CBO warns of deficit with tax cuts, spending

Yearly mark on course to surpass $1 trillion

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, 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 $1 trillion 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 the 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.

Neither Republican congressional leaders nor Trump, who once vowed to balance the budget, had any immediate comment on the report.

The CBO also confirmed earlier estimates that the tax cuts would increase the deficit about $1.9 trillion over 11 years.

Democrats said the report rebuked Republicans’ claims to be fiscal conservatives. “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, however, contributed to 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 national 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.

While the report offered Democrats substantial ammunition in a campaign year, it offered the president some limited good news.

The average economic growth will rise 0.7 percentage points as a result of the tax plan, and about 1.1 million jobs will be added, the report said. That, in turn, will also boost the gross domestic product.