The massive tax cuts signed into law in December, which Republicans said would pay for themselves, will balloon the us deficit in years ahead, the Congressional Budget Office said on Monday, possibly hobbling President Donald Trump's future agenda. The Republican tax legislation, passed by Congress without Democratic support, along with a recent bipartisan $1.3 trillion spending package, are expected to drive economic growth faster than initially expected, CBO said.
The CBO projects that GDP will expand at an average annual rate of 1.9% between 2018 and 2028, which incorporates a big jump in growth this year to 3.3% followed by slower growth in succeeding years: 2.4% in 2019, then 1.7% from 2020-2026 and 1.8% in each of the next two years.
As a result, federal debt is projected to be on a steadily rising trajectory throughout the coming decade. On the Senate floor, Minority Leader Chuck Schumer (D-N.Y.) said the report is "a reminder of how unserious the current Republican Party is about deficits".More news: Jailed Reuters journalists in Myanmar fail to win their freedom
The new report said 10-year debt will now hit $12.4 trillion, after breaking the $1-trillion mark in 2020.
He want on decry a planned Balanced Budget Amendment vote in the House this week as a "sham".
Republicans controlling Washington have largely lost interest in taking on the deficit. The expiration of lower individual tax rates at the end of 2025 will add to slowed economic growth then, the CBO added. Deficits can snowball, as larger deficits require larger interest payments, pushing the government to borrow more and more money to close the gap.
"Anyone who argues this course can continue is living with blinders", said Campaign to Fix the Debt Co-chairmen Judd Gregg, a former GOP senator, and Ed Rendell, a former Democratic governor. And if interest rates go up, the government will have to pay much more to finance the more than $14 trillion in Treasury debt held by investors.More news: Apartment fire breaks out in Trump Tower leaves 1 dead
Still, some economists are skeptical of the peril posed by deficits, noting that during the Obama administration many deficit hawks warned of a fiscal crisis that has so far failed to materialize.
Besides, there is little pressure for action beyond a small chorus of deficit hawks.
If the Republicans really wanted to lock in their tax cuts, they needed spending restraint.More news: Finger find adds weight to earlier out-of-Africa timing