US Federal budget deficit projected to top $1T in 2020

US Federal budget deficit projected to top $1T in 2020

Now that conservatives complained about the $1.3 trillion catchall spending bill - which blew through previous budget limits by $300 billion over this year and next, House GOP leaders have scheduled a vote this week on a proposed amendment to the Constitution to require a balanced federal budget.

And, the gap between spending and receipts would balloon to just over $1tn by 2020 - some $200bn higher than previously predicted.

Altogether, deficits over the decade will be $1.6 trillion higher than previously projected by CBO and by 2028, debt held by the public would total almost 100 percent of GDP; the most since post-World War II. It will average 3.8 percent this year and dip to 3.3 percent next year - the lowest figure in the post-World War II era.

The report cites 2017 tax legislation and the $1.3 trillion bipartisan budget for 2018, which increased spending caps, as key reasons for a growing budget shortfall, as well as an assumption that annual economic growth will remain below 2 percent after a temporary surge this year and next.

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Moreover, the Trump administration plans to increase spending drastically over the next two years.

In the near term, a rosier-than-expected economic outlook for individuals offered by the CBO could boost the Republican economic message as Trump's party seeks to retain control of Congress in the November midterm elections.

The CBO also reports that economic growth will lower the unemployment rate below 4 percent.

"Such high and rising debt would have serious negative consequences for the budget and the nation", the CBO warned. "That percentage will be the largest since 1946, and well more than twice the average over the past five decades", he said.

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The tax law that President Donald Trump and congressional Republicans passed in December will cut government revenue by $1.3 trillion from 2018 to 2028, the CBO reported.

Republicans claimed their economic policies would pay for themselves by stimulating growth.

The deficit will rise to $804 billion this year before jumping to $1 trillion in 2019. "Most of this growth is driven by consumer spending and business investment, but federal spending also contributes a significant amount this year", Hall said.

"Anyone who argues this course can continue is living with blinders", said Campaign to Fix the Debt Co-chairmen Judd Gregg, a former GOP senator, and Ed Rendell, a former Democratic governor. But such a measure has little chance of passing and the effort will largely be about political messaging.

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There is a nightmare scenario in which borrowers lose faith in the country's ability to pay back its debts, demanding higher interest rates on their loans and setting off a spiral of larger deficits and still-higher rates.

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