US deficit to exceed $1 trillion next year, CBO says

22 Août, 2019, 15:51 | Auteur: Auguste Feret
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Previously, the non-partisan federal agency that provides budget and economic information to Congress forecasted the deficit to be $896 billion for 2019 and $892 billion for 2020. The deficit would have been even bigger, but the CBO reduced its forecast for interest rates, lowering the government's anticipated borrowing costs. Over the next ten years, the deficit is expected to expand by $809 billion more than previously projected.

"Tariffs also affect business investment by increasing business' uncertainty about future barriers to trade and thus their perceptions of risk associated with investment in the United States and overseas", CBO Director Phillip Swagel said in a statement that accompanied an updated 10-year forecast.

By 2029, the accumulated federal debt is projected to exceed $29 trillion, or 95% of GDP - the highest ratio since just after World War II, the CBO said.

The CBO said the budget deal signed into law earlier this month, which took away the prospect of a government shutdown in October and the threat of deep automatic spending cuts, would boost deficits by United States dollars 1.7 trillion over the coming decade.

The two-year budget agreement passed on August 2 increased domestic and defense spending and suspended the debt ceiling, which the CBO estimated would add roughly $1.7 trillion to the deficit over the next decade.

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"CBO projects that the recent budget deal will add $1.5 trillion, plus interest, to our rapidly growing debt over the next decade", said Michael Peterson, CEO of the Peter G. Peterson Foundation in a statement.

But CBO said that rising domestic prices spurred by higher trade tariffs would reduce consumers' purchasing power and increase the cost of business investment. The CBO said in January saw a gap of $890 billion next year and didn't see it topping $1 trillion until 2022.

"The recent budget deal was a budget buster, and now we have further proof", said Maya MacGuineas, president of the Committee for a Responsible Federal Budget, in a statement. "Both parties took an already unsustainable situation and made it much worse". Her organization is focused on educating the public on issues with significant fiscal policy impact.

The news of a deficit that is ballooning faster than expected comes amid President Donald Trump's consideration to implement payroll and capital gains tax cuts, a clear sign that, despite rhetoric from Trump himself and senior administration officials, the White House is concerned about the possibility of a recession in the near future.

"We will know in year 8, 9, or 10 what revenues it brought in to the government over time", Rep. Kevin Brady of Texas said at the Peterson Foundation's fiscal summit in Washington.

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