Anyone remember when Trump promised to eliminate not only the deficit but the entire federal debt in 8 years? It would be “easy,” he said. Instead, his tax cut without any spending cuts and huge increase in defense spending has dropped tax revenue so far that the Congressional Budget Office says it will cross the $1 trillion mark next year.
The deficit — the gap between what the government takes in through taxes and other sources of revenue and what it spends — will reach $960 billion for the 2019 fiscal year, which ends Sept. 30. That gap will widen to $1 trillion for the 2020 fiscal year, the Congressional Budget Office said in updated forecasts released on Wednesday.
The updated projections show deficits rising — and damage from Mr. Trump’s tariffs mounting — faster than the office had previously predicted. In May, the budget office said it expected a deficit of $896 billion for 2019 and $892 billion for 2020…The increasing levels of red ink stem from a steep falloff in federal revenue after Mr. Trump’s 2017 tax cuts, which lowered individual and corporate tax rates, resulting in far fewer tax dollars flowing to the Treasury Department. Tax revenues for 2018 and 2019 have fallen more than $430 billion short of what the budget office predicted they would be in June 2017, before the tax law was approved that December.
This is nearly unprecedented when the economy is growing. We see big deficits during hard economic times because the lower growth means lower tax revenue and the need for more social assistance for those who can’t find jobs and need things like food stamps to survive. Then when the economy is growing, the deficit goes down as tax revenue collections recover and the need for assistance programs decreases. That’s why we saw a huge spike in the deficit in 2009 when the Great Recession hit, then by the end of Obama’s term the deficit had dropped more than 60% from that 2009 high point.
But not under Mr. I’ll Eliminate the Debt Trump. His massive tax cuts and boost in federal spending have dropped tax revenue while spending more on the other end. So instead of paying down the debt, he’s increasing it by nearly $5 trillion in only four years. His own 2020 budget plan projects that he’ll add $9.1 trillion to the debt if he stays in office for 8 years.