U.S. budget deficit to top $1 trillion next year
The U.S. budget deficit could exceed $1 trillion over the next financial year, according to the Congressional Budget Office.
Kevin Freking had the news for the AP:
The federal budget deficit is expected to balloon to more than $1 trillion in the next fiscal year under the first projections taking into account the big budget deal that President Donald Trump and Congress reached this summer, the Congressional Budget Office reported.
The return of $1 trillion annual deficits comes despite Trump’s vow when running for office that he would not just balance the budget but pay down the entire national debt.
“The nation’s fiscal outlook is challenging,” said Phillip Swagel, director of the nonpartisan CBO. “Federal debt, which is already high by historical standards, is on an unsustainable course.”
The office on Wednesday upped this year’s deficit projection by $63 billion and the cumulative deficit projection for the next decade by $809 billion. The higher deficit projections come even as the CBO reduced its estimate for interest rates, which lowers borrowing costs, and as it raised projections for economic growth in the near term.
The number crunchers at CBO projected that the deficit for the current fiscal year will come to $960 billion. In the next fiscal year, which begins Oct. 1, it will exceed $1 trillion.
CNN’s Donna Borak quoted the chairman of the CBO as saying:
“The nation’s fiscal outlook is challenging,” said Phill Swagel, director of the CBO. “Federal debt, which is already high by historical standards, is on an unstainable course, projected to rise even higher after 2029 because of the aging of the population, growth in per capita spending on health care and rising interest costs.”
He added that to put spending on a sustainable course, “lawmakers will have to make significant changes to tax and spending policies — making revenues larger than they would be under current law, reducing spending below projected amounts, or adopting some combination of those approaches.”
The White House’s Office of Management Budget has run slightly higher numbers, predicting that the deficit will exceed $1 trillion for the entire fiscal year.
The country’s debt has been piling higher under the Trump administration in part due to a $1.5 trillion tax cut signed into law in 2017 along with a massive spending package passed by Congress. Adding to the amassing heap is a two-year budget deal, signed by President Donald Trump, set to raise government spending by hundreds of billions of dollars.
CBS noted the CBO’s projections for the next 10 years were not too optimistic either:
Starting next year, deficits will top $1 trillion, averaging about $1.2 trillion annually over the coming decade. The higher deficit projections come mostly from recent legislation to lift the nation’s debt limit and reverse scheduled 10% cuts to defense and nondefense programs.
It’s unusual for deficits to grow during times of economic expansion. However, economists are divided on whether high debt creates a drag on the U.S. economy. Record-high debt levels so far have not increased the interest the U.S. pays to borrow money.
The CBO’s deficit estimate grew even though it reduced its projections for interest rates, lowering borrowing costs, and as it raised projections for economic growth in the near term.