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11 April 2018, 12:41 | Myrtle Vega
Donald Trump speaks during a campaign event in Hartford Conn. in April 2016
The deficit is estimated to climb to $804 billion this year and $981 billion in fiscal 2019, hitting $1 trillion in 2020 and topping $1.5 trillion in 2028, the Congressional Budget Officesaid in a report Monday.
Economic growth is projected by the CBO to jump above three percent this year, exceeding the Trump administration's goal and far above the less than three percent the CBO projected before the tax cuts and spending bill.
The report does say the US gross domestic product is likely to grow faster than previously thought this year.
The tax legislation alone increaseddeficits by $1.3 trillion even after taking into account the increases in economic growth it is projected to spur. It fact, the deficit is likely to push well above the $1 trillion in future years.
In fact America could be staring at a decade where the size of its debt and budget deficit starts growing faster than the economy, and if the economy slows, then the situation will worsen dramatically.
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Meanwhile, the House is scheduled to vote Thursday on a constitutional amendment that would prohibit Congress from spendingmore than the government takes in annually, unless a supermajority of both chambers votes to exceed those limits.
In the next few years, deficits will "grow substantially" before stabilizing in 2023, resulting in a projected cumulative deficit of $11.7 trillion for 2018-2027, the CBO said. Annual deficitspending will top $1 trillion by 2020. As a result, the tax cut ate into a larger base of expected tax revenue. "From day one, 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". Inflation, interest rates will rise as the unemployment rate drops, which will force GDP growth to slow down from 2020 - 2026.
"He tried to make it seem that he could cut taxes, raise spending and eliminate deficits all at the same time, to make it seem like he's a miracle worker", said Stan Collender, a former congressional budget committee staffer.
By 2028, the government will spend $7 trillion: $4.5 trillion of that on entitlements, $1.6 trillion on defense and domestic discretionary programs, and a staggering $915 billion on interest payments. Only in 1945 and 1946 has the debt held by the public been higher.
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. The political theory behind this combination was that Republicans needed to take advantage of their full control of government to pass the tax cuts Democrats opposed, which exclusively benefit the very rich.
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