The federal deficit is getting tired of all this winning.
According to a report released Monday afternoon from the Congressional Budget Office (CBO), the annual U.S. budget deficit will rise above $1 trillion in 2020, two years earlier than previously forecast.
Last year, the CBO estimated the 2018 deficit would be $242 billion less than this year’s estimate. Why? The main reason is smaller tax revenues. The report explained that, “accounting for most of that difference is a $194 billion reduction in projected revenues, mainly because the 2017 tax act is expected to reduce collections of individual and corporate income taxes.”
This is far from what candidate Trump told his supporters he would do:
- In his official campaign launch address, Trump promised to “reduce our $18 trillion in debt,” which will not happen if annual deficits hit $1 trillion in two years.
- On the campaign trail, Trump said he would “freeze the budget,” which has certainly not happened.
- Shortly before his inauguration, he told Fox News host Sean Hannity that he would “balance the budget very quickly… I think over a five-year period. And I don’t know, maybe I could even surprise you.”
- Previous to that, in March 2016, he told Bob Woodward that he could get rid of the debt “fairly quickly.” When pressed, he said, “Well, I would say over a period of eight years.” Since Trump took office, his own budget director called that promise “hyperbole.”
- Trump asserted during the second presidential debate that he would bring back energy companies, which would make so much money that they could pay off the national debt. This has not happened.
Cumulatively for the 2018-2027 period, the deficit will be $11.7 trillion, “$1.6 trillion larger than the $10.1 trillion that the agency anticipated in June,” the CBO report said.
Most of that deficit can be explained by the lost revenue caused by the tax cut legislation Congress passed and Trump signed at the end of last year. At the same time, the 2018 budget passed earlier this year increases military and domestic spending by about $300 billion.
The federal government operated with a surplus in the 90s, then ran a medium deficit in the 00s, until the Great Recession required stimulus spending along with bank bailouts to rescue the economy. Those trillion-dollar-plus deficits shrank to back to average size in recent years but as this CBO graphic shows, the trendline, thanks to increased spending and large tax cuts, is for deficits to balloon out again.
The White House’s own budget proposal would run a $900 billion annual budget deficit into 2022 — but that didn’t stop White House spokesperson Raj Shah from claiming, erroneously, on Fox News that the Trump budget “has over $3 trillion dollars in deficit reduction, which is the largest deficit reduction of a budget in terms of a 10-year outlay that we’ve ever seen.”