USA budget deficit to balloon on Republican tax cuts: CBO

Donald Trump speaks during a campaign event in Hartford Conn. in April 2016

A copy of the $1.3 trillion spending bill is stacked on a table in the Diplomatic Room of the White House in Washington, March 23, 2018.

The massive tax cuts signed into law in December, which Republicans said would pay for themselves, will balloon the USA deficit in years ahead, the Congressional Budget Office said on Monday, possibly hobbling President Donald Trump's future agenda.

But those growth rates will not offset the deficits, which will "increase rapidly this year and over the next few years", then stabilize, resulting in a projected cumulative deficit of $11.7 trillion for 2018-2027, CBO forecast.

Jeff Stein, The Washington Post •.

President Donald Trump and Congressional Republicans' tax cuts and spending increases will have serious impacts on the USA deficit.

The independent office's updated projections predict the deficit will reach $981 billion.

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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. But the fiscal stimulus from tax cuts and spending increases will also exert upward pressure on interest rates and prices, and larger budget deficits will crowd out private investment, lowering GDP in later years, CBO says. As a result, the tax cut ate into a larger base of expected tax revenue. "That amount is far greater than the debt in any year since just after World War Two", it concluded. The CBO said the deficit for fiscal 2018 would total $804 billion, up from $665 billion in the last fiscal year. 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. They're expected to remain near 21% of GDP over the next three years, then grow more quickly, topping 23% of GDP by 2028.

"We've had a big tax cut and a big spending increase, and they're showing up here", said Benjamin Page, a senior fellow at the Tax Policy Center, a nonpartisan think tank. The CBO released an alternative fiscal scenario in its report, taking into account changes that more closely represent current policy trends.

"The CBO's report exposes the staggering costs of the GOP tax scam and Republicans' contempt for fiscal responsibility", House Minority Leader Nancy Pelosi, D-Calif, said in a statement Monday.

Van Hollen also expressed worry that Republicans will use this news to cut into entitlement programs like Social Security.

The new report said that by 2028, the debt load will exceed 96 percent of GDP. "The economy is improving, with the help of tax reform, but we now must get serious about spending reform and cuts". But such a measure has little chance of passing and the effort will largely be about political messaging.

"We expect interest rates to accelerate faster", said CBO's Hall.

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