The Congressional Budget Office is upping its projections for this year's federal deficit by $63 billion and increasing its forecast for deficits over the next decade by $809 billion.

The nonpartisan office projects the deficit will exceed $1 trillion beginning next year.

The office says its projections on both fronts stem mostly from recently enacted legislation that lifted the nation's debt limit and reversed scheduled 10% cuts to defense and nondefense programs. </s> Deficits as far as the eye can see

The US Congressional Budget Office sees the US deficit at $960 billion in fiscal year 2019, that's $63 billion higher than the previous forecast.

For the period from 2020-2029, they see deficits averaging $1.2 trillion and a cumulative $12.2 trillion compared to $11.4 trillion previously.



On growth, they see it a 2.3% this year versus the 2.5% prior forecast due to lower business fixed investment. They also say tariffs will cut 0.3 pp of GDP through next year. </s> The U.S. budget deficit is set to widen to $1 trillion by fiscal year 2020, two years sooner than previously estimated, according to the Congressional Budget Office.

The deficit will expand faster than forecast after recent legislation raised spending levels, according to the the nonpartisan group’s annual budget outlook released Wednesday. That effect was somewhat moderated by the expectation of lower interest rates, which reduces borrowing costs.

It would be the first time the deficit exceeded the $1 trillion mark since 2012, as the economy was recovering from the financial crisis. The deficit breaching that threshold would come as President Trump runs for reelection.

Economic growth is expected to expand at a 2.3% pace in the fourth quarter this year, followed by 2.1% next year, the CBO said, up from the agency’s prior estimate of 1.7%. After that, growth will slow to about 1.8% through 2029, the CBO said.

“Partially offsetting the budgetary effects of new legislation are revisions to our economic forecast, which pushed down deficit projections,” CBO Director Phillip Swagel said in a statement.

Economists are increasingly warning that a recession may be on the horizon, with a key segment of the so-called yield curve on U.S.Treasury notes briefly inverting last week, a rare occurrence that has historically presaged a recession. The odds of a U.S. downturn in the next 12 months rose to 35% in Bloomberg’s August survey of economists, from 31% forecast previously.

The growing U.S. debt load could add to strains on the economy, now in its longest expansion on record. It’s a troubling factor amid Trump’s ongoing trade war with China that’s delaying some investment, an increasingly gloomy consumer and slowing global growth.

“The nation’s fiscal outlook is challenging,” Swagel said in the statement. “Federal debt, which is already high by historical standards, is on an unsustainable course, projected to rise even higher after 2029 because of the aging of the population, growth in per capita spending on healthcare and rising interest costs.”

The budget deficit will widen to $1.01 trillion over the 12 months through 2020, from an expected $960 billion this year. The CBO had said in January that the shortfall would come in at around $890 billion next year and wouldn’t top $1 trillion until fiscal 2022.

As a share of GDP, the deficit is forecast to increase to 4.6% next year from 4.5% this year.

The deficit has expanded under Trump amid the Republicans‘ $1.5-trillion tax cut package, increased federal spending and an aging population that’s boosting the cost of social programs like Medicare. Trump said recently “a lot of people” would like a cut in payroll taxes and he’s floated the idea of a capital gains tax break as his administration examines ways to juice the economy.

The U.S. last ran a deficit bigger than $1 trillion between 2009 and 2012, when President Obama ran a large deficit to finance a bailout for the financial markets and a stimulus plan to yank the country out of the financial crisis. </s> WASHINGTON (AP) — The federal budget deficit is expected to balloon to more than $1 trillion in the next fiscal year under the first projections taking into account the big budget deal that President Donald Trump and Congress reached this summer, the Congressional Budget Office reported.

The return of $1 trillion annual deficits comes despite Trump's vow when running for office that he would not just balance the budget but pay down the entire national debt.

"The nation's fiscal outlook is challenging," said Phillip Swagel, director of the nonpartisan CBO. "Federal debt, which is already high by historical standards, is on an unsustainable course."

The office on Wednesday upped this year's deficit projection by $63 billion and the cumulative deficit projection for the next decade by $809 billion. The higher deficit projections come even as the CBO reduced its estimate for interest rates, which lowers borrowing costs, and as it raised projections for economic growth in the near term.

The number crunchers at CBO projected the deficit for the current fiscal year will come to $960 billion. In the next fiscal year, which begins Oct. 1, it will exceed $1 trillion.

The CBO said the budget deal signed into law earlier this month, which took away the prospect of a government shutdown in October and the threat of deep automatic spending cuts, would boost deficits by $1.7 trillion over the coming decade.

Increased spending on disaster relief and border security would add $255 billion. Downward revisions to the forecast for interest rates will help the picture, trimming $1.4 trillion.

Swagel said the federal debt will rise even higher after the coming decade because of the nation's aging population and higher spending on health care.

To put the country on sustainable footing, Swagel said, lawmakers will have to increase taxes, cut spending or combine the two approaches. </s> CBO Predicts Budget Deficit Will Reach Nearly $1 Billion This Year

NPR's David Greene talks to Phillip Swagel, director of the nonpartisan Congressional Budget Office, who says the nation's fiscal outlook is challenging and is on an unsustainable course. </s> WASHINGTON — The federal budget deficit is expected to balloon to more than $1 trillion in the next fiscal year under the first projections taking into account the big budget deal that President Donald Trump and Congress reached this summer, the Congressional Budget Office reported.

The return of $1 trillion annual deficits comes despite Trump’s vow when running for office that he would not just balance the budget but pay down the entire national debt.

“The nation’s fiscal outlook is challenging,” said Phillip Swagel, director of the nonpartisan CBO. “Federal debt, which is already high by historical standards, is on an unsustainable course.”

The office on Wednesday upped this year’s deficit projection by $63 billion and the cumulative deficit projection for the next decade by $809 billion. The higher deficit projections come even as the CBO reduced its estimate for interest rates, which lowers borrowing costs, and as it raised projections for economic growth in the near term.

The number crunchers at CBO projected the deficit for the current fiscal year will come to $960 billion. In the next fiscal year, which begins Oct. 1, it will exceed $1 trillion.

The CBO said the budget deal signed into law earlier this month, which took away the prospect of a government shutdown in October and the threat of deep automatic spending cuts, would boost deficits by $1.7 trillion over the coming decade. Increased spending on disaster relief and border security would add $255 billion. Downward revisions to the forecast for interest rates will help the picture, trimming $1.4 trillion.

Like this article? Gain access to all of our great content with a month-to-month subscription. Start your subscription here. </s> WASHINGTON — The Congressional Budget Office has upped its estimate of current and future deficits largely as a result of the two-year budget deal enacted last month, which the agency projects will add $1.7 trillion in red ink over 10 years.

That forecast assumes that the increased spending in fiscal 2020 and 2021 thanks to the higher caps will continue throughout the decadelong budget window, growing with inflation. At the same time, changes to the economic forecast and a reduction in estimated interest rates will partly offset the spending increases, the agency said in its latest budget and economic outlook.

The deficit is now projected at $960 billion in fiscal 2019, up $63 billion from the $896 billion the CBO estimated in May. Over the fiscal 2020-29 period, the cumulative deficit is projected to be $12.2 trillion, or $809 billion larger than in the previous estimate.

Growth forecasts for most of the decade are basically unchanged from prior projections. Real gross domestic product would see a boost in the next two years from the spending deal, though weighed down somewhat by tariff increases implemented by the Trump administration.

Real GDP growth is expected to be 2.3% this year, measured from the fourth quarter over the same period in 2018, or down from 2.5% last year. During Trump’s reelection campaign in 2020, the CBO sees growth trending down to 2.1%, a far cry from the 3% the administration has said its policies will produce.

A recession doesn’t appear imminent in the new forecast, though that isn’t unusual for the CBO. And next year’s growth estimate is 0.4 percentage points higher than it was in January.

Interest rates are once again a major driver of reduced spending, with debt service costs over a decade estimated at $1.4 trillion lower than in the previous forecast, despite the added debt from the new spending deal. The benchmark 10-year Treasury note is now expected to yield 2.3% this year and 2.2% next year, down sharply from January’s forecast of 3.4% and 3.6%, respectively.

In addition to the budget deal, the CBO said, supplemental appropriations for disaster relief and border security will increase the deficit. The CBO estimated that the supplemental appropriations will add $255 billion to the deficit over the 2020-29 period. That is based on the agency’s assumption that the additional funding will grow with inflation.

Under the new projections, the deficit would top $1 trillion in fiscal 2020, two years earlier than previously projected. The fiscal 2020 deficit, at $1.008 trillion, would be $116 billion higher than earlier projected. The fiscal 2021 deficit is estimated at $1.034 trillion, or $72 billion higher than previously projected.

The last time deficits topped $1 trillion was fiscal 2012, as the U.S. was still digging out from the Great Recession.

When measured as a share of the economy, however, the picture looks a little better: Deficits as a percentage of GDP are expected to average 4.7% over the next decade. That’s significantly above what economists view as a comfortable level, but well below the 8.4% average of the fiscal 2009-12 period, when deficits last hit 12 digits. </s> The federal budget deficit is expected to balloon to more than $1 trillion in the next fiscal year under the first projections taking into account the big budget deal that President and Congress reached this summer, the Congressional Budget Office reported Wednesday.

The return of $1 trillion annual deficits comes despite Trump's vow when running for office that he would not just balance the budget but pay down the entire national debt.

"The nation's fiscal outlook is challenging," said Phillip Swagel, director of the nonpartisan CBO. "Federal debt, which is already high by historical standards, is on an unsustainable course."

 

 The office upped this year's deficit projection by $63 billion and the cumulative deficit projection for the next decade by $809 billion. The higher deficit projections come even as the CBO reduced its estimate for interest rates, which lowers borrowing costs, and as it raised projections for economic growth in the near term.

The number crunchers at CBO projected that the deficit for the current fiscal year will come to $960 billion. In the next fiscal year, which begins Oct. 1, it will exceed $1 trillion.

The CBO said the budget deal signed into law earlier this month, which took away the prospect of a government shutdown in October and the threat of deep automatic spending cuts, would boost deficits by $1.7 trillion over the coming decade.

Increased spending on disaster relief and border security would add $255 billion. Downward revisions to the forecast for interest rates will help the picture, trimming $1.4 trillion.

Swagel said the federal debt will rise even higher after the coming decade because of the nation's aging population and higher spending on health care.

To put the country on sustainable footing, Swagel said, lawmakers will have to increase taxes, cut spending or combine the two approaches.

The CBO projects that the economy will expand more slowly, from 2.3 per cent this year to 1.8 per cent on average in the next four years. The assumption reflects slower growth in consumer spending and government purchases, as well as the effect of trade policies on business investment.

It also projects the unemployment rate will remain close to its current level of 3.7 per cent through the end of 2020 and then rises to 4.6 per cent by the end of 2023.

The CBO's estimate is the first to reflect the hard-won budget and debt deal signed into law earlier this month.

"The recent budget deal was a budget buster, and now we have further proof. Both parties took an already unsustainable situation and made it much worse," said Maya MacGuineas, president of the private Committee for a Responsible Federal Budget.

MacGuineas said lawmakers should ensure the legislation they enact is paid for and redouble efforts to control the growth in health care costs and restore the solvency of the Social Security program.

Her organization is focused on educating the public on issues with significant fiscal policy impact.

Senior White House adviser Kellyanne Conway pivoted to the president's desire to fund the military and other programs when asked about the report.

"We're always concerned about the deficit," Conway said. "We also need to fund a lot of the projects and programs that are important to this country. </s> The federal budget deficit is expected to balloon to more than $1 trillion in the next fiscal year under the first projections taking into account the big budget deal that President Donald Trump and Congress reached this summer, the Congressional Budget Office reported Wednesday.

The return of $1 trillion annual deficits comes despite Trump’s vow when running for office that he would not just balance the budget but pay down the entire national debt.

“The nation’s fiscal outlook is challenging,” said Phillip Swagel, director of the nonpartisan CBO. “Federal debt, which is already high by historical standards, is on an unsustainable course.”

The office upped this year’s deficit projection by $63 billion and the cumulative deficit projection for the next decade by $809 billion. The higher deficit projections come even as the CBO reduced its estimate for interest rates, which lowers borrowing costs, and as it raised projections for economic growth in the near term.

The number crunchers at CBO projected that the deficit for the current fiscal year will come to $960 billion. In the next fiscal year, which begins Oct 1, it will exceed $1 trillion.

The CBO said the budget deal signed into law earlier this month, which took away the prospect of a government shutdown in October and the threat of deep automatic spending cuts, would boost deficits by $1.7 trillion over the coming decade. Increased spending on disaster relief and border security would add $255 billion. Downward revisions to the forecast for interest rates will help the picture, trimming $1.4 trillion.

Swagel said the federal debt will rise even higher after the coming decade because of the nation’s aging population and higher spending on health care.

To put the country on sustainable footing, Swagel said, lawmakers will have to increase taxes, cut spending or combine the two approaches.

The CBO’s estimate is the first to reflect the hard-won budget and debt deal signed into law earlier this month.

“The recent budget deal was a budget buster, and now we have further proof. Both parties took an already unsustainable situation and made it much worse,” said Maya MacGuineas, president of the private Committee for a Responsible Federal Budget.

MacGuineas said lawmakers should ensure the legislation they enact is paid for and redouble efforts to control the growth in health care costs and restore the solvency of the Social Security program. Her organization is focused on educating the public on issues with significant fiscal policy impact.
The Congressional Budget Office forecasts a deficit of US$1 trillion next year, up from the previous estimate of $892 billion.