US Deficit Could Surpass $1 Trillion Well Before Previously Estimated

Donald Trump speaks during a campaign event in Hartford Conn. in April 2016

Donald Trump speaks during a campaign event in Hartford Conn. in April 2016

The CBO released analysis Monday detailing how the federal budget deficit will be $804 billion in 2018 and exceed $1 trillion in 2020.

With conservatives complaining about the $1.3 trillion catchall spending bill - which blew through previous budget limits by $300 billion over this year and next - House GOP leaders have scheduled a vote this week on a proposed amendment to the Constitution to require a balanced federal budget.

The GOP tax cuts and omnibus spending bill will push the deficit over $1 trillion next year, according to a report by the Congressional Budget Office.

The government is slated to spend $4.1 trillion this year: $2.5 trillion of that on entitlements, $1.3 trillion on defense and domestic discretionary spending such as education and the environment, and $316 billion on interest payments on the debt. But the CBO projected Monday that the bill would boost economic growth 0.7 percent over a decade - not enough to keep it from adding to the deficit. Real GDP will expand 3.3 percent in 2018 and 2.4 percent in 2019.

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The CBO said that "such high and rising debt would have serious negative consequences for the budget and the nation", which would include limiting the government's flexibility to introduce new policies and making it vulnerable to fiscal shock.

But the CBO suggests the administration's promise that the tax cuts would pay for themselves seems out of reach.

"To address our federal debt, we must slow the growth of entitlement spending, increase revenues with a growing economy, and make responsible spending cuts", Lankford said in a statement.

At 11 years, the report covers a slightly longer time period than the usual 10-year projections, but even accounting for just the first decade, the figure remains around $1.9 trillion. Trump has ruled out cuts to social security or Medicare and Republicans on Capitol Hill have failed to take steps against the deficit since Trump took office.

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The government's mounting debt has seemed of little outcome on Capitol Hill in recent months as Republicans in Congress successfully worked to pass a sweeping package of tax cuts. The modern Republican Party has pioneered a completely novel theory: Governments should balance their budgets when run by Democrats, and run extremely large deficits when run by Republicans.

"We expect interest rates to accelerate faster", said CBO's Hall. That plan is widely viewed as a symbolic measure with little chance of passing Congress or winning the necessary ratification from the states.

"This high and rising debt matters because it harms our economy, by crowding out public and private investment, reducing our fiscal flexibility, and lowering confidence and certainty".

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