A combination of corporate tax cuts and a bipartisan omnibus spending bill are likely to lead to trillion-dollar budget deficits next US financial year, with $2 trillion-plus deficits expected not too far in the future, despite Republicans ostensibly controlling the Whitehouse, Senate and Congress.
According to Forbes’ Chuck Jones, Trump’s first year budget deficit was larger than Obama’s last budget in office.
“The U.S. Federal deficit was $587 billion in Obama’s last year and it grew to $666 billion in Trump’s first year of his presidency. The U.S. Federal Deficit will probably increase this year (fiscal 2018), could come close to if not exceed $1 trillion in fiscal 2019 and will likely exceed $1 trillion in fiscal 2020 and beyond. And this is before the additional deficits created by the tax reform bill and the just passed two-year budget,” Jones wrote in Forbes.
Adam Michel is a Policy Analyst at the Roe Institute for Economic Policy. Writing for the Heritage Foundation, he slammed President Trump’s approach to the deficit.
“This past year, the House, the Senate and President Donald Trump all proposed budgets that cut spending growth and move the U.S. toward fiscal sanity. Each of these proposals has been successively ignored. Instead, Congress crafts bipartisan agreements to spend more every year – reviving trillion-dollar deficits and increasing the pace at which the U.S. debt grows,” Michel said,
“Without spending cuts, including significant reforms to entitlement spending, tax cuts only serve to make the U.S. fiscal crisis worse. However, a dearth of tax revenue is not the reason Congress has racked up $20 trillion of debt. Washington’s problem is an addiction to spending other people’s money.
The President of non-partisan think-tank Committee For a Responsible Federal Budget (CRFB), Maya MacGuineas was also harsh on the latest deficit mess.
“No one voting for this bill can claim to care about the debt and deficits – in fact, it is fiscal malpractice. Congress just ordered everything on the menu and then some and sent the bill over to the kids’ table,” she said in a statement.
“It is hard to believe that just a few years ago a national bipartisan fiscal commission was working on a plan to bring our growing and historic national debt back down to sustainable levels,” she said, “In the past two months, Congress has gone on a borrowing spree, racking up trillions of dollars in new debt on the national credit card at a time when the debt is already at post-war record highs.”
According to CRFB figures, the omnibus bill itself is projected to bring the deficit to 99 percent of Gross Domestic Product (GDP) by 2027, possibly rising to 109 percent of GDP in 2027 if the temporary measures in the budget and the recent tax cuts were made permanent – blitzing the previous record of 106 percent of GDP set by post-Second World War spending.