The U.S. budget deficit will exceed the symbolic $1 trillion barrier this year, the Congressional Budget Office said, warning that the nation’s debt is growing at an “unsustainable” rate.
The CBO estimated the gap between federal revenue and spending will reach $1.02 billion in 2020, approaching the record deficit levels of 2009 to 2011 when the Obama administration spent heavily on post-crisis stimulus measures.
“The return of a trillion-dollar deficit now comes as the economy is running on all cylinders, with the CBO predicting that the jobless rate nationwide will average below 4% through at least 2022,” The Associated Press said.
Gross domestic product will expand by 2.2% this year, according to the CBO.
The deficit outlook has worsened as President Trump’s 2017 tax cuts have resulted in reduced tax revenue and Congress passed a spending package last year that is expected to add more than $500 billion to the debt over a decade.
The CBO expects the shortfall will average $1.3 trillion between 2021 and 2030, with net interest spending rising from 1.7% of GDP in 2020 to 2.6% in 2030 as large deficits cause the government to borrow more. The federal debt held by the public is projected to rise to $31.4 trillion at the end of 2030, or 98% of GDP.
“That’s a sad reflection of our nation’s poor fiscal health, and it adds insult to injury that we’re piling on all this debt in a growing economy,” said Michael A. Peterson, the chief executive of the Peter G. Peterson Foundation, which advocates for deficit reduction. “If a policy is important enough to enact, it should be important enough to pay for.”
CBO Director Phillip Swagel said the economy’s performance “makes the large and growing deficit all the more noteworthy. Changes in fiscal policy must be made to address the budget situation because our debt is growing on an unsustainable path.”
The CBO raised its GDP estimate for 2020 from 2.1% but that is still well below Trump’s 3% target. Over the decade, GDP is expected to grow at a more anemic pace of 1.7%.