Republican tax cuts to fuel historic U.S. deficit

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Republican tax cuts to fuel historic U.S. deficits: CBO

Make THIS seem like it's something else, righty.

Amanda Becker


WASHINGTON (Reuters) - The massive tax cuts signed into law in December, which Republicans said would pay for themselves, will balloon the U.S. deficit in years ahead, the Congressional Budget Office said on Monday, possibly hobbling President Donald Trump’s future agenda.

The deficit - the amount that Washington’s spending exceeds its revenues - will expand to $804 billion in fiscal 2018, which ends on Sept. 30, up from $665 billion in fiscal 2017, CBO said.

The national debt is on track to approach 100 percent of gross domestic product (GDP) by 2028, said the nonpartisan CBO, which analyzes legislation for Congress.

“That amount is far greater than the debt in any year since just after World War II,” CBO said, adding that the debt is now about 77 percent of GDP, a measure of the size of the economy. The Republican tax legislation, passed by Congress without Democratic support, along with a recent bipartisan $1.3 trillion spending package, are expected to drive economic growth faster than initially expected, CBO said.

Real GDP will grow by 3.3 percent in 2018; 2.4 percent in 2019; and 1.8 percent in 2020, it said.

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.

The analysis “confirms that major damage was done” by the new tax law and the spending bill, said Michael Peterson, head of the nonpartisan Peter G. Peterson Foundation.

“This high and rising debt matters because it harms our economy,” said Peterson, whose group backs fiscal conservatism.

“During a time of low unemployment and economic expansion, we should be taking reasonable steps to put our debt on a sustainable path – but instead we are piling up trillions of bills,” he said.

The CBO’s annual report on the U.S. budget and economy typically comes out in January but was delayed this year to allow it to assess effects of the tax overhaul and spending bill. The forecast does not take into account any economic impact of the trade dispute between the United States and China.

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