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CBO: Federal deficit to hit $601B in 2019

Published in Blog on July 17, 2017 by Convention Of States Project

Federal deficits are expected to rise for the first time in nearly a decade, driving up the federal debt to almost unprecedented levels, according to an analysis from the non-partisan Congressional Budget Office. 

While the federal deficit is projected to drop in 2017 and 2018, CBO projects it will rise to $601 billion in 2019 thanks to rising Social Security and Medicare costs. 

CBO projects that the economy will grow at an average rate of 2.1 percent in the coming years, raising employment and wages. 

That will also raise revenue for the government through income taxes, but not enough to offset rising entitlement costs from an aging population, the CBO said. 

The projections could be a factor in decisions by the Trump administration and a Republican Congress to reform the tax code, repeal and replace ObamaCare and invest in infrastructure. 

Tax cuts could lead to projections of even higher deficits by reducing government revenue, though President Trump and his economic team have talked of a reform that would offset rate cuts with the elimination of tax breaks on the wealthy. 

Trump Treasury Secretary nominee Steve Mnuchin has discussed a tax cut for the middle class and for businesses that would ensure the wealthy continue to pay the same amount of taxes. 

Conservatives worried about government spending are likely to point to the deficit projections to question costly spending on infrastructure that might bust the budget. Trump has discussed a plan that would rely on tax credits and tolls to incentivize private sector investments in roads and bridges.

While the federal budget deficit increased in 2016 for the first time since 2009, it has generally been dropping since the height of the financial crisis. 

Click here to read more from The Hill.

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