Jeff Stein, The Washington Post •.
The independent office's updated projections predict the deficit will reach $981 billion. "Federal debt is projected to be on a steadily rising trajectory throughout the decade".
The news came on Monday as tax cuts and federal spending hikes took effect. After 2019, economic growth is projected to slow, eventually matching CBO's estimate of the economy's maximum sustainable rate of growth... 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.
Unless Congress acts to stem the tide of red ink, the deficit would climb to $1.5 trillion by 2028 - and it could reach $2 trillion by that year if lawmakers extend a number of temporary policies. 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. "The reality of it is that as our tax cuts are taking effect, our economy will continue to surge and we'll have more revenue coming into the government short term", said Sen. And the Democrats aren't exactly offering a fiscally responsible alternative. On the Senate floor, Minority Leader Chuck Schumer (D-N.Y.) said the report is "a reminder of how unserious the current Republican Party is about deficits".
"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. It is hard to imagine any cuts to Social Security, Medicare or other public programs, even though they make up a good portion of the budget - That would be a "political non-starter".
CBO also assumes the middle class will face significant tax increases toward the end of the decade.
Analysts say the debt problems could get worse. But in an indicator that Republicans are becoming concerned about the political liability of surging shortages, " the House will vote Thursday to a constitutional amendment to require balanced funding.
"We expect interest rates to accelerate faster", said CBO's Hall.
It's also true that the White House's official budget projects a mere $363 billion deficit in 2028. If interest rates go up, the government would have to pay much more to finance the more than $14tn in treasury debt held by investors.
And as the government borrows more, it risks crowding out private investment that would have stimulated more economic growth, the CBO warned. While the benefits of tax reform should not be overlooked, including a projected high short-term GDP growth and low unemployment, the deficit and debt forecasts are daunting and need to be addressed.
Republicans once laced into President Barack Obama for trillion-dollar-plus deficits but mostly fell quiet on Monday's news. And not a word from the debt and deficit mob and those conservatives who reckon higher spending will be inflationary.
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