U.S. budget deficit to balloon on Republican tax cuts-CBO

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

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

The US is facing a return to years of trillion-dollar annual budget deficits from 2020 onwards as the tax cuts pushed by President Donald Trump and Republicans and higher public spending strain America's finances - at a time when the nine year economic recovery is starting to show signs of ageing. Deficits would grow to $1.5tn by 2028 - and could exceed $2tn if the tax cuts are fully extended and if Washington does not cut spending.

The new report said 10-year debt will now hit $12.4 trillion, after breaking the $1 trillion mark in 2020. It predicts that government debt held by the public will swell to almost 100% of USA gross domestic product at the end of the 2020s.

"That amount is far greater than the debt in any year since just after World War II", CBO said, adding that the debt is now about 77 percent of GDP, a measure of the size of the economy. That deal paved the way for Congress to pass a $1.3 trillion spending bill last month.

Members of both parties further added to the deficit in March when they increased military and domestic spending by almost $300 billion over the next two years.

The CBO estimated that potential economic growth will be elevated over the next two years but long term will average 1.9 percent a year.

"Such high and rising debt would have serious negative consequences for the budget and the nation", the CBO said in its Budget and Economic Outlook, warning that it increased the likelihood of a "fiscal crisis" in the US. "That percentage will be the largest since 1946, and well more than twice the average over the past five decades", he said.

Democrats seized on the report to blast the GOP tax law and portray Republicans as fiscally irresponsible. The Republican tax legislation, passed by Congress without Democratic support, along with a recent bipartisan $1.3 trillion spending package, are expected to drive economic growth faster than initially expected, CBO said. Growth will be primarily driven by business investment, consumer spending and federal spending.

The national debt, which has topped $21 trillion, is expected to soar to more than $33 trillion in 2028.

He also warned against the Republicans' push for a balanced budget amendment to the Constitution, saying it would tie policymakers' hands during economic downturns, preventing them from injecting any spending stimulus. The tax law is projected to add at least $1.5 trillion to the national debt over the next debate. Trump has ruled out cuts to Social Security and Medicare, and Capitol Hill Republicans have failed to take steps against the deficit since Trump took office.

There is a nightmare scenario in which borrowers lose faith in the country's ability to pay back its debts, demanding higher interest rates on their loans and setting off a spiral of larger deficits and still-higher rates.

Recommended News

  • Civilian, Army man killed in ongoing encounter and protests in south Kashmir

    Civilian, Army man killed in ongoing encounter and protests in south Kashmir

    Reports claim the civilian killings were caused after the local populace hindered in the operation of security forces. While Malik addressed the media in person, Geelani and the Mirwaiz spoke to the journalists over telephone.
    Netflix Inc (NASDAQ:NFLX)

    Netflix Inc (NASDAQ:NFLX)

    The investment professionals in our partner's database now have: 344.43 million shares, down from 356.10 million shares in 2017Q3. Loop Capital gave the stock a Hold rating, while setting a price target at $325 in a research note from Friday, March 16th, 2018.
    United States  refutes reports of attack on Syrian airbase

    United States refutes reports of attack on Syrian airbase

    The Pentagon later issued a statement saying, "At this time, the Department of Defense is not conducting airstrikes in Syria". The U.S. missile strike was against a Syrian air base which Washington said was used to launch the strike.
  • CL: Juventus tie is like a final, says Real coach Zidane

    CL: Juventus tie is like a final, says Real coach Zidane

    Reigning titleholders Real Madrid will play host to Juventus at Wednesday's UEFA Champions League quarterfinal return legs.
    Fear propels migrants to stick with caravan

    Fear propels migrants to stick with caravan

    Mujica said that "a minimum of 80 percent" of the migrants in the group come from Honduras. " They're rapists . Rangel and the criminal groups reached their truce despite the Mexican government rejecting the idea.
    Amit Shah's remarks equating opposition with animals disrespectful: Rahul

    Amit Shah's remarks equating opposition with animals disrespectful: Rahul

    Gandhi was on the sixth leg of campaigning as part of the "Janashirvada Yatra " ahead of the May 12 polls in Karnataka. The focus, Gandhi said, was to get the country "out of the mess Modi and the RSS put it in".
  • National Guard arrives in Roma, Texas

    National Guard arrives in Roma, Texas

    It will not be a assignment to locate women and children or detain persons escaping violence and trying a better existence. Border Patrol Chief Greg Burwell said it's a challenge to keep tabs on all of it.
    IPL: Sunrisers Hyderabad crush RR by 9 wickets

    IPL: Sunrisers Hyderabad crush RR by 9 wickets

    Dhawan remained unconquered on 77 off 57 balls, while skipper Williamson smacked 36 not out off 35 balls. Dhawan maintained the intensity and reached his 29th half-century in the tournament in the 10th over.
    Moses In Action As West Ham's Chicharito Punishes Chelsea

    Moses In Action As West Ham's Chicharito Punishes Chelsea

    Eden Hazard's indifferent form has epitomised Chelsea's struggles and the Belgian playmaker had gone seven games without a goal. It was only a temporary reprieve for West Ham as Conte's men took a 36th-minute lead from the resulting short corner.
  • There Are Parking Restrictions Outside Kate's Hospital AKA Royal Baby Soon

    There Are Parking Restrictions Outside Kate's Hospital AKA Royal Baby Soon

    The announcement would only be made when William and Kate have informed Queen Elizabeth and other members of their families. There had been rumours that Kate wanted to give birth to her third child at home.
    Bahrain Grand Prix Qualifying: It's a FERRARI front row

    Bahrain Grand Prix Qualifying: It's a FERRARI front row

    Red Bull's troubles were doubled as Daniel Ricciardo , who was running fourth, parked his RB14 on the side of the track. Brendon Hartley fell agonisingly short of reaching Q3 and will start from a still impressive P11.
    High turnout in Hungary leads to election delays

    High turnout in Hungary leads to election delays

    But as Chairman of the Party, Vona has gradually brought Jobbik into the mainstream in the hope of widening its political base. Hungary's National Election Office reports 13.17 percent of eligible voters had cast ballots by 9 a.m. (0700GMT).

We are pleased to provide this opportunity to share information, experiences and observations about what's in the news.
Some of the comments may be reprinted elsewhere in the site or in the newspaper.
Thank you for taking the time to offer your thoughts.