CBO: Tax Cuts, Spending Driving Debt to Historic Levels

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.

This monumental deficit can largely be attributed to the lost revenue that resulted from the tax cut legislation Congress passed and Trump signed at the end of past year.

The new report predicts the economy will grow by 3.3 percent this year but that gross domestic product growth will drop to 1.8 percent by 2020.

"They've been wrong consistently, from the 1930s to the 1960s to the 1980s on the impact of tax cuts as it relates to revenues", Scott said of the CBO, which was formed in 1974. "In their craven haste to give corporations and the wealthiest 1% massive tax breaks, Republicans saddled our children and grandchildren with trillions of dollars of debt". "A blowout spending bill is going to cause a problem, which is why the omnibus was bad", said Sen. The GOP tax law will boost economic growth by an average of 0.7 percent over the next decade and create 1.1 million jobs.

"The largest effects on GDP over the decade stem from the tax act", according to the CBO. CBO attributes these economic trends to the three major laws mentioned above, along with rising federal budget deficits over the ten-year window. He also asserted the media did not properly cover the deficit implications of the bipartisan 2018 spending bill that passed in March. The deficit will be US$804 billion for the current financial year, which ends on September 30, a big rise from the US665 billion deficit for fiscal 2017 and US$242 billion more than the CBO projected last (northern) summer. From 2021 through 2028, deficits will average 4.9 percent of GDP. This change reflects the net effect of substantial estimated reductions in tax collection (nearly $1.7 trillion) due to policy changes, and a significant increase in tax collections (about $1 trillion) due to higher projected economic growth. Trump has ruled out cuts to social security or Medicare and Republicans on Capitol Hill have failed to take steps against the deficit since Trump took office.

Current tax and spending policies are moving the country toward a vicious cycle of rising interest rates and even higher levels of debt.

The agency also said that if Congress were to cancel the expiration of individual tax rate cuts and raise discretionary spending again after the budget deal expires in 2020, "the result would be even larger increases in debt". While some members of Congress care about reducing deficits, it is now clear that the Republican majority in both chambers and the Republican in the White House have little interest in being responsible stewards of the federal purse. Those surpluses turned to deficits after tax cuts under President George W. Bush, as well as sharp increases in military spending for the wars in Afghanistan and Iraq.