The deficit in 2016, President Barack Obama’s last full year in office, was $585 billion. CBO now projects that the deficit will be at least $1 trillion each year in perpetuity unless policymakers make changes.
…The U.S. government’s budget deficit is projected to reach $1.02 trillion in 2020, according to a report released Tuesday by the nonpartisan Congressional Budget Office, as the federal government continues to spend much more than it collects in tax revenue.
A combination of the 2017 tax cuts and a surge in new spending has pushed the deficit wider. This year would mark the first time since 2012 that the deficit breached $1 trillion, a threshold that has alarmed some budget experts because deficits typically contract — not expand — during periods of sustained economic growth.
…Trump, asked about the rising deficit following the tax cuts, told CNBC last year: “We’ve taken in more revenue substantially than we did when the taxes were high. Nobody can even believe it,” [because it’s not true.]
…The CBO report shows that tax collections are weaker than they would be without the 2017 Republican tax law, which permanently locked in lower rates for many corporations while creating temporary reductions for households. Tax revenue remained roughly flat the first year the law was in effect, despite economic growth of nearly 3 percent. It rose slightly in 2019 but not enough to compensate for flatlining the year before.
…In January 2017, before the tax law, the CBO projected corporate tax revenue would represent 1.8 percent of gross domestic product. Now, they are expected to represent only 1.1 percent of GDP.
…Combined with an increase in spending, the deficit has ballooned, forcing the Treasury Department to borrow more money to cover the balance.
…With rising annual deficits, the total debt held by the government is also projected to grow dramatically, from about $18 trillion in 2020 to $31 trillion in 2030, according to the CBO’s projections. The U.S. government must pay interest on this debt to keep borrowing money.