Budget office says deficit to top $1T by ’20
CBO warns of fiscal crisis as U.S. debt continues to rise
WASHINGTON — Propelled by the GOP tax cut plan and increased government spending favored by both parties, the nation’s deficit will top $1 trillion by 2020 and its debt burden within a decade will approach rates not seen since the aftermath of World War II, the Congressional Budget Office said Monday.
The budget deficit next year will rise to $804 billion, or $139 billion higher than the estimates made before the $1.5 trillion tax plan and $1.3 trillion spending bill were signed into law by President Donald Trump in December and March, respectively.
The national debt will rise from nearly $16 trillion at the end of 2018 to almost $29 trillion by 2028, the nonpartisan office said.
“The bigger the debt, the bigger the chances of a fiscal crisis,” CBO director Keith Hall warned Monday, noting that debt as a percentage of the gross domestic product in 2028 will be the highest since 1946.
He said that the expansion of debt was particularly troublesome during a time of economic growth, rather than in response to a recession as usually seen, such as after the 2008 financial collapse.
“We’re quite a few years off a recession and we have very high deficits,” Hall said.
The last CBO report issued during the Obama administration said that after a $587-billion deficit in 2016, the shortfall was expected to break the $1trillion mark in 2023, rising to $1.4 trillion in 2027. The total budget deficit over the 10-year span beginning in 2017 was projected to be $9.4 trillion.
The new report said shortfall will now hit $12.4 trillion over the span ending in 2028, after breaking the $1-trillion mark in 2020. That’s three years earlier than expected, due to the The nonpartisan CBO said the $1.5 trillion tax plan and $1.3 trillion spending bill signed by President Donald Trump will help push the budget deficit to $804 billion next year. tax cut and spending plans.
Neither Republican congressional leaders — who railed against Obama’s deficit-spending — nor Trump — who once vowed to balance the budget — had any immediate comment on the CBO report.
The CBO also confirmed earlier estimates that despite GOP promises that their tax cuts would pay for themselves through economic growth, the plan would actually increase the deficit about $1.9 trillion over 11 years.
Democrats said the report refuted Republicans’ claims to be fiscal conserva- tives.
“In their craven haste to give corporations and the wealthiest 1 percent massive tax breaks, Republicans saddled our children and grandchildren with trillions of dollars of debt,” House Minority Leader Nancy Pelosi of California said in a statement.
Democrats warned that Republicans may next try to slash Social Security and Medicare in an effort to pare back the deficit they’ve made worse. Some House Republicans have floated the idea of a balanced budget amendment, which would require huge cuts to discretionary programs and those that support older and sick Americans. It is unlikely to pass the Senate.
“From day one, the Republican agenda has always been to balloon the deficit in order to dole out massive tax breaks to the largest corporations and wealthiest Americans, and then use the deficit as an excuse to cut Social Security and Medicare,” said Senate Democratic leader Chuck Schumer of New York.
“The American people deserve a Congress that is focused squarely on helping the middle class, not patronizing Kabuki theatre — like sham ‘balanced budget’ votes — from Republicans who blew up the deficit to benefit wealthy special interests.”
Democrats, however, contributed to the the deficit’s additional rise by supporting the March spending measure, which gave Republicans higher military spending and Democrats a boost in domestic funding.
The CBO estimated that by 2027 the debt would comprise 88.9 percent of the gross domestic product, just below the level at which economists say its load would harm the economy.
The new report said that by 2028, the debt load will exceed 96 percent of GDP. If individual tax cuts created in the GOP plan are extended beyond their current expiration in 2026 — as many expect will occur — the negative impact on the debt would be even more pronounced.
The CBO is the nonpartisan agency charged with delivering independent analysis of the economy, budget bills and other legislation.
Last year, congressional Republicans and the Trump administration lambasted the CBO as lacking credibility after it delivered negative assessments of GOP health care bills. Historically it has been considered a dependable source of fiscal predictions.