Trillion-dollar deficits come roaring back under Trump

Trump tax cuts forecast to send US deficit to $1 trillion in 2020

According to the Congressional Budget Office (CBO), the United States will return to trillion-dollar annual budget deficits from 2020 onwards as the tax cuts pushed by Trump and Republicans, and higher public spending, strain America's finances.

The CBO's report has been revised to incorporate the effects of a new $1.3 trillion government spending bill and the $1.5 trillion in Republican-led tax cuts approved a year ago. CBO's report estimates deficit levels of $804 billion and $981 billion over the next two years respectively, and $1 trillion dollar deficits starting in 2020. The AP points out the report estimates that the GOP tax bill will add $1.8 trillion to the deficit over the coming decade, even after the "positive benefits on the economy are factored in". "A blowout spending bill is going to cause a problem, which is why the omnibus was bad", said Sen.

The Congressional Budget Office projected ballooning deficits over the next several years, without figuring in the potential economic impact from steep tariffs on certain markets proposed by the White House.

Last year's deficit registered $665 billion, which was well below the record $1.4 trillion posted during Obama's first year in office, when the Great Recession led to plunging revenues and a spike in spending. No serious effort was made to offset the lost revenue and spending increases.

The nonpartisan budget scorekeeper also projects that debt held by the public will rise from $16 trillion, or 78 percent of gross domestic product, at the end of this year to nearly $29 trillion, or 96.2 percent of GDP, in 2028.

"In our economic projections, which underlie our budget projections, inflation-adjusted GDP, or real GDP, expands by 3.3 percent this year and by 2.4 percent in 2019".




Unless Congress acts to stem the tide of red ink, the deficit would climb to $1.5 trillion by 2028 - and it could reach $2 trillion by that year if lawmakers extend a number of temporary policies.

Deficits remain at 5.1% through 2025 before dipping in later years to average 4.9% of GDP over the 2021-2028 period.

"Productivity growth returns to almost its average over the past 25 years and recent changes in fiscal policy boost incentives to work, save, and invest; nonetheless, economic growth is held down by slower growth of the labor force", the CBO said.

His formal budget proposals have been far harsher, but the Republican-led Congress has pushed against his proposed cutbacks due to their political unpopularity and the need to attract Democratic votes in order to pass any plan. "From day one, the Republican agenda has always been to balloon the deficit in order to dole out massive tax breaks to the largest corporations and wealthiest Americans, and then use the deficit as an excuse to cut Social Security and Medicare".

The agency also said that if Congress were to cancel the expiration of individual tax rate cuts and raise discretionary spending again after the budget deal expires in 2020, "the result would be even larger increases in debt".

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