Federal Debt Projected to Grow by $8.6 Trillion Over Next Decade
By ALAN RAPPEPORTJAN. 24, 2017
WASHINGTON — After seven years of fitful declines, the federal budget deficit is projected to begin swelling again this decade, adding $8.6 trillion to the federal debt over the next ten years, according to projections from the nonpartisan Congressional Budget Office that reveal the strain that the government’s debt will have on the economy as President Trump embarks on plans to slash taxes and ramp up spending.
The deficit, which is expected to shrink in the next two years before swelling later in the decade, will amount to 3.8 percent of the country’s total economic output, above the 3 percent that economists view as the danger point for the economy.
The new deficit figures will be a major challenge to congressional Republicans, who were swept to power in 2010 on fears of a swollen deficit and who have made controlling red ink a major part of their legislating. Statutory caps imposed in 2011 on domestic and defense spending have helped control the deficit. But those controls are likely to be swamped by the aging Baby Boomer generation, which is ramping up spending on health care and Social Security.
Now, congressional leaders will have to choose between their fealty to the cause of fiscal prudence and the demands of the new president, who wants $1 trillion in infrastructure work over 10 years, a surge in defense spending, and large tax cuts for individuals and corporations.
The Congressional Budget Office’s budget and economic outlook said that the share of debt held by the public is expected to reach 89 percent in 2027. Such a high level of debt could increase the likelihood of a financial crisis and raise the possibility that investors will become skittish about financing the government’s borrowing.
Over the next 10 years, real economic output is projected to grow at an annual rate of 1.9 percent.
Mr. Trump has promised that his combination of tax cuts and investment on infrastructure will cause growth to surge above 4 percent.
Despite the swelling deficit, the report describes an economy that is currently on “solid ground,” with increasing output and job growth on the immediate horizon. The snapshot represents a stark contrast to the economic “carnage” that Mr. Trump detailed in his inauguration address and the crisis that faced President Barack Obama when he took office eight years ago. https://www.nytimes.com/2017/01/24/us/politics/budget-deficit-trump.html?ref=politics