Highlights of the CBO's Budget and Economic Outlook

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The new CBO projection is the first since President Donald Trump signed a tax cut that is expected to cost the government almost $1.9 trillion over 11 years, then signed legislation to significantly boost military and domestic spending over the next two years.

For 2018, the deficit is expected to top $800 billion, about $140 billion more than the shortfall previous year.

The Congressional Budget Office said its projected increase in the 2018 budget deficit is due to new tax cuts and the March spending bill. CBO projects that the new laws will increase deficits by $2.7 trillion - $1.7 trillion in lower revenue as a result of the tax cuts and $1 trillion in higher spending. In a decade, the more red ink is expected to achieve $1.5 billion.

But it could be worse because the CBO says its figures very likely underestimate the size of the deficit.

The CBO also said the deficit would continue to climb over that decade.

"The federal budget deficit grows substantially over the next several years", CBO Budget Director Keith Hall said Wednesday after his agency released the report. Market Watch notes that the US hasn't run deficits exceeding a trillion dollars since 2012.

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But, as deficits, inflation and interest rates rise, GDP growth will slow from 2020 to 2026, the CBO said.

In its 2017 projection, the CBO estimated that by 2027 the national debt would comprise 88.9 percent of the gross domestic product, just below the level at which economists say its load would itself harm the economy.

The analysis "confirms that major damage was done" by the new tax law and the spending bill, said Michael Peterson, head of the non-partisan Peter G. Peterson Foundation.

Turning to the budget projections, we estimate that the 2018 deficit will total $804 billion, $139 billion more than the $665 billion shortfall recorded in 2017.

Deficits remain at 5.1% through 2025 before dipping in later years to average 4.9% of GDP over the 2021-2028 period. Next year's growth will rise from 1.5 percent to 2.4 percent. And they don't buy the Laffer Curve nonsense peddled in the United States and here by tax cut advocates, that company tax cuts will be so stimulatory that they'll produce a net tax revenue increase. 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 modern Republican Party has pioneered a completely novel theory: Governments should balance their budgets when run by Democrats, and run extremely large deficits when run by Republicans. Deficits can snowball, as larger deficits require larger interest payments, pushing the government to borrow more and more money to close the gap. Only in 1945 and 1946 has the debt held by the public been higher.

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