According to projections released by the Congressional Budget Office (CBO), the annual budget deficit is expected to top $800 billion at the end of fiscal year 2018 and will exceed $1.5 trillion by 2028.
In the first of its biannual budget and economic reports issued Monday, the CBO projected the national debt will reach $15.7 trillion in 2018 and will nearly double to $28.7 trillion in one decade — 96 percent of projected U.S. GDP.
In 2017, the federal government ran a budget deficit of $665 billion against an original CBO estimate of $563 billion.
A nonpartisan office, the CBO concluded three factors are driving the unwelcome news: The 2017 tax reform bill signed into law by President Trump, a surge in federal spending and interest on the federal debt.
The CBO also concluded emergency relief for three hurricanes and the two-year budget deal which raised spending caps have also contributed to an increasingly dismal fiscal forecast.
Most troubling, says the CBO, is the likelihood the budget deficits reaching over $28 trillion, almost equal to GDP in 2028.
“Projected deficits over the 2018-2027 period have increased markedly since June 2017, when CBO issued its previous projections. Such high and rising debt would have serious negative consequences for the budget and for the nation.” the CBO report read.
The report went on to say tax and spending bills have “significantly reduced revenues and increased outlays anticipated under current law.”
Signed into law in late 2017, President Trump and supporters of his tax bill had claimed a return of offshore corporate tax revenue and additional revenue from corporate investment would narrow annual budget deficits.
Often critics of the tax plan, Democratic opponents were quick to seize on the CBO’s dire projections and attack the White House ahead of the 2018 mid-term elections.
“The CBO’s latest report exposes the scam behind the rosy rhetoric from Republicans that their tax bill would pay for itself,” said Senate Minority Leader Chuck Schumer (D-N.Y.).
In order to save face, congressional Republicans have scheduled a vote for Thursday to enact a constitutional amendment requiring balanced federal budgets and are in discussions with the White House to implement further spending cuts.
[CNBC] [Roll Call] [Image courtesy Seattle Times]