The Associated Press is reporting President Donald Trump's tax cuts and the passage of the Omnibus Spending Bill last month is sending the government's budget deficit toward the $1.0 trillion mark, and we could reach that point as soon as next year, according to the CBO.
The federal deficit, or the gap between how much the government takes in in revenue and how much it shells out, is expected to skyrocket 21% over last year to reach $804 billion in the fiscal 2018 year ending September.
According to CBO's projections, economic growth is expected to surge over the next two years, with gross domestic product (GDP) expanding by 3.3 percent in 2018 and 2.4 percent in 2019.
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 Congressional Budget Office says tax and spending bills will push the deficit to $804 billion this year and almost $1 trillion for 2019. CBO attributes these economic trends to the three major laws mentioned above, along with rising federal budget deficits over the ten-year window.
The economic growth promises to drop the nationwide unemployment rate below 4 percent starting this year, CBO predicts.
But those growth rates will not offset the deficits, which will "increase rapidly this year and over the next few years", then stabilise. The GOP tax law will boost economic growth by an average of 0.7 percent over the next decade and create 1.1 million jobs. Revenues are lowered by $1.0 trillion and projected outlays are increased by $500 billion.
Congress also passed a $1.3 trillion spending bill last month - a bipartisan agreement that increased defense and domestic spending alike.
"That increase reflects significant growth in mandatory spending - mainly because the aging of the population and rising health care costs per beneficiary are projected to increase spending for Social Security and Medicare, among other programs". They will remain above $1 trillion for the foreseeable future, the analysts said, painting a better economic picture but a significantly worse fiscal picture than previous year. The current national debt, including projected future spending on social programs, totals more than $20 trillion. The political theory behind this combination was that Republicans needed to take advantage of their full control of government to pass the tax cuts Democrats opposed, which exclusively benefit the very rich.
The CBO also said the deficit would continue to climb over that decade.
It said that while the measures will temporarily boost the USA economy, they will exacerbate its long-term debt.