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The Congressional Budget Office forecast that the new tax law will generate an average of 0.7 percent growth over the decade and create 1.1 million jobs.
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However, larger budget deficits would crowd out private investment in later years, dampening economic growth.
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As a result, the CBO estimated the cumulative deficit over the next decade will be $1.6 trillion larger than previously projected. By 2028, the national debt would total 96 percent of GDP.
The Republican overhaul of America’s tax code and increased government spending are projected to boost economic growth to 3.3 percent this year but push the national debt to nearly the same size as gross domestic product by 2028, according to government data released Monday.
The Congressional Budget Office forecast that the new tax law will generate an average of 0.7 percent growth over the decade and create 1.1 million jobs. It also predicted the two-year federal spending deal would increase GDP by 0.3 percent this year and 0.6 percent in 2019. However, larger budget deficits would crowd out private investment in later years, dampening economic growth.
As a result, the CBO estimated the cumulative deficit over the next decade will be $1.6 trillion larger than previously projected. By 2028, the national debt would total 96 percent of GDP.
“Such high and rising debt would have serious negative consequences for the budget and for the nation,” the CBO report stated.
Trillion-dollar deficits come roaring back
President Trump has overseen a dramatic worsening of the government’s finances in his first 14 months in office, sending deficits soaring to more than $800 billion this year topping $1 trillion by 2020, and staying there every year for the foreseeable future, the Congressional Budget Office said Monday.
Last year’s tax cuts will sap the government of money, even as the budget and spending deals approved this year will push the government to spend more money — cash it will have to borrow.
That will quickly push deficits back to the levels they were during the Obama administration, when the government was recovering from the Great Recession.
As those yearly deficits pile up, the debt will deepen dramatically. Within a decade the debt held by the public will total $28.7 trillion, flirting with rates nearly 100 percent of the economy, as measured by gross domestic product, the CBO said.