The Congressional Budget Office on Monday forecast the return of trillion-dollar deficits in 2020, in the nonpartisan agency's first budget update since the enactment of President Donald Trump's tax cut law last year and the big spending bill this year.
The independent financial scorekeeper said that the long-term USA debt, now more than US$ 21 trillion, could soar to more than US$ 33 trillion by 2028, with increasing annual deficits jumping from US$ 804 billion this year to US$ 1.5 trillion in a decade. A $1.3 trillion 2018 spending bill was approved last month with bipartisan support as a result of that deal. Deficits would grow to $1.5 trillion by 2028 - and could exceed $2 trillion if the tax cuts are fully extended and if Washington doesn't cut spending.
Projected deficits over the 2018-2027 period have increased markedly since June 2017, when CBO issued its previous projections.
Numerous new major tax cuts and huge spending commitments introduced by the Donald Trump administration since he took office 18 months will really begin to be felt in terms of treasury coffers by the end of his first term.
Debt held by the public, which has doubled in the past 10 years as a percentage of gross domestic product (GDP), will approach 100 percent of GDP by 2028.
That would be a boost for President Trump, who has committed to generating growth of at least 3 percent. No mention of the "voodoo economics" idea of dodgy economists that lower taxes generates higher spending and lower deficits.
As a result, federal debt is projected to be on a steadily rising trajectory throughout the coming decade. Now they are perfectly comfortable jacking the deficit back up to recession-crisis levels, merely because they want to hand out tax cuts to owners of wealth while increasing defense, and without forcing their constituents to bear the cost of the necessary trade-offs. But the CBO expects growth to slow to 2.4 percent in 2019.
The timing of the balanced-budget debate - after Congress agreed to cut taxes and spend more money that will substantially grow the deficit and debt - has longtime budget hawks once again scolding lawmakers for rhetoric that does not meet reality.
The CBO also said the deficit would continue to climb over that decade.
If the Republicans really wanted to lock in their tax cuts, they needed spending restraint.
Interest rates are expected to rise in the years ahead which will make interest payments on the national debt even more expensive and could lead to cutbacks in other government spending, from social programs to the military.