CBO projects U.S. deficit to reach $1 trillion by 2020
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, because of the tax cut and spending plans.
Neither Republican congressional leaders — who railed against President Barack Obama’s deficit spending — nor Trump, who once vowed to balance the budget, had any immediate comment on the report.
The CBO also confirmed earlier estimates that despite Republican promises that the tax cuts would pay for themselves through economic growth, the plan would actually increase the deficit about $1.9 trillion over 11 years.
