According to the Congressional Budget Office, the U.S. budget deficit is expected to grow over the next few years due to tax cuts that were approved back in December by Republicans in Congress and POTUS Donald Trump. According to the CBO, Washington’s spending exceeds revenues and may reach $804 billion in fiscal 2018. An increase from $665 billion in fiscal 2017. The CBO forecast that deficits will “increase rapidly this year and over the next few years,” then stabilize, resulting in a projected cumulative deficit of $11.7 trillion for 2018-2027.
According to the CBO, the $1.3 trillion federal spending package as well as tax cuts are anticipated to push economic growth, pushing discretionary spending from businesses and households in the next two years. Inflation, interest rates will rise as the unemployment rate drops, which will force GDP growth to slow down from 2020 – 2026. Expirations for individual tax rates at the end of 2025 will slow economic growth as well.
The CBO’s annual report on the economy and U.S. budget typically releases in January but was delayed so it can assess effects of the spending bill and tax overhaul. The trade dispute between the U.S. and China was not taken into consideration on its impact on the economy.
Senate Democrat, Chuck Schumer stated that higher deficits and lower revenues due to the tax overhaul will force Republicans to cut programs such as Medicare health insurance and Social Security for elderly individuals. “The CBO’s latest report exposes the scam behind the rosy rhetoric from Republicans that their tax bill would pay for itself,” Schumer said in a statement.