US Federal budget deficit projected to top $1T in 2020

GOP tax law will add $1.9 trillion to debt CBO

Jeff Stein, The Washington Post •.

The twin tax and spending bills will push the budget deficit to $804 billion this year, ending September 30, and just under $1 trillion for the upcoming budget year.

As the budget watchdog Committee for a Responsible Federal Budget (CRFB) explained last month, the bill 'spent more than either side asked for, ' and contributed to a larger deficit this fiscal year than originally projected. "The bigger the debt, the bigger the chances of a fiscal crisis". As deficits accumulate, debt held by the public rises from 78 percent of GDP (or $16 trillion) at the end of 2018 to 96 percent of GDP (or $29 trillion) by 2028.

Numerous new major tax cuts and huge spending commitments introduced by the Donald Trump administration since he took office 18 months will really begin to be felt in terms of treasury coffers by the end of his first term.

But those growth rates will not offset the deficits, which will "increase rapidly this year and over the next few years", then stabilize, resulting in a projected cumulative deficit of $11.7 trillion for 2018-2027, CBO forecast.

During debate on the bill, Republican leaders predicted that their proposal would spark massive economic growth that would limit - or even eliminate - additions to the deficit. After 2019, economic growth is projected to slow, eventually matching CBO's estimate of the economy's maximum sustainable rate of growth...

This year, lawmakers approved a two-year budget deal that raised strict caps on military and domestic spending by about $300 billion.

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The independent financial scorekeeper said that the long-term USA debt, now more than US$ 21 trillion, could soar to more than US$ 33 trillion by 2028, with increasing annual deficits jumping from US$ 804 billion this year to US$ 1.5 trillion in a decade. Revenues are lowered by $1.0 trillion and projected outlays are increased by $500 billion.

"The timing of this is really concerning because we're not coming out of a recession", Hall said Monday.

Republicans controlling Washington have largely lost interest in taking on the deficit, and the issue has fallen in prominence in recent years. "This week, House Republicans will move forward with their plan to pay for this tax giveaway: A budget procedure that would gut Medicare, Medicaid, Social Security, and investments in our nation's economy and future growth", he said.

Democrats seized on the report to criticise Republicans, who have previously championed fiscal responsibility.

"The CBO's latest report exposes the scam behind the rosy rhetoric from Republicans that their tax bill would pay for itself", Schumer said in a statement Monday. They're expected to remain near 21% of GDP over the next three years, then grow more quickly, topping 23% of GDP by 2028.

The CBO also said the deficit would continue to climb over that decade.

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