WASHINGTON (AP) - The combined effects of President Trump's tax cuts and last month's budget-busting spending bill is sending the government's budget deficit toward the $1 trillion mark next year, according to a new analysis by the Congressional Budget Office.
Democrats seized on the report to blast the GOP tax law and portray Republicans as fiscally irresponsible.
Jeff Stein, The Washington Post •.
In order to include several important pieces of budget and spending legislation that passed recently, particularly the Tax Cuts and Jobs Act, the Bipartisan Budget Act, and the Omnibus Appropriations package, CBO pushed its usual January release date to April.
The independent office's updated projections predict the deficit will reach $981 billion.
More worrying for politicians the CBO projections and CBO also assumes significant tax increases toward the end of the 2020's because the Trump tax cuts were created to give permanent cuts to corporations and heirs of large estates, but linked these to temporary, expiring tax cuts for the middle class.Trump and the Republicans were forced to do this because the $US1.5 trillion budget limit did not allow them enough money to cut all the taxes they wanted to cut.
The increasing deficits could over time make it more difficult for the U.S. government to fund growth of domestic and defense programs
The report projects economic growth to slow after 2019, with projected deficits increasing "markedly" since the CBO's last report in June 2017.
This year, lawmakers approved a two-year budget deal that raised strict caps on military and domestic spending by about $300 billion.
"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. They did this because the $1.5 trillion budget limit did not allow them enough money to cut all the taxes they wanted to cut.
"The timing of this is really concerning because we're not coming out of a recession", Hall said Monday. No mention of the "voodoo economics" idea of dodgy economists that lower taxes generates higher spending and lower deficits. Those effects will be partially offset by $1.1 trillion in increased tax receipts resulting from faster economic growth, meaning that the new laws will add a net $1.6 trillion to deficits over the next decade, CBO says. "The American people deserve a Congress that is focused squarely on helping the middle class, not patronizing Kabuki theatre - like sham "balanced budget" votes - from Republicans who blew up the deficit to benefit wealthy special interests". On the Senate floor, Minority Leader Chuck Schumer (D-N.Y.) said the report is "a reminder of how unserious the current Republican Party is about deficits".
The CBO also said the deficit would continue to climb over that decade. Now, with total GOP control of Congress and the presidency, revenues have been cut while spending has increased - the opposite of fiscal conservatism and a sore spot with many GOP voters. "The economy is improving, with the help of tax reform, but we now must get serious about spending reform and cuts".
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.
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