almost a percentage point.

The figure would be even larger if the tax cuts for individuals and families do not expire as scheduled. The CBO forecasts the growth rate will rise to 3.3 percent this year and drop to 2.4 percent in 2019.

House Republicans are also expected to vote this week on a balanced-budget amendment to the Constitution, which would force federal revenue and spending to balance. And not a word from the debt and deficit mob and those conservatives who reckon higher spending will be inflationary. Those surpluses turned to deficits after tax cuts under President George W. Bush, as well as sharp increases in military spending for the wars in Afghanistan and Iraq.

Other reports by AllAboutTopnews

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