US Budget Deficit Headed To Over $1 Trillion By 2020

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According to the Congressional Budget Office (CBO), the United States will return to trillion-dollar annual budget deficits from 2020 onwards as the tax cuts pushed by Trump and Republicans, and higher public spending, strain America's finances.

The Congressional Budget Office says tax and spending bills will push the deficit to $804 billion this year and almost $1 trillion for 2019.

That budget gap - the amount by which the USA government spending exceeds revenue - is then forecast to remain above $1 trillion through 2027.

The deficit - the amount that Washington's spending exceeds its revenues - will expand to $804 billion in fiscal 2018, which ends on September 30, up from $665 billion in fiscal 2017, CBO said. If lawmakers renew tax cuts expected to expire under the new tax law, there would be "even larger increases in debt".

The CBO's forecast shows the fiscal stimulus will lift growth rate in short term, but do little to boost economic prospect in longer term. Notably, and in keeping with the anti-intellectual spirit of the times, conservatives have not even bothered formulating a rationale for increasing the deficit during the peak of an economic expansion.

As a result, federal debt is projected to be on a steadily rising trajectory throughout the coming decade. No mention of the "voodoo economics" idea of dodgy economists that lower taxes generates higher spending and lower deficits.

The report said the debt burden would approach 100 percent of the GDP by 2028, the highest level since just after World War II.

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The deficits are expected to drive the national debt from $21 trillion now up to $33 trillion within 10 years.

According to the report, the tax law would cost the government $2.3 trillion in revenues, but economic growth would offset that figure by about $461 billion.

Sen. James Lankford, R-Oklahoma, said the tax bill had helped stimulate growth, but that reining in the deficit would require slowing down increasing spending on social programs.

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.

Meanwhile, the House is scheduled to vote Thursday on a constitutional amendment that would prohibit Congress from spending more than the government takes in annually, unless a supermajority of both chambers votes to exceed those limits.

Worse, it could ultimately lead to an economic downturn and make a fiscal crisis more likely.

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