Federal deficits projected to rise, surpassing $1 trillion in 2020

Federal deficits projected to rise, surpassing $1 trillion in 2020

Federal deficits projected to rise, surpassing $1 trillion in 2020

"From day one, the Republican agenda has always been to balloon the deficit in order to dole out massive tax breaks to the largest corporations and wealthiest Americans, and then use the deficit as an excuse to cut Social Security and Medicare", said Senate Democratic Leader Charles Schumer, D-N.Y.

The national budget deficit will now surpass $1 trillion by 2020, two years earlier than expected according to a new report out by the nonpartisan Congressional Budget Office on Monday. CBO now estimates the 2018 deficit will be $242 billion higher than it had estimated last June, before the tax cuts.

This monumental deficit can largely be attributed to the lost revenue that resulted from the tax cut legislation Congress passed and Trump signed at the end of a year ago.

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Economic Effects of the 2017 Tax Act on Real GDP Congressional Budget Office

Why? Well, the CBO said in its report (https://www.cbo.gov/publication/53651), "Accounting for most of that difference is a $194 billion reduction in projected revenues, mainly because the 2017 tax act is expected to reduce collections of individual and corporate income taxes".

Instead the non-partisan CBO said the cumulative debt would be the same size as the overall Gross Domestic Product in 10 years' time.

Democrats seized on the report to blast the GOP tax law and portray Republicans as fiscally irresponsible. As deficits accumulate, debt held by the public rises from 78 percent of GDP (or $16 trillion) at the end of 2018 to 96 percent of GDP (or $29 trillion) by 2028. The economic growth promises to drop the nationwide unemployment rate below 4%, the CBO predicted.

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Economic growth will climb to 3.3 percent this year thanks to the fiscal stimulus from tax cuts and increased spending, but will fall to 2.4 percent in 2019 and 1.8 percent in 2020. 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 GOP tax law will boost economic growth by an average of 0.7 percent over the next decade and create 1.1 million jobs. In our projections, budget deficits continue increasing after 2018.

"The federal budget deficit grows substantially over the next several years", said CBO Director Keith Hall on Wednesday after his agency released the report.

"Productivity growth returns to almost its average over the past 25 years and recent changes in fiscal policy boost incentives to work, save, and invest; nonetheless, economic growth is held down by slower growth of the labor force", the CBO said.

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But the flurry of recent legislation is making it hard for Republicans to continue blaming President Barack Obama and Democrats for the government's fiscal condition.

Democrats accused Republicans of agitating for just that outcome, saying the tax cuts were created to starve the government of money to pave the way for those cuts.

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