U.S. cruises toward record-breaking debt on Trump's watch

The nation’s fiscal outlook looks ever bleaker, thanks in part to deficit spending during President Donald Trump’s first term, Congress’ nonpartisan budget scorekeeper projected Tuesday. Within 16 years, the federal deficit is expected to be the largest in history, outpacing even the fiscal shortfalls that followed World War II, according to Congressional Budget Office estimates. Congress’ recent tax and spending laws — along with ballooning costs of programs like Social Security and Medicare — also are driving up the amount the government pays in interest on money borrowed to make up for the gap in cash coming in and going out. Indeed, those interest payments will exceed the cost of all Social Security spending within decades, CBO predicts. Interest costs also will be higher than discretionary spending, which amounts to all federal dollars Congress controls. Debt is projected to reach 78 percent of gross domestic product by the end of this year — the highest level since about 1950. At this rate, that debt would actually exceed the size of the economy within a decade, breaking the historic record of 106 percent by 2034. In drumming up support for their tax overhaul, congressional Republicans have said the new law would spur enough economic growth to offset a loss in revenue over the next decade. CBO predicts, however, that most of that economic revving will happen in the next several years, with the largest single-year increase occurring in 2022, with GDP growing by a full percentage point. After that, GDP growth is expected to be modest, amounting to an average boost of 0.7 percent over a decade. The effects of the Republican tax law on federal deficits are projected to diminish after 2026, when many of the costly individual tax breaks are set to expire. After that point, revenue is xpected to rise again. And a decade out, the tax law would have almost no effect on the economy or the federal deficit, CBO predicts. source: https://www.politico.com/story/2018/06/26/cbo-federal-deficit-break-records-651929 #Headlines by: sferris@politico.com (Sarah Ferris)

Original Post: https://www.politico.com/story/2018/06/26/cbo-federal-deficit-break-records-651929