CBO Sees $804 Billion 2018 Deficit, $1 Trillion Gap By 2020

Randolph Lopez
April 11, 2018

More worrying for politicians the CBO projections and CBO also assumes significant tax increases toward the end of the 2020's because the Trump tax cuts were created to give permanent cuts to corporations and heirs of large estates, but linked these to temporary, expiring tax cuts for the middle class.Trump and the Republicans were forced to do this because the $US1.5 trillion budget limit did not allow them enough money to cut all the taxes they wanted to cut.

Jeff Stein, The Washington Post •.

Deficits: Projected budgets deficits will grow substantially over the budget window, reaching over $1 trillion in 2020, two years sooner than projected by CBO last June. According to the CBO, Washington's spending exceeds revenues and may reach $804 billion in fiscal 2018.

Those deficits will quickly build, doubling the government's main pool of debt over the next decade. "This is the first forecast to take into account the recent tax and spending legislation, and it's clear that lawmakers have added significantly more debt on top of an already unsustainable trajectory", said Michael Peterson, President and CEO of the Peterson Foundation, a nonpartisan group that focuses on America's fiscal challenges. GDP growth is forecast to slow down after 2020, in part because all of this economic stimulus is likely to drive up interest rates.

No matter what the economic indicators imply, the Trump administration doesn't hesitate from making wildly exaggerated claims, as the White House spokesperson Raj Shah said on Fox News that the Trump budget "has over $3 trillion dollars in deficit reduction, which is the largest deficit reduction of a budget in terms of a 10-year outlay that we've ever seen".

"The only time since World War II when the average deficit has been so large over so many years was after the 2007-2009 recession", the budget office noted.

Under current law, the budget office projects the federal deficit will rise from $804 billion in this fiscal year to surpass the $1 trillion mark in 2020 and reach almost $1.53 trillion by 2028.

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Budget-watchers have been predicting the return of trillion-dollar deficits for months.

The new report said 10-year debt will now hit $12.4 trillion, after breaking the $1 trillion mark in 2020. Those effects will only partially offset the deficit cost of the tax cuts. And the Democrats aren't exactly offering a fiscally responsible alternative.

Senate Minority Leader Chuck Schumer, D-New York, blamed the new tax law. During the campaign he advocated protecting numerous expensive programs - including Social Security and Medicare - and never squared the fiscal impact of the tax cuts he also favored.

"The CBO, God bless 'em, had a very lowball economic growth estimate", Kudlow said on CNN. "Now, during a time of low unemployment and economic expansion, we should be taking reasonable steps to put our debt on a sustainable path - but instead we are piling up trillions of bills that will harm the next generation's economic prospects and prosperity", he said.

It warned that it would have "serious negative consequences" for the US.

To assuage conservative anger over the spending bill, House Republicans plan to hold a vote this week on a balanced budget amendment to the Constitution.

Other reports by GlobalViralNews

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