White House projects 2019 deficit at more than $1 trillion
The White House issued its annual budget review yesterday and estimated that the annualized federal deficit for 2019 will top $1 trillion.
Estimates from the nonpartisan Congressional Budget Office had forecast the deficit to near $1 trillion in 2019, but not pass it until 2020.
Budget watchdogs said that deficits had doubled in recent years as a result of bipartisan spending agreements and the GOP tax-cut law passed in December.
"This is a striking acknowledgement following almost two years of claims that economic growth unleashed by these policies will wipe deficits away," said Maya MacGuineas, president of the Committee for a Responsible Federal Budget.
The budget outlook maintained the rosy economic projections the Trump White House has used in previous forecasts, but seemed to indicate a slight retreat from an earlier promise.
Trump officials have regularly argued that the administration's policies would lead to sustained economic growth of 3 percent over 10 years, well above mainstream projections. In its updated budget outlook, OMB's average growth rate dropped under 3 percent over the decade, dipping below the target as of 2025.
Despite record federal revenue totals over the past quarter, the deficit continues to rise. The problem isn't the tax cuts. It's the more than $300 billion in additional spending authorized by Congress as a result of the budget deal between Trump and the Democrats last spring.
We can't grow ourselves out of our deficit problems as long as Congress spends the additional revenue generated by the tax cuts. Some of that spending was unavoidable. The budget deal signed by President Obama and the GOP in 2015 placed caps on domestic spending, including national defense. The shortfall in military spending was becoming dangerous, and Trump ran on a promise to increase funding.
But no corresponding cuts were made in other domestic programs, leading to our current deficit problems. The CBO estimates that these trillion-dollar deficits will be with us for a decade, that the benefits from the tax cuts won't last more than four or five years. That remains to be seen.
But there is little doubt that whatever restraint on spending there was previously, the shackles are off, and we can expect more of the same, at least in the near term.