Federal deficit to hit $1 trillion earlier than expected

Federal deficit to top $1 trillion per year by 2020, budget office says

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

The Congressional Budget Office is projecting that the federal debt will rise steadily over the next 10 years to almost 100% of GDP by 2028 - an amount "far greater than the debt in any year since just after World War II".

"The legislation has significantly reduced revenues and increased outlays anticipated under current law", the CBO said. But they, too, did little to offset the loss of revenue from the tax cut plan.

Economic growth is projected by the CBO to jump above three percent this year, exceeding the Trump administration's goal and far above the less than three percent the CBO projected before the tax cuts and spending bill.

Turning to the budget projections, we estimate that the 2018 deficit will total $804 billion, $139 billion more than the $665 billion shortfall recorded in 2017.

The government will borrow 19 cents of every dollar it spends this year.

For much of the same reason, other independent analysts, such as the Committee for a Responsible Federal Budget, are already saying the deficit could push toward (or even past) the $2 trillion threshold by the end of the 2020s.

"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.

Republicans controlling Washington have largely lost interest in taking on the deficit, an issue that has fallen in prominence in recent years. It is hard to imagine any cuts to Social Security, Medicare or other public programs, even though they make up a good portion of the budget - That would be a "political non-starter". The CBO projects that by 2028 federal interest costs would exceed $900 billion, almost triple what they are this year in nominal terms, and roughly double as a percentage of GDP. Since such constitutional amendments require two-thirds of the House and Senate to agree, it is unlikely to pass Congress, let alone be ratified by the states.

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The report projects economic growth to slow after 2019, with projected deficits increasing "markedly" since the CBO's last report in June 2017.

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.

The White House is also likely to propose rolling backing some of the domestic spending increases in the government-wide funding bill.

"That is unacceptable", said Sen. Lindsey Graham, R-S.C. "We made a deal".

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

Trump called the $1.3 trillion spending measure last month a "ridiculous situation" and said he only signed it to protect defense spending.

Republicans treated deficits of this scale as risky portents of civilizational collapse during Barack Obama's first term, when the economy was recovering from the greatest financial crisis in three-quarters of a century. It warns that interest rates on government borrowing will spike, with the benchmark 10-year Treasury note, now yielding 2.8 percent, will average a 3.0 percent interest rate this year and 3.7 percent next year. Total deficits over the next decade would total almost $12.42 trillion.

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