Changes in USA tax laws, the $1.3 trillion federal spending plan for 2018 and an anticipated slowdown in United States economic growth are expected to push the budget deficit to historically high levels totaling almost 100 percent of gross domestic product by 2028, the Congressional Budget Office (CBO) predicted in a report on Monday.
The budget deficit will be 4.2% of the nation's gross domestic product in 2018, and will grow to 5.1% in 2022, the CBO estimates.
The Congressional Budget Office said its projected increase in the 2018 budget deficit is due to new tax cuts and the March spending bill. Beginning in 2020, however, the CBO said deficits would exceed $1 trillion a year. "Analysts have said for years that a debt problem was looming on the horizon", said Shai Akabas, economic policy director at the Bipartisan Policy Center.More news: 'We are sad and annoyed' - Jesus demands response from Manchester City
While economic growth is projected to be strong this year and next, the CBO estimates that things will slow down again. Regardless of where you land on the political spectrum, taxpayers should agree that CBO's numbers are alarming and politicians' insatiable appetite for massive deficit spending must be restrained.
Federal watchdog the Congressional Budget Office forecast the deficit to swell to $804bn this year, some $242bn more than it projected last summer. Over that period, the agency estimates revenue will be about 2 percent less than projected previous year, and spending about 1 percent higher.
Net outlays for interest paid on federal debt are projected to roughly triple what they are this year in nominal terms and roughly double as a percentage of GDP, according to the CBO.
The rising deficit means that a larger part of the government's spending is paid for voluntarily by investors rather than compelled payments taken from taxpayers. It predicts that government debt held by the public will swell to almost 100% of U.S. gross domestic product at the end of the 2020s.More news: China's Xi Jinping pledges to cut auto tariffs amid USA trade clash
"The tax cuts passed a year ago actually added an amount to America's long-run fiscal challenge that is roughly the same size as the pre-existing shortfalls in Social Security and Medicare". For example, the deficit would average 6.3% of GDP from 2023 to 2028, and rise to 7.1% of GDP by 2028.
Democrats seized on the report to blast the GOP tax law and portray Republicans as fiscally irresponsible.
The government's mounting debt has seemed of little outcome on Capitol Hill in recent months as Republicans in Congress successfully worked to pass a sweeping package of tax cuts.
It lifted its economic growth forecast for this year and next to 3.3% and 2.4% respectively. And not a word from the debt and deficit mob and those conservatives who reckon higher spending will be inflationary.More news: West Ham striker Hernandez pushes Moyes to start him