U.S. deficit to eclipse $1 trillion

WASHINGTON — The U.S. government’s budget deficit is projected to reach $1.02 trillion in 2020, according to a report released Tuesday by the nonpartisan Congressional Budget Office, as the federal government continues to spend much more than it collects in tax revenue.

A combination of the 2017 tax cuts and a surge in new government spending has pushed the deficit wider. This year would mark the first time since 2012 that the deficit breached $1 trillion, a threshold that has alarmed some budget experts because deficits typically contract — not expand — during periods of sustained economic growth.

This year’s deficit would be an increase from 2019, when the government deficit grew to $984 billion. At the end of 2019, bipartisan majorities in Congress approved new spending bills that added more than $500 billion to the deficit over the next decade. In comparison, the deficit in 2016 was $585 billion.

The CBO also projected the economy would grow by 2.2% in 2020, short of a 3% target set by the Trump administration. The projections were contained in the CBO’s annual budget and economic outlook.

With rising annual deficits, the total debt held by the government is also projected to grow dramatically, from about $18 trillion in 2020 to $31 trillion in 2030, according to CBO projections. The U.S. government must pay interest on this debt to keep borrowing money.

“The U.S. economy is doing well, with low unemployment and rising wages,” Phillip Swagel, the CBO’s director, said in a statement. “But our projections also suggest that over the long-term, changes in fiscal policy must be made to address the budget situation.”

Inflation — one of the potential hazards of high deficits — remains low by historical standards.