Changes in United States tax laws, the $1.3 trillion federal spending plan for 2018 and an anticipated slowdown in U.S. economic growth are expected to push the budget deficit to historically high levels totaling almost 100 percent of gross domestic product by 2028, the Congressional Budget Office (CBO) predicted in a report on Monday. Deficits would grow to $1.5tn by 2028 - and could exceed $2tn if the tax cuts are fully extended and if Washington does not cut spending.
Debt held by the public, which has doubled in the past 10 years as a percentage of gross domestic product (GDP), will approach 100 percent of GDP by 2028.
"That amount is far greater than the debt in any year since just after World War II", the report said.
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.
Members of both parties further added to the deficit in March when they increased military and domestic spending by almost $300 billion over the next two years.
In the near term, a rosier-than-expected economic outlook for individuals offered by the CBO could boost the Republican economic message as Trump's party seeks to retain control of Congress in the November midterm elections.
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Real GDP will grow by 3.3% in 2018; 2.4% in 2019; and 1.8% in 2020, it said. At the same time, the long-term budget forecast counters the GOP's arguments that tax cuts will pay for themselves through economic growth. More speculatively, higher wages and less competition in the labor force could actually raise the fertility rate among Americans, ultimately contributing to a larger labor force than the CBO now expects.
Republicans, who powered through massive tax cuts and then cut a deal with Democrats to surge spending, were mostly silent on the numbers. In our projections, budget deficits continue increasing after 2018.
The analysis "confirms that major damage was done" by the new tax law and the spending bill, said Michael Peterson, head of the nonpartisan Peter G. Peterson Foundation.
"To address our federal debt, we must slow the growth of entitlement spending, increase revenues with a growing economy, and make responsible spending cuts", Lankford said in a statement.
House Republicans have said they will take up a measure to balance the budget, now that lawmakers have returned from a two-week recess.
Donnelly said, "This report confirms my serious concerns about the ballooning deficit, which Speaker Ryan has said he wants to pay for through cuts to Medicare and Social Security, putting seniors and retirees at risk". While the benefits of tax reform should not be overlooked, including a projected high short-term GDP growth and low unemployment, the deficit and debt forecasts are daunting and need to be addressed.