USA TODAY International Edition
Deficit, national debt set to soar to records
Report says fiscal situation ‘clearly unsustainable’
WASHINGTON – Get ready for the return of trillion-dollar budget deficits and record-high debt.
A report released Friday concludes that recent tax-and-spending legislation passed by Congress is helping to drive up the federal deficit and push the national debt as a percentage of annual economic output to levels not seen since just after World War II.
Trillion-dollar deficits will return permanently by next year — three years earlier than projected — and debt will exceed the size of the economy within a decade, according to the analysis by the non-partisan Committee for a Responsible Federal Budget.
“These projections show a fiscal situation that is clearly unsustainable,” concludes the report, a copy of which was obtained by USA TODAY.
The $1.5 trillion tax-cut package that Congress passed in December and the $400 billion budget bill approved last month aren’t the sole reasons for the increase but have “turned a dismal fiscal situation into a dire one,” the report says.
“Revenue is lower, spending is higher, deficits are larger and the national debt is rapidly headed toward a new record,” the report says.
The federal budget deficit — the annual amount by which government expenses exceed revenues — will climb to $1.1 trillion in 2019, up from $665 billion in 2017, and will hit $1.7 trillion by 2028, according to the report. Previous projections showed trillion-dollar deficits returning in 2022 and projected a $1.5 trillion deficit by 2028.
The national debt — the accumulation of those annual deficits — will hit $29.4 trillion by 2028, or roughly 101% of the gross domestic product, which is the value of all goods and services produced in the country during a given year, the report projects. That is within 5 percentage points of the record set in 1946, just after World War II, the report notes. And it is up from $14.7 trillion at the end of 2017, or 76% of the GDP.
The deficits and debt will be even worse if temporary spending increases and tax cuts are made permanent, the report warns.
In that scenario, the deficit would total $2.4 trillion by 2028. The debt would hit $33 trillion by 2028, or 113% of the GDP, exceeding the 1946 record.
“This is really perhaps the most fiscally irresponsible period of recent history,” said Maya MacGuineas, the committee’s president. “There is no economic reason to borrow. There’s not fiscal justification for borrowing.”