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As "deficit hawk" Paul Ryan decides to retire today
https://www.nytimes.com/2018/04/09/u...ing-trump.html
The federal government’s annual budget deficit is set to widen significantly in the next few years, and is expected to top $1 trillion in 2020 despite healthy economic growth, according to new projections from the nonpartisan Congressional Budget Office released Monday.
The national debt, which has exceeded $21 trillion, will soar to more than $33 trillion in 2028, according to the budget office. By then, debt held by the public will almost match the size of the nation’s economy, reaching 96 percent of gross domestic product, a higher level than any point since just after World War II and well past the level that economists say could court a crisis.
The fear among some economists is that rising deficits will drive up interest rates, raise borrowing costs for the private sector, tank stock prices and slow the economy, which would only drive the deficit higher.
“Such high and rising debt would have serious negative consequences for the budget and the nation,” said Keith Hall, the director of the budget office. “In particular, the likelihood of a fiscal crisis in the United States would increase.”
The budget office forecast is the first since President Trump signed a sweeping tax overhaul, then signed legislation to significantly increase military and domestic spending over the next two years. The figures are sobering, even in a political climate where deficit concerns appear to be receding.
But that added economic growth does not come close to paying for the tax overhaul, which the budget office said would add more than $1.8 trillion to deficits over that period, from lost tax revenue and higher interest payments.
Many Republicans have said the tax overhaul would vault economic growth over 3 percent a year for a sustained period, generating more revenue than the tax cuts would cost. But the budget office expects the economy to grow at an annual average rate of 1.9 percent over the next decade. Growth would start strong, at 3.3 percent this year and 2.4 percent next year, but then slow considerably.
And if the temporary tax cuts for individuals are extended past their scheduled expiration at the end of 2025, the price tag for the tax overhaul would be even greater.
Mr. Trump has talked about embarking upon “Phase 2” of tax cuts, which could include making those individual tax cuts permanent.
Democrats jumped on the projections to castigate Republicans over their economic record.
“From Day 1,” the Senate Democratic leader, Chuck Schumer of New York, said, “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.”
Representative Nancy Pelosi of California, the House Democratic leader, was equally harsh: “The C.B.O.’s report exposes the staggering costs of the G.O.P. tax scam and Republicans’ contempt for fiscal responsibility.”
For their part, Republicans were remarkably quiet: “Without question, we have challenging work ahead,” said Representative Steve Womack of Arkansas, the chairman of the House Budget Committee.
This fiscal year, which ends Sept. 30, the budget deficit is expected to total $804 billion, up from $665 billion last fiscal year, according to the projections. In a decade, the red ink is expected to reach $1.5 trillion.
The national debt, which has exceeded $21 trillion, will soar to more than $33 trillion in 2028, according to the budget office. By then, debt held by the public will almost match the size of the nation’s economy, reaching 96 percent of gross domestic product, a higher level than any point since just after World War II and well past the level that economists say could court a crisis.
The fear among some economists is that rising deficits will drive up interest rates, raise borrowing costs for the private sector, tank stock prices and slow the economy, which would only drive the deficit higher.
“Such high and rising debt would have serious negative consequences for the budget and the nation,” said Keith Hall, the director of the budget office. “In particular, the likelihood of a fiscal crisis in the United States would increase.”
The budget office forecast is the first since President Trump signed a sweeping tax overhaul, then signed legislation to significantly increase military and domestic spending over the next two years. The figures are sobering, even in a political climate where deficit concerns appear to be receding.
But that added economic growth does not come close to paying for the tax overhaul, which the budget office said would add more than $1.8 trillion to deficits over that period, from lost tax revenue and higher interest payments.
Many Republicans have said the tax overhaul would vault economic growth over 3 percent a year for a sustained period, generating more revenue than the tax cuts would cost. But the budget office expects the economy to grow at an annual average rate of 1.9 percent over the next decade. Growth would start strong, at 3.3 percent this year and 2.4 percent next year, but then slow considerably.
And if the temporary tax cuts for individuals are extended past their scheduled expiration at the end of 2025, the price tag for the tax overhaul would be even greater.
Mr. Trump has talked about embarking upon “Phase 2” of tax cuts, which could include making those individual tax cuts permanent.
Democrats jumped on the projections to castigate Republicans over their economic record.
“From Day 1,” the Senate Democratic leader, Chuck Schumer of New York, said, “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.”
Representative Nancy Pelosi of California, the House Democratic leader, was equally harsh: “The C.B.O.’s report exposes the staggering costs of the G.O.P. tax scam and Republicans’ contempt for fiscal responsibility.”
For their part, Republicans were remarkably quiet: “Without question, we have challenging work ahead,” said Representative Steve Womack of Arkansas, the chairman of the House Budget Committee.
This fiscal year, which ends Sept. 30, the budget deficit is expected to total $804 billion, up from $665 billion last fiscal year, according to the projections. In a decade, the red ink is expected to reach $1.5 trillion.
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