The non-partisan Congressional Budget Office (CBO) expects the Republican tax reform bill and 2018 congressional budget agreement to grow the economy over the coming years, but adds almost $2 trillion to federal deficit over the next decade.
In its 11-year estimate, CBO estimated that interest payments would account for $582 billion of the $1.9 trillion total deficit increase. They will remain above $1 trillion for the foreseeable future, the analysts said, painting a better economic picture but a significantly worse fiscal picture than a year ago. By then, debt held by the public will nearly match the size of the nation's economy, reaching 96 percent of gross domestic product, a higher level than any point since just after World War II and well past the level that economists say could court a crisis. That amount is far greater than the debt in any year since just after World War II.
The report released on Monday was the CBO's first comprehensive fiscal and economic outlook since the tax and spending legislation enacted by the US Congress late a year ago.
This year, lawmakers approved a two-year budget deal that raised strict caps on military and domestic spending by about $300 billion. GDP growth is forecast to slow down after 2020, in part because all of this economic stimulus is likely to drive up interest rates.
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"Such high and rising debt would have serious negative consequences for the budget and the nation", the CBO said in its Budget and Economic Outlook, warning that it increased the likelihood of a "fiscal crisis" in the US. Economic growth from the tax cuts will add 0.7% on average to the nation's economic output over the coming decade, the analysis said, only partially offsetting the deficit cost of the tax cuts. The rush has been to blame this news on the GOP's tax cuts, . Numerous tax cuts are set to expire after 2025, while higher spending levels expire after two years. Growth will be primarily driven by business investment, consumer spending and federal spending.
"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. It is hard to imagine any cuts to Social Security, Medicare or other public programs, even though they make up a good portion of the budget - That would be a "political non-starter".
The figure would be even larger if the tax cuts for individuals and families do not expire as scheduled. And not a word from the debt and deficit mob and those conservatives who reckon higher spending will be inflationary. That plan is widely viewed as a symbolic measure with little chance of passing Congress or winning the necessary ratification from the states.